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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993 Commission File Number 1-3004
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
ILLINOIS POWER COMPANY
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation
or organization State of Illinois
I.R.S. Employer Identification No. 37-0344645
Address of principal executive offices 500 South 27th Street,
Decatur, Illinois
Zip Code 62525-1805
Registrant's telephone number, including area code 217-424-6600
Securities registered pursuant to Section 12(b) of the Act:
Cumulative Cumulative
Preferred Preferred First Mortgage New Mortgage
Stock, $50 Stock, no Bonds Bonds
par value par value
(Registered on the New York Stock Exchange)
4.08% Adjustable Rate Series A 6 1/2% Series due 1999 6 1/8% Series due 2000
4.26% Adjustable Rate Series B 7.95% Series due 2004 5 5/8% Series due 2000
4.70% 8.00% 8 3/4% Series due 2021 6 1.2% Series due 2003
4.42% 6 3/4% Series due 2005
4.20% 8% Series due 2023
8.24% 7 1/2% Series due 2025
7.56%
8.00%
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Common Stock, without par value
(Registered on the New York and Chicago Stock Exchanges)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during thepreceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of the close of business on February 28, 1994 was
$1,939,133,433.
The number of shares of the Registrant's Common Stock, without par value,
outstanding on February 28, 1994 was 75,643,937.
Documents Incorporated by Reference
1. Portions of Illinois Power Company's 1993 Annual Report. (Parts I, II and
IV of Form 10-K.)
Exhibit Index located on pages 54 through 62.
Total number of pages sequentially numbered is 124.
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ILLINOIS POWER COMPANY
FORM 10-K
For the Fiscal Year Ended December 31, 1993
TABLE OF CONTENTS
Part I Page
Item 1. Business 5
Electric Business 6
Power Coordination Agreement With Soyland 7
Fuel Supply 8
Construction Program 12
Clinton Power Station 13
General 13
Rate and Regulatory Matters 14
Accounting Matters 15
Decommissioning Costs 15
Dividends 16
Gas Business 16
Gas Supply 18
Environmental Matters 19
Air Quality 20
Clean Air Act 20
Gas Manufacturing Sites 22
Water Quality 22
Other Issues 23
Electric and Magnetic Fields 24
Environmental Expenditures 24
Research and Development 24
Regulation 24
Executive Officers of the Registrant 25
Operating Statistics 26
Item 2. Properties 26
Item 3. Legal Proceedings 27
Fuel and Purchased Gas Adjustment Clauses 27
Environmental 27
Peabody Coal Company and Arch Coal Sales
Company, Inc. 27
Item 4. Submission of Matters to a Vote of Security Holders 27
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TABLE OF CONTENTS (Continued)
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 28
Item 6. Selected Financial Data 28
Item 7. Management's Discussion and Analysis Financial
Condition and Results of Operations 28
Item 8. Financial Statements and Supplementary Data 28
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 28
Part III
Item 10. Directors and Executive Officers of the Registrant 28
Item 11. Executive Compensation 29
Item 12. Security Ownership of Certain Beneficial Owners and
Management 34
Item 13. Certain Relationships and Related Transactions 39
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
On Form 8-K 40
Signatures 42
Exhibit Index 54
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PART I
Item 1. Business
Illinois Power Company (the "Company") was incorporated under the laws of
the State of Illinois on May 25, 1923. It 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.
On February 9, 1994, the stockholders of the Company approved, by a
favorable vote of 57,647,534 shares or 70.14% of the total shares
outstanding, an agreement and plan of merger for creation of a holding
company. The holding company will be named Illinova Corporation.
Documents have been filed relating to the formation of a holding company
with the Illinois Commerce Commission (ICC), the Federal Energy
Regulatory Commission (FERC), the Securities and Exchange Commission
(SEC) under the Public Utility Holding Company Act and the Nuclear
Regulatory Commission (NRC). In January 1994, the NRC gave its consent to
the restructuring. The applications filed with the FERC, the SEC, and the
ICC are currently pending. The holding company formation is not subject to
ICC approval; however, the ICC must approve the agreement under which the
Company may provide services and facilities to the holding company and
affiliates.
The territory served by the Company comprises substantial areas in
northern, central and southern Illinois, including the following larger
communities (1990 Federal Census data):
Class of
City Population Service Furnished
Decatur................... 83,885 Electric and Gas
Champaign................. 63,502 Electric and Gas
Bloomington............... 51,972 Electric
Belleville................ 42,785 Electric and Gas
East St. Louis............ 40,944 Gas
Normal.................... 40,023 Electric
Urbana.................... 36,344 Electric and Gas
Danville.................. 33,828 Electric and Gas
Galesburg................. 33,530 Electric and Gas
Granite City.............. 32,862 Electric and Gas
The Company holds franchises in all of the 310 incorporated
municipalities in which it furnishes retail electric service and in all
of the 257 incorporated municipalities in which it furnishes retail gas
service.
Total operating revenues, including interchange sales, of the Company
for the past three years by classes of service were as follows:
1993 1992 1991
(Millions of dollars)
Electric $1,266.4 $1,190.9 $1,186.7
Gas $ 314.8 $ 288.6 $ 288.2
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Operating income before income taxes for the past three years by classes of
service were as follows:
1993 1992 1991
(Millions of dollars)
Electric $ 383.2 $ 348.4 $ 337.4
Gas $ 28.6 $ 23.9 $ 29.7
Identifiable assets for the past three years by classes of service were
as follows:
1993 1992 1991
(Millions of dollars)
Electric $4,526.8 $4,602.9 $4,577.2
Gas $ 406.4 $ 355.4 $ 329.0
At December 31, 1993, the Company had 4,540 employees.
Electric Business
Overview
The Company supplies electric service at retail to an estimated
aggregate population of 1,265,000 in 310 incorporated municipalities,
adjacent suburban and rural areas, and numerous unincorporated
communities. Electric service at wholesale is supplied for resale to one
electric utility and to the Illinois Municipal Electric Agency (IMEA) as agent
for 11 municipalities. The Company also has a power coordination agreement
with Soyland Power Cooperative, Inc. (Soyland). See the sub-caption "Power
Coordination Agreement With Soyland" hereunder for additional
information. In 1993, the Company provided interchange power to 13
utilities for resale.
The Company's highest system peak hourly demand (native load) in 1993
was 3,415,000 kilowatts on August 26, 1993. This 1993 peak load compares
with the Company's historical high of 3,508,000 kilowatts in 1988.
The Company owns and operates electric generating facilities
having a net summer capability of 4,416,000 kilowatts. The major
electric generating stations are Clinton power station (Clinton) (933,000
kilowatts, of which 810,000 kilowatts of capability are owned by the Company
and 123,000 kilowatts of capability are owned by Soyland), Baldwin
(1,740,000 kilowatts), Havana (666,000 kilowatts), Wood River (603,000
kilowatts), Hennepin (286,000 kilowatts) and Vermilion (165,000 kilowatts).
The other generating facilities owned by the Company consist of gas turbine
units at three locations which provide peaking service and have an aggregate
capability of 146,000 kilowatts. Havana Units 1-5 (238,000 killowatts) and
Wood River Units 1-3 (139,000 kilowatts) are currently not staffed, but
are available to meet reserve requirements with a maximum of four months'
notice.
The Company owns 20% of the capital stock of Electric Energy, Inc.
(EEI), an Illinois corporation, which was organized to own and operate
a steam electric generating station and related transmission facilities
near Joppa, Illinois to supply electric energy to the Department of
Energy (DOE) for its project near Paducah, Kentucky. Under a power supply
agreement with EEI, the Company has the right to purchase 5.0% of the annual
output of the Joppa facility. The Company has the flexibility to schedule the
capacity in varying amounts ranging from a nominal 51,000 kilowatts for
52 weeks up to a maximum of 203,000 kilowatts for approximately
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13 weeks. The Company must schedule its annual capacity entitlement by
August 1 of the preceding year, and availability of the scheduled capacity
is subject to certain other limitations related to scheduling
considerations of the other co-owners of the Joppa facility and the DOE,
and unit outages (if any).
The Company is a participant, together with Union Electric Company
and Central Illinois Public Service Company, in the Illinois-Missouri
Power Pool which was formed in 1952. The Pool operates under an
Interconnection Agreement which provides for the interconnection of
transmission lines and contains provisions for the coordination of
generating equipment maintenance schedules, inter-company sales of firm
and non-firm power, and the maintaining of minimum capacity reserves by
each participant equal to the greater of 15% of its peak demand, one-half of
its largest unit, or one-half of its largest non-firm purchase.
The Company, Central Illinois Public Service Company and Union Electric
Company have a contract with Tennessee Valley Authority (TVA) providing for
the interconnection of the TVA system with those of the three companies to
exchange economy and emergency power and for other working arrangements.
The Company also has interconnections with Indiana-Michigan Power
Company, Commonwealth Edison Company, Central Illinois Light Company,
Iowa-Illinois Gas & Electric Company, Kentucky Utilities Company,
Southern Illinois Power Cooperative, Soyland Power Cooperative, Inc. and the
City of Springfield, Illinois for various interchanges, emergency services
and other working arrangements.
The Company is also a member of the Mid-America Interconnected
Network, which is one of nine regional reliability councils
established to coordinate plans and operations of member companies
regionally and nationally.
Power Coordination Agreement With Soyland
Under the provisions of a Power Coordination Agreement (PCA) between
Soyland and the Company dated October 5, 1984, as amended, the Company is
required to provide Soyland with 8.0% (288 megawatts) of electrical capacity
from its fossil-fueled generating plants through 1994. This requirement
will increase to 12% in 1995 and each year thereafter until the agreement
expires or is terminated. This is in addition to the capacity Soyland
receives as an owner of Clinton. The Company is compensated with capacity
charges and for energy costs and variable operating expenses. The Company
transmits energy for Soyland through the Company's transmission and
subtransmission systems. Under provisions of the PCA, Soyland has the
option of participating financially in major capital expenditures at the
fossil-fueled plants, such as those needed for Clean Air Act compliance,
to the extent of its capacity entitlement and with each party bearing its
own direct capital costs, or having the costs treated as plant additions
and billed to Soyland in accordance with other billing provisions of the
PCA. See the sub-caption "Clean Air Act" on page 20, under "Environmental
Matters" for further discussion. At any time after December 31, 2004, either
the Company or Soyland can terminate the PCA by giving not less than seven
years' prior written notice to the other party. The party to whom
termination notice has been given may designate an earlier effective date
of termination which shall be not less than twelve months after receiving
notice. The revenues received from the power supplied to Soyland under
the PCA are classified as operating revenues. In 1993, Soyland supplied
electricity to 21 distribution cooperative members who served approximately
150,000 rural customers in 69 Illinois counties.
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Fuel Supply
The Company used coal to generate 70.2% of the electricity
produced during the year ended December 31, 1993, with nuclear, oil,
and gas contributing 28.4%, 0.4%, and 1.0%, respectively. The respective
average costs of these fuels per million Btu during 1993 were: Coal $1.50,
Nuclear $.90, Oil $3.40 and Gas $2.60 for a weighted average cost of $1.34.
The weighted average cost of all fuels per million Btu during the years
1992 and 1991 was $1.33 and $1.37, respectively. High-sulfur coal mined
in Illinois, Indiana and Kentucky provided 44.7%, 17.2% and 4.1%,
respectively, of the coal delivered to the Company's electric generating
stations in 1993. In addition, the Company received low-sulfur coal
from Kentucky, Colorado, West Virginia, Wyoming, Montana, Tennessee, Utah
and Illinois.
The average cost of primary fuel consumed at the Company's
generating stations during the periods indicated was as follows:
Average Cost of Primary Fuel
(per million Btu)
Primary
Station Fuel 1993 1992 1991
Baldwin Coal $1.41 $1.40 $1.46
Havana Coal 1.63 1.59 1.57
Hennepin Coal 1.61 1.56 1.53
Vermilion Coal 1.38 1.34 1.35
Wood River Coal 1.60 1.49 1.55
Clinton Uranium 0.91 0.99 1.04
The Company's rate schedules contain provisions for passing along
to its electric customers increases or decreases in the cost of
fuels used in its generating stations. See the information under the
captions Revenue and Energy Cost of "Note 1 - Summary of Significant
Accounting Policies" on page 33 of the Illinois Power Company 1993
Annual Report which is incorporated herein by reference and the sub-caption
"1987 Uniform Fuel Adjustment Clause Reconciliation" on page 14 for
additional information.
Reference is made to the sub-caption "Environmental Matters" hereunder
for information regarding pollution control matters relating to the
Company's fuel supply.
Coal - As shown below, the Company presently has contracts with expiration
dates ranging from 1994 to 2004 which will provide about 41 million tons of
coal. Based upon projected 1994 usage of approximately 6.6 million tons,
this is equivalent to about 6.2 years of consumption.
Longer-term contracts with Peabody Coal Company (Peabody) and
Arch Coal Sales Company, Inc. (Arch) in effect in 1993 provide for price
renegotiations related to current market prices. In 1993, as hereinafter
described, the Company negotiated contract amendments with each of these
suppliers lowering the cost of their coal. These amendments provide for
future price adjustments based on specified benchmarks. The shorter-term
contracts with Northern Coal Company, CONSOL, Inc. and Golden Oak Mining
Co. contain specified annual prices for each year in the contract term.
The Company will be evaluating replacement coal supply alternatives to
the CONSOL, Inc. contract at Wood River and the Northern Coal Company
contract at Vermilion. Final decisions on both are expected by the end
of the third quarter of 1994. Total contract purchases will range
between 5.4 million to 5.7 million tons of coal in 1994.
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The sources and quantities of coal supplies, contract expiration dates,
weighted average cost of coal purchases and anticipated sulfur contents
are summarized in the following table:
Weighted
Delivered
Cost per
Million Btu Expiration Anticipated
for the Date of Sulfur
Year Ended Primary Content*
Supplier Station 12/31/93 Contract (Percent)
Peabody Coal Co.(a) Baldwin $1.40 2004 3.0
Arch Coal Sales Co.,
Inc.(b) Baldwin 1.31 1999 3.0
Peabody Coal Co.(a) Hennepin 1.60 2004 3.0
CONSOL, Inc.(c) Wood River 1.62 1994 0.9
Golden Oak Mining
Co.(d) Havana 1.73 1995 0.6
Northern Coal
Company(e) Vermilion 1.24 1994 3.0
* High-sulfur content classified as 2.5 percent or greater.
(a) The Company has a contract with Peabody to purchase, in total,
2,500,000 tons per year at Baldwin and Hennepin. The Company has also
agreed to purchase and Peabody has agreed to supply through 1995 all
coal needs above the Arch and Peabody contract quantities at Baldwin
and Hennepin.
(b) This contract will supply 2,065,500 tons per year.
(c) This contract will supply 500,000 tons in 1994.
(d) This contract will supply 200,000 to 250,000 tons per year.
(e) This contract provides for delivery of 150,000 to 360,000 tons in
1994.
See the sub-caption "Environmental Matters" hereunder for additional
information regarding the supply of coal at the Baldwin power station.
When the Company's needs exceed contracted quantities, coal is
purchased on the spot market. Spot purchases in 1993 represented about
12% of the Company's total coal purchases. The delivered cost of coal
purchased on a spot basis during the year varied between $26.47 per ton,
or $1.27 per million Btu, and $50.11 per ton, or $2.01 per million Btu.
The Company anticipates that the spot market will continue to be a
favorable supplemental source of supply for the next few years, and the
Company will have adequate supplies of coal. The coal inventory at December
31, 1993 represented a 25 day supply based on the Company's average daily
burn projection for 1994.
In December 1992, the Company filed a complaint in the U. S. District
Court in St. Louis, Missouri, against Peabody, in which the Company sought
declaratory judgment and injunctive relief with respect to its contractual
rights to test burn and use coal from other suppliers in order to achieve
compliance with the Clean Air Act if to do otherwise would expose the Company
to higher costs.
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In January 1993, the Company filed a complaint in the U. S. District
Court in St. Louis, Missouri against Arch seeking a declaratory judgment to
enforce provisions in the coal supply contracts with Arch which permit
the Company under certain circumstances to negotiate or arbitrate lower coal
prices and if coal is available from other suppliers at substantially lower
cost, to terminate the contracts on one year's notice. In February 1993,
Arch and two subsidiaries filed suit against the Company in Perry
County, Illinois, seeking a declaratory judgment, specific performance and
other relief related to the Company's rights to declare force majeure and
limit its coal purchases under the existing contracts, State law, and the
Clean Air Act, and its declaration of certain force majeure events in
prior years. In accordance with agreements-in-principle executed by the
Company with each of these suppliers, all litigation was temporarily placed
on hold, and deadlines for responses extended, to allow the parties to
conclude negotiation of terms under which the Company may continue to
purchase coal,through amendments to the existing contracts, on a cost-
competitive basis, during the Phase I compliance period of the Clean Air Act
Amendments.
Final agreements were executed with both Arch and Peabody in 1993.
In accordance with those agreements, all of the above-described litigation
will be dismissed with prejudice.
Oil - The Havana power station (five units totaling 238,000 kilowatts), is
the Company's only station which utilizes fuel oil for the generation of
electric energy. These units are currently not staffed, but are available to
meet reserve requirements with a maximum of four months' notice.
Gas - Three generating units (totaling 139,000 kilowatts) at the Wood River
power station and two combustion peaking plants, Stallings (75,000
kilowatts) and Oglesby (60,000 kilowatts), are fueled with natural gas.
The three units at Wood River are currently not staffed, but are available
to meet reserve requirements with a maximum of four months' notice.
These units have the capability of burning either natural gas or
distillate fuel oil. Natural gas is also used in start-up and as a
secondary boiler fuel for two generating units (totaling 286,000
kilowatts) at the Hennepin power station and as a secondary boiler fuel
for one generating unit (totaling 92,000 kilowatts) at the Wood River power
station. Natural gas is also used as start-up fuel for one additional
unit at the Wood River power station. The Company anticipates that
adequate supplies of gas for these uses will be available for the
foreseeable future. See the sub-caption "Gas Business" hereunder.
Nuclear - The Company leases nuclear fuel from Illinois Power Fuel
Company (Fuel Company). The Fuel Company, which is 50% owned by the Company,
was formed in 1981, for the purpose of leasing nuclear fuel to the Company
for Clinton. Lease payments are equal to the Fuel Company's cost of fuel as
consumed (including related financing and administrative costs). This lease
is recorded as a capitalized lease on the Company's books. As of December
31, 1993, the Fuel Company had an investment in nuclear fuel of
approximately $129 million. The Company is obligated to make subordinated
loans to the Fuel Company at any time the obligations of the Fuel Company
which are due and payable exceed the funds available to the Fuel Company.
At December 31, 1993 the Company had no outstanding loans to the Fuel
Company.
At December 31, 1993, the Company's net investment in nuclear fuel
consisted of $22 million of Uranium 308. This inventory represents fuel to be
used in connection with the fifth reload of Clinton which is scheduled to
commence in March 1995. The unamortized investment of the nuclear fuel
assemblies in the reactor was $106 million.
The Company signed two contracts in 1988 for the supply of uranium
concentrates beginning in 1991. One contract is with U. S. Energy/Crested
Corporation and the other contract is with Cameco, a Canadian corpora-
tion. Each of the two contracts is for 1,179,240 lbs. of uranium
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concentrates, with deliveries from 1991 to 1997. The contracts
contain an option for an additional 479,440 lbs. of uranium concentrates
for delivery through 2000. Each of the two contracts is to provide an
estimated 35% of Clinton's fuel requirements, but each contract contains
provisions permitting the Company to purchase 50-60% of Clinton's fuel
requirements in certain years through the spot market. The decision to
utilize these provisions is made the year before each delivery and
depends on the estimated price and availability from the spot market versus
the estimated contract prices. During 1993, all nuclear fuel purchases were
settled in United States dollars.
In October 1993, the Company filed suit in U.S. District Court,
Central District of Illinois, Danville, seeking a declaration that the
Company's termination of one of these uranium supply contracts is permitted
by the terms of the contract. Defendants in the lawsuit are 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. The Company
purchased approximately half of its uranium concentrates supply under
this contract, which the Company terminated shortly before filing this
action. If the contract termination is upheld, the Company does not
anticipate having difficulty in replacing the contract at significantly
lower fuel prices. The defendants have filed responses including affirma-
tive defenses and breach of contract claims. A motion for change of
venue filed by certain of the defendants has been denied, and the case is
proceeding.
Conversion services for the period 1991-2001 are contracted with
Sequoyah Fuels. Sequoyah Fuels closed its Oklahoma conversion plant in 1992
and has joined with Allied Chemical Company to form a new marketing
company named CoverDyn. All conversion services will be performed at
Allied's Metropolis, Illinois facility, but Sequoyah Fuels will retain the
contract with the Company. The Company has a Utility Services contract for
uranium enrichment requirements with the DOE which provides 70% of the
enrichment requirements of Clinton through September 1999. The remaining
30% has been contracted with the DOE through its incentive pricing plan
through September 1995, and an amendment was signed in 1993 which covers the
remaining 30% through 1999. This amendment allows the Company to either
purchase the enrichment services at the DOE's incentive price or provide
electricity at DOE's Paducah, Kentucky enrichment plant, an agreed exchange
rate. In addition, legislation was passed to create a new private
government corporation, the United States Enrichment Corporation (USEC),
for enrichment services. All of the DOE's assets including all contracts
were transferred to the USEC as of July 1993.
A contract with General Electric Company provides fuel fabrication
requirements for the initial core and 2,196 fuel bundles (approximately 11
reloads through 2004). In 1993, an amendment was signed with the
General Electric Company to add 1,472 fuel bundles to the contract and
to change the existing price as well as some other terms and conditions.
The additional 1,472 fuel bundles are expected to cover fuel fabrication
requirements through 2017.
Beyond the stated commitments, the Company may enter into additional
contracts for uranium concentrates, conversion to uranium hexafluoride,
enrichment and fabrication.
Currently, no plants for commercial reprocessing of spent nuclear
fuel are in operation in the U.S., and reprocessing cannot commence until
appropriate licenses are issued by the NRC. Clinton has on-site high density
storage capability which will provide spent nuclear fuel storage capacity
to meet requirements until the year 2004. Various governmental agencies are
currently reviewing the environmental impact of nuclear fuel
reprocessing and waste management. The Nuclear Waste Policy Act of
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1982 was enacted to establish a government policy with respect to disposal
of spent nuclear fuel and high-level radioactive waste. The Company
signed a contract for disposal of spent nuclear fuel and/or high-level
radioactive waste on July 6, 1984 with the DOE. Under the contract,
the Company is required to pay the DOE one mill (one-tenth of a cent) per
net kilowatt-hour (one dollar per MWH) of electricity generated and sold.
The Company is recovering this amount through rates. The federal government
is required to have a repository in place to accept spent nuclear fuel by
January 31, 1998; however, current federal government schedules indicate
the year 2010 for the acceptance of the first spent nuclear fuel. The
Company expects that it will be able to meet interim storage requirements
through 2009 on-site using existing in-core pool facilities.
Under the Energy Policy Act of 1992, the Company is responsible for
a portion of the cost to decontaminate and decommission the DOE's uranium
enrichment facilities. Each utility will be assessed an annual fee for a
period of fifteen years based on quantities purchased from the DOE
facilities prior to passage of the Act. During 1992 the Company recorded
an estimated liability of $10.5 million, which was revised to $7.2 million
in 1993. At December 31, 1993, the Company has a remaining liability of
$6.7 million representing future assessments. The Company is recovering
these costs, as amortized, through its fuel adjustment clause.
Construction Program
The cost, including allowance for funds used during construction
(AFUDC), of the Company's construction program during 1994 and during
the period January 1, 1994 to December 31, 1998 is estimated as follows:
Five-Year
Period
1994 1994-1998
(Millions of dollars)
Electric generating facilities $ 57.4 $ 221.2
Electric generating facilities-
clean air compliance 11.4 13.3
Electric transmission and distri-
bution facilities 57.2 301.9
General plant 37.4 119.6
Gas facilities 24.2 119.0
Total construction 187.6 775.0
Nuclear fuel 28.4 114.8
Total $216.0 $ 889.8
The above estimates include potential costs which maybe required to
comply with the Clean Air Act as discussed further in "Environmental
Matters". See the sub-caption "Clean Air Act" hereunder on page 20
for additional information.
The estimated construction expenditures during the period January 1,
1994 to December 31, 1998, together with the repayment at maturity of
currently outstanding long-term debt (including lease payments under capital
leases) and redeemable preferred stock, aggregating approximately $424
million, and sinking fund requirements of approximately $2 million are
expected to require expenditures by the Company of approximately $1.315
billion. Construction and capital requirements are expected to be met
through internal cash generation.
In 1992, the Board authorized a new general obligation mortgage
(New Mortgage), which is intended to replace the Company's 1943 Mortgage
and Deed of Trust (First Mortgage). All bonds issued to date under the New
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Mortgage have been secured by a corresponding issue of first mortgage bonds
under the First Mortgage. As a result of the September 1993 write-off
related to deferred Clinton post-construction costs, based upon the most
restrictive earnings test contained in the First Mortgage, the Company
anticipates that it will be prohibited from issuing additional first
mortgage bonds for other than refunding purposes until mid 1994. The
Company's ability to issue additional first mortgage bonds for refunding
purposes is similarly limited, since the earnings test must also be met if
the bonds to be refunded are not within two years of maturity. The
Company does not have any first mortgage bonds maturing within two years.
However, the September 1993 write-off did not impact the Company's ability
to issue new mortgage bonds under the New Mortgage. The amount of available
unsecured borrowing capacity totaled $105 million at December 31, 1993.
Also, at December 31, 1993, the unused portion of the Company's total bank
lines of credit was $200 million. The Company is required to maintain
unused lines of credit with lending institutions under which the Company
shall be entitled to borrow sums of money in an aggregate amount equal at any
time to the total of (a) the aggregate principal amount of the commercial
paper of the Fuel Company then outstanding (b) plus the aggregate
principal amount of commercial paper of the Company then outstanding.
At December 31, 1993, such outstanding commercial paper of the Fuel
Company was $54.5 million.
Clinton Power Station
General
The Company owns 86.8% of Clinton and Soyland owns the remaining 13.2%.
The terms for sharing the construction, ownership and operation of Clinton
are set forth in several related agreements between the Company and Soyland.
Under these agreements, the Company has authority to act on behalf of Soyland
for purposes of various matters relating to the design, construction,
operation, maintenance and decommissioning of Clinton. See the sub-caption
"Decommissioning Costs" hereunder on page 15 for additional information on
the decommissioning of Clinton.
The Clinton nuclear power station was placed in service in 1987 and
represents approximately 19% of the Company's installed generation capacity.
In 1993, Clinton provided 28% of the Company's total electric generation
and had the lowest fuel cost per megawatt-hour generation compared to
all other Company-owned power stations. The investment Clinton and its
related deferred costs represented approximately 56% of the Company's total
assets at December 31, 1993. Clinton related costs represented 36% of
the Company's total 1993 other operating, maintenance and depreciation
expenses. Clinton's equivalent availability was 73%, 62% and 76% for 1993,
1992 and 1991, respectively. Clinton's equivalent availability was lower in
1993 and 1992 due in part to the timing of refueling and maintenance
outages.
Ownership of an operating nuclear generating unit exposes the
Company to significant risks including increased and changing regulatory,
safety and environmental requirements, and increases in the future cost
of closing and dismantling the unit. The Company expects to be allowed to
continue to operate Clinton; however, if any unforeseen or unexpected
developments would prevent the Company from doing so, the Company could
be materially adversely affected. For further discussion of insurance
limitations, refer to the caption Insurance of "Note 3 - Commitments and
Contingencies" on page 35 of the Illinois Power Company 1993 Annual Report
which is incorporated herein by reference.
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Rate and Regulatory Matters
1992 Rate Order
A September 1993 decision by the Illinois Appellate Court, Third
District (Appellate Court Decision), upheld key components of the August 1992
Rehearing Order (Rehearing Order) issued by the ICC. The Rehearing Order
denied the Company recovery of certain deferred Clinton post-
construction costs consisting of all deferred depreciation and real estate
taxes and 72.8% of the deferred common equity return.
The Company originally recorded these deferred Clinton post-construction
costs as a regulatory asset when such costs were believed probable of
recovery through future rates, based on prior ICC orders. The deferred
costs were recorded from the time Clinton began operations (April 1987) to
the time the ICC allowed the Company to begin recovering these deferred costs
in rates (March 1989), otherwise known as the regulatory lag period.
Based upon the Company's assessment of the Appellate Court Decision
and in accordance with Financial Accounting Standards No. 71, "Accounting
for the Effects of Certain Types of Regulation" (FAS 71) the Company
recorded a loss of $271 million ($200 million or $2.65 per share, net of
income taxes) in September. This write-off includes revenues and related
interest to be refunded for deferred costs included in electric rates between
April 1992 and August 1992 which were disallowed by the Rehearing Order.
In October 1993, the Company petitioned the Appellate Court to
reconsider the Appellate Court Decision. The ICC petitioned the Appellate
Court to reconsider its instructions in the Appellate Court Decision
regarding the application on remand of ratemaking adjustments in
determining the actual financial harm incurred by the Company. In
January 1994, the Appellate Court denied all petitions for rehearing. In
February 1994, the parties to the appeal, including the Company and the ICC,
presented a joint motion to the Appellate Court in which the parties
agreed to a form of order to be entered on remand by the ICC and the Company
agreed to waive its right to seek further judicial review of the Rehearing
Order. The Appellate Court granted the joint motion on March 2, 1994 and
remanded the matter to the ICC for further proceedings in accordance with the
parties' joint motion. On March 16, 1994, the ICC issued the order on
remand in the form agreed to by the parties.
The order on remand entered by the ICC does not alter the ICC's
determination in the Rehearing Order of the amount of post-construction costs
incurred in connection with the operation of Clinton that is recoverable in
rates by the Company, and does not result in any change in the Company's
retail electric tariffs. The order on remand provides for refunds,
calculated in accordance with the ICC's April 1992 order directing that
revenues be collected subject to refund pending the rehearing proceeding,
aggregating approximately $8.9 million, including interest. The refund
obligation was included in the September write-off. Refunds were reflected
on customer's bills beginning on March 25, 1994.
1987 Uniform Fuel Adjustment Clause Reconciliation
In April, the Illinois Appellate Court, Third District, issued its
decision reversing the ICC's February 1992 order pertaining to the Company's
annual Uniform Fuel Adjustment Clause reconciliation. The ICC's February
1992 order had stated that carrying costs of $29.3 million incurred by the
Company's nuclear fuel affiliate, Illinois Power Fuel Company, between
August 1985 and April 1987, and added to the balance of nuclear fuel
inventory during the same period in accordance with a previous ICC order,
were imprudent and that the balance of recoverable nuclear fuel costs should
be reduced by that amount. The Appellate Court held that the evidence did
- 14 -
not support the finding in the February 1992 order that the Company was
imprudent in nuclear fuel procurement and management, reversed the
disallowance and remanded for entry of an order consistent with its
determination.
In May, the ICC filed a petition for leave to appeal the Appellate Court
decision to the Illinois Supreme Court. In October, the Illinois Supreme
Court denied the ICC's petition for leave to appeal and issued its
mandate to remand the case to the ICC. In January 1994 the ICC issued its
order on remand consistent with the Appellate Court decision. As a result
of the Appellate Court decision, the Company expects to recover
approximately $14.3 million previously refunded to customers, which will
not have an impact on the Company's results of operations.
Accounting Matters
The Company currently prepares its financial statements in accordance
with FAS 71. Accordingly, the Company records various regulatory assets and
liabilities, such as deferred Clinton costs. Management believes that
the Company currently meets the criteria for continued application of FAS
71, but will continue to evaluate significant changes the regulatory and
competitive environment to assess the Company's overall compliance with the
criteria of FAS 71.
Decommissioning Costs
The Company is responsible for its ownership share of the costs of
decommissioning Clinton. The Company is collecting future decommissioning
costs through its rates based on an ICC approved formula that allows the
Company to adjust rates annually for changes in decommissioning cost
estimates.
Based on NRC regulations that establish a minimum funding level,
the Company's 86.8% share of Clinton decommissioning costs is estimated
to be approximately $344 million (1993 dollars) and reflects an increase in
1993 due to changes in the calculation of the NRC minimum. The NRC
minimum is based only on the cost of removing radioactive plant structures.
A site-specific study to estimate the costs of dismantling, removal and
disposal of Clinton has not been made; however, the Company plans to under-
take this study sometime in the near future. This study may result in
projected decommissioning costs higher than the NRC specified funding
level. At December 31, 1993 and 1992, the Company had recorded a liability
of $17.2 million and $12.3 million, respectively, for the future
decommissioning of Clinton.
External decommissioning trusts, as prescribed under Illinois law
and authorized by the ICC, have been established to accumulate funds,
based on the expected service life of the plant, for the future
decommissioning of Clinton. For years 1993, 1992 and 1991, the Company has
contributed $3.9 million, $3.7 million and $3.4 million, respectively, to
its external nuclear decommissioning trust funds. The balances in these
nuclear decommissioning funds at December 31, 1993 and 1992, were $17.2
million and $12.3 million, respectively. The Company recognizes earnings and
expenses from the trust funds as changes in its assets and liabilities
relating to these funds. The estimated fair value of the December 31,
1993, was $18.3 million.
In 1992, the ICC entered an order in which the ICC expressed
concern that the Company take all reasonable action to ensure that
Soyland contributes its ownership share of the current or any
revised estimate of decommissioning costs. The order also states that
if the Company becomes liable for decommissioning expenses
attributable to Soyland, the ICC will then decide whether that expense
should be the responsibility of the Company's stockholders or its customers.
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Dividends
The Company's Board of Directors has declared quarterly common and
preferred stock dividends payable through the second quarter of 1994.
The Board of Directors acted to resolve uncertainties about the Company's
ability to declare and pay common and preferred stock dividends in the event
that write-offs related to the August 1992 Rehearing Order produced an
accumulated deficit (negative retained earnings). Additionally, ICC
authorization is required to declare and pay dividends in the event of
negative retained earnings. In March 1993, the Company received such
authorization to pay dividends through the second quarter of 1994, contingent
on the Company meeting certain financial tests. The loss taken by the
Company in September 1993 will not affect the Company's ability to meet
these financial tests.
On February 1, 1994, the Company paid its previously declared dividends
for the first quarter of 1994. The Company expects that dividends
previously declared for the second quarter of 1994 will be paid on the
normal payment date in 1994. If payment is unlawful (i.e., if the Company
fails to meet the financial tests in the ICC order) on normal payment date,
the Company will be precluded from paying dividends. In this event, under
the terms of the Board's declaration, no common stock dividend payments will
be made and the payment of preferred stock dividends will be deferred until
such time as payment is lawful. Payment of current and cumulative preferred
stock dividends will be made to holders of preferred stock as of the record
date specified for the quarter in which payment of dividends first becomes
authorized and lawful.
Declaration and payment of dividends on preferred and common stock for
quarters subsequent to the second quarter of 1994 will require an extension
of the previously granted authorization from the ICC if the Company continues
to have negative retained earnings. On January 21, 1994, the Company filed
a supplemental petition seeking an extension of this authorization for the
third and, if necessary, fourth quarters of 1994. On March 23, 1994, the
ICC granted the Company's supplemental petition but included the additional
condition that the Company may not increase the current stock dividend above
the current quarterly rate of $.20 per share while its retained earnings
are negative. The Company will take such steps as may be required and are
appropriate to sustain its normal schedule for preferred and common stock
dividend payments.
Consistent with its efforts to insure the continuation of preferred and
common stock dividend payments during any period of negative retained earnings,
the Company appropriated $100 million of year-to-date 1993 earnings for the
declaration of dividends. This action was taken prior to recording the
September 1993 write-off, and in a manner consistent with the FERC Uniform
System of Accounts, in order to address issues raised by the Federal
Power Act relating to the declaration of dividends, and to mitigate
uncertainty associated with the declaration and payment of dividends
subsequent to the second quarter of 1994.
Gas Business
The Company supplies natural gas service at retail to an estimated
aggregate population of 920,000 in 257 incorporated municipalities, adjacent
suburban areas and numerous unincorporated communities. It does not sell gas
for resale.
During the twelve months ended December 31, 1993 the Company purchased
66,608,000 MMBtu of natural gas from Panhandle Eastern Pipe Line Company
(Panhandle), Natural Gas Pipeline Company of America (Natural), Mississippi
River Transmission Corporation (Mississippi), Trunkline Gas Company
- 16 -
(Trunkline), ANR Pipeline Company (ANR), and in the spot market at a cost of
approximately $188 million. The average cost of natural gas purchased by the
Company from all suppliers for the years 1993, 1992 and 1991 was $2.82, $2.62
and $2.49 per MMBtu, respectively.
The total cost of natural gas delivered increased 2% from 1992 due to
increased sales to customers and higher prices. Approximately 30% of total
gas purchased was from spot market sources. Gas therm sales, which exclude
therms transported, decreased 2.6% in 1993. When transported gas for
industrial and commercial customers is included, the total gas delivered
(therms sold plus therms transported) to the Company's customers increased
1.1% from 1992.
The Company's rate schedules contain provisions for passing through to
its gas customers increases or decreases in the cost of purchased gas. See
the information under the captions Revenue and Energy Cost of "Note 1 - Summary
of Significant Accounting Policies" on page 33 of the Illinois Power
Company 1993 Annual Report which is incorporated herein by reference.
The volume of customer-owned gas transported during 1993 increased 12.3%
from that of 1992 due to lower spot market prices. Approximately 150
industrial and large commercial customers purchase gas directly from gas
producers. These customers are charged for the transportation of gas through
the Company's system to their plant facilities.
The Company has eight underground gas storage fields having a total
capacity of approximately 15.2 million MMBtu and a total deliverability on
a peak day of about 347,000 MMBtu. In addition to the capacity of the eight
underground storage fields, the Company has contracts with Panhandle for one
million MMBtu of underground storage capacity and a total deliverability
on a peak day of approximately 20,000 MMBtu, with Natural for 1.2 million
MMBtu of storage capacity and a total deliverability on a peak day of 37,000
MMBtu and with ANR for 173,000 MMBtu of storage capacity and a total
deliverability on a peak day of 3,473 MMBtu. Operation of underground
storage permits the Company to increase deliverability to its customers during
peak load periods by taking gas into storage during the off-peak months.
The Company owns three active liquefied petroleum gas plants having an
aggregate peak-day deliverability of about 50,000 MMBtu for peak-shaving
purposes. Gas properties in clude approximately 7,600 miles of mains.
The Company experienced its 1993 peak-day send out of 592,197 MMBtu of
natural gas on February 17, 1993. The Company's highest peak-day send
out was 857,324 MMBtu of natural gas on January 10, 1982.
In December 1992 the Company filed a petition with the ICC to lower the
gas utility plant composite depreciation rate to 3.4%. The proposed
reduction was based on new estimates of remaining plant life as developed
in a gas depreciation study completed in 1992. In July 1993 the ICC issued
an order approving the new rate effective on the date of the order in the
Company's pending gas rate case, which is expected in April 1994.
The Company filed a gas retail rate increase request with the ICC
May 14, 1993, seeking to adjust its rates to reflect rising operating and
maintenance expenses, the effects of lower sales to ultimate customers
and capital costs associated with the Hillsboro storage field expansion and
pipeline project. For a discussion of the Hillsboro storage field and
expansion and pipeline project see the sub-caption "Gas Supply" hereunder.
The Company originally asked for a net annual rate increase of approxi-
mately $13.3 million, or slightly more than 4%. This rate increase
consisted of a base rate increase of approximately $30.7 million,
- 17 -
partially offset by projected annual savings of $17.4 million in the cost
of gas (as a result of increased storage capacity in the Hillsboro storage
field) that will automatically flow to customers through the Uniform Gas
Adjustment Clause. In January 1994, the Company revised its proposal to a
net annual rate increase of $12.3 million consisting of a base rate
increase of $27.6 million, partially offset by $15.3 million of projected
gas cost savings. The requested rate increase includes an authorized rate of
return of 9.84%, as compared to 11.99% which is currently authorized. The
decrease in the authorized rate of return is a result of a decline in the
cost of debt and preferred stock, combined with a lower rate of return on
equity as compared to the Company's last gas rate case. In February 1994,
the ICC issued its Hearing Examiner's Proposed Order (HEPO) recommending
the Company receive a $20.3 million base rate increase which includes
an authorized rate of return of 9.51%. A final order by the ICC, which
may be different than the HEPO, is expected in April 1994. The Company's
last gas rate increase was effective January 1983, followed by a gas rate
decrease in December 1984.
Gas Supply
Pursuant to Orders 636 and 636-A, issued in April and August 1992,
respectively, the FERC approved amendments to its rules that are intended
to increase competition among natural gas suppliers by "unbundling" the
interstate pipelines' merchant sales service into separate sales and
transportation services and by mandating that the pipelines' firm transpor-
tation service be comparable to the transportation service included
in their traditional bundled sales service. Under this rule, pipelines are
required to unbundle services that they provide today so that natural gas
purchasers can select services as needed to meet their energy requirements.
As of December 31, 1993, all of the Company's pipeline suppliers had
restructured their service offerings to conform with the requirements of
Orders 636 and 636-A. The Company believes these rules will increase the
complexity of providing firm gas service. This additional complexity results
from the greater number of options available to the Company, as
well as the added responsibility to arrange for the acquisition,
transportation and storage of natural gas, which was previously
bundled into the pipelines' sales service. As a result of Orders 636 and
636-A, the pipelines will charge their customers "transition" costs, which
arise from the unbundling of services. The Company has estimated that
approximately $10.5 million in transition costs will be incurred and
subsequently recovered through the Uniform Gas Adjustment Clause over the
next three to four years. In 1993, the Company began to pay transition
costs billed by gas pipelines and began to recover these payments through
the Uniform Gas Adjustment Clause. The ICC issued its order on March 9,
1994, which permits recovery of the transition costs through the Uniform
Gas Adjustment Clause.
Under Order 636, the Company has entered into firm transportation
agreements with the pipelines that feed its system. These contracts
replace the sales contracts previously held with the respective pipelines.
The amounts of firm transportation volumes under the contracts currently in
effect with each pipeline are listed below.
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Order 636
Source Implementation Date Firm Transportation Volume
Panhandle 5/01/93 75,900 MMBtu plus58,370 Leased Storage
Natural 12/01/93 89,454 MMBtu plus 37,675 Leased Storage
Mississippi 11/01/93 102,000 MMBtu including Storage
Trunkline 5/01/93 10,831 MMBtu
Trunkline SG-2 5/01/93 3,726 MMBtu
ANR 11/01/93 5,684 MMBtu
Historic gas purchases are shown in the following table. The
source labeled "Other" below represents purchases from small natural gas
fields in Illinois.
Contract Purchases
Expiration Years Ended December 31,
Source Date 1993 1992 1991
(Millions of MMBtu)
Panhandle 4/30/96 16.0 8.0 10.6
Natural 11/30/96 21.4 19.3 21.6
Mississippi 10/31/96 8.7 5.4 8.9
Trunkline 4/30/94 0.5 0.1 0.1
ANR 10/31/96 0.1 0.1 0.1
Spot Market - 19.8 37.1 24.0
Other - 0.1 0.1 0.1
Total 66.6 70.1 65.4
The Company's present estimated supplies of gas from pipelines and its
own storage are sufficient to serve all of its existing firm loads, and to
provide best efforts service to interruptible loads. Gas service to
interruptible customers was interrupted on six occasions for a total of
622 hours during the year 1993. On these occasions, storage service was
made available in lieu of curtailment. Gas service continues to be
available to all applicants on a current basis.
During 1993, the Company completed the Hillsboro Storage Field
expansion project at a cost of approximately $56 million. The project included
construction of a 62 mile pipeline from Hillsboro to the Decatur area, as
well as additional facilities in the Metro-East area. The expansion increased
total gas storage capacity by 42 percent and allows the Company to take
maximum advantage of lower summer spot market prices, to reduce pipeline
contract demand charges and to increase supplier price competition in the
St. Louis Metro-East area. Nine new injection-withdrawal wells and two
additional compressor units have been constructed to increase the
storage capacity of the Hillsboro Field. Injection rates were tripled
and delivery/withdrawal rates were increased 150 percent to better meet
winter peak demand.
Environmental Matters
The Company is subject to regulation by certain federal and Illinois
authorities with respect to environmental matters and may in the future become
subject to additional regulation by such authorities or by other federal,
state and local governmental bodies. Existing regulations affecting the
Company are principally related to air and water quality, hazardous
wastes and toxic substances.
- 19 -
Air Quality
Pursuant to the Federal Clean Air Act (Act), the United States
Environmental Protection Agency (USEPA) has established ambient air quality
standards for air pollutants which in its judgment have an adverse effect
on public health or welfare. The Act requires each state to adopt laws
and regulations, subject to USEPA approval, designed to achieve such standards.
Pursuant to the Illinois Environmental Protection Act, the Illinois
Pollution Control Board (Board) adopted and, along with the Illinois
Environmental Protection Agency (IEPA), is enforcing a comprehensive
set of air pollution control regulations which include emission limitations
and permitting, monitoring, and reporting requirements. These regulations
have, with some modifications, received USEPA approval and are enforceable
by both the Illinois and federal agencies.
The air pollution regulations of the Board impose limitations on
emissions of particulate, sulfur dioxide, nitrogen oxides, and various other
pollutants. Enforcement of emission limitations is accomplished in part
through the regulatory permitting process. To construct a facility
which will produce regulated emissions, a construction permit must be
obtained, usually on the basis of the design being sufficient to permit
operation within applicable emission limitations. Upon completion of
construction, an operating permit for the facility must be obtained.
Operating permits are granted for various periods, usually within a range
from two to five years. The initial granting or subsequent renewal of
operating permits is based upon a demonstration that the facility operates
within prescribed limitations on emissions. The Company's practice is to
obtain an operating permit for each source of regulated emissions.
Presently, it has a total of approximately 100 permits for emission sources
at its power stations and other facilities, expiring at various times.
In addition to having the requisite operating permits, each source of
regulated emissions must be operated within the regulatory limitations
on emissions. Verification of such compliance is usually accomplished by
reports to regulatory authorities and inspections by such authorities.
Jointly, the Company and IEPA petitioned the Board to adopt a regulatory
amendment providing for a site-specific sulfur dioxide limitation applicable
to the Baldwin power station. The Board granted that relief in 1979 and
amended it in 1983 to satisfy certain concerns raised by USEPA. In October
1983, the amendment, with supporting information, was submitted to USEPA
for approval as part of the State Implementation Plan (SIP). On March 5,
1990, USEPA approved the Baldwin SIP allowing the use of local coal up to
full capacity of the Baldwin power station.
In addition to the sulfur dioxide emission limitations for existing
facilities, both the USEPA and the State of Illinois adopted New Source
Performance Standards (NSPS) applicable to coal-fired generating units
limiting emissions to 1.2 pounds of sulfur dioxide per million Btu of heat
input. This standard is applicable to the Company's Unit 6 at the Havana
power station. The federal NSPS also limits nitrogen oxides, opacity and
particulate emissions and imposes certain monitoring requirements. In 1977
and 1990 the Act was amended and, as a result, USEPA has adopted more
stringent emission standards for new sources. These standards would
apply to any new plant constructed by the Company.
Clean Air Act
On November 15, 1990, the U. S. Congress passed the Clean Air Act
Amendments (Amendments). The Amendments create new programs to
control acid rain, protect stratospheric ozone and require permits
for most air pollution sources. The Amendments also modify the existing
hazardous air pollutant program and impose new air quality requirements on
sources in areas which do not meet the ambient air quality standards.
- 20 -
As the regulations implementing the Amendments are developed, the Company
will develop and implement plans to maintain compliance with any new air
pollutant restrictions.
In August 1992, the Company announced that it had suspended
construction of two scrubbers at the Baldwin power station, on which the
Company has expended approximately $34.6 million. After suspending scrubber
construction, the Company reconsidered its alternatives for complying with
Phase I of the 1990 Clean Air Act Amendments. In March, the Company
announced its compliance plan for Phase I (1995-1999) of the Clean Air Act.
To meet the Phase I sulfur dioxide requirements of the acid rain
provisions of the Clean Air Act, the Company will purchase sulfur dioxide
emission allowances while continuing the use of high-sulfur Illinois coal.
An emission allowance is the authorization by the USEPA to emit one ton of
sulfur dioxide. The Company has already contracted to purchase
approximately 430,000 of the approximately 550,000 emission allowances it
expects to need to acquire from outside sources for Phase I compliance
purposes. In 1993 the Illinois General Assembly passed and the governor
signed legislation authorizing the ICC to permit expenditures and revenues
from emission allowance purchases and sales to be reflected in rates
charged to customers through the fuel adjustment clause as a cost of fuel.
On February 18, 1994, the Company filed with the ICC revised fuel
adjustment clause tariffs providing for recovery of expenses and
revenues from emission allowances. On March 16, 1994, the ICC suspended
this filing for investigation pursuant to the provisions of the Illinois
Public Utilities Act. In addition, on March 9, 1994, the ICC initiated
a rule-making proceeding to consider changes to its Uniform Fuel
Adjustment Clause regulation to conform to the 1993 legislation.
The Company's compliance plan will defer, until at least 2000, any
need for scrubbers or other capital projects associated with sulfur
dioxide emission reductions. Additional actions will be required by
the Company to achieve compliance with the Phase II sulfur dioxide and
nitrogen-oxide emission requirements of the Clean Air Act.
To achieve compliance with the Phase I nitrogen-oxide emission
reduction requirements of the acid rain provision of the Clean Air Act, the
Company is installing low-nitrogen-oxide burners at two generating units.
The estimated capital cost for these burners is $13 million. Additional
capital expenditures are anticipated prior to 2000 to comply with the Phase II
nitrogen-oxide requirements, as well as potential requirements to further
reduce nitrogen-oxide emissions in the St. Louis metropolitan area. The
Company is also proceeding with installation of continuous emission
monitoring systems at its major generating stations, as required by the
acid rain provisions of the Clean Air Act. The estimated capital cost for
these monitoring systems is $17 million. The Company has expended
approximately $9 million through 1993 on continuous emission monitoring
systems.
In July 1993, the Alliance for Clean Coal (Alliance), a coalition of
Western coal producers and railroads, filed suit against the ICC in the U.S.
District Court in Chicago. The Alliance sought a declaration that the
Illinois statute regarding the filing with and approval by the ICC of utility
Clean Air Act compliance plans is unconstitutional. In September 1993,
the ICC issued an order pursuant to this statute approving the Company's
compliance plan for Phase I. In December 1993, the U.S. District Court issued
an opinion and an order in Alliance for Clean Coal vs. Ellen Craig, et al.
declaring the statute unconstitutional. The order prohibits the ICC
from enforcing the statute, and declares void compliance plans prepared and
approved in reliance on the statute. The Company is of the belief that
no regulatory approval is now required of its Clean Air Act compliance
plan, and has determined to go forward with the plan it has adopted for
Phase I. The ICC has appealed the District Court decision to the U.S. Court
of Appeals.
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Gas Manufacturing Sites
The Company, through its predecessor companies, is identified on a
State of Illinois list as the responsible party for potential environmental
impairment at 25 former manufactured-gas plant sites. The Company is
investigating each site to determine (1) the type and amount of residues
present; (2) whether the residues constitute environment or health risks and,
if present, the extent of those risks; and (3) whether the Company has any
responsibility for remedial action. Because of the unknown and unique
characteristics of each site (such as amount and type of residues
present, physical characteristics of the site and the environmental risk) and
uncertain regulatory requirements, the Company is not able to determine
its ultimate liability for the investigation and remediation of the 25 sites.
However, at December 31, 1993, the Company has estimated and recorded a
minimum liability of $35 million, which is an increase of $10 million
from 1992. This adjustment to the liability was made because the
Company can better define the extent of contamination due to ongoing
monitoring. In 1993, the Company spent approximately $1.5 million for investi-
gation and remediation activities. The Company is unable to determine at this
time what portion of these costs, if any, will be eligible for recovery from
insurance carriers or other potentially responsible parties. In addition,
the Company is unable to determine the time frame over which these costs may
be paid out. The Company has also recorded a regulatory asset in the
amount of $36 million, reflecting management's expectation that
investigation and remediation costs for the manufactured-gas plant sites will
be recovered from customers.
In September 1992, the ICC issued a generic order addressing the
recoverability of costs incurred by utilities in cleaning up coal-tar deposits
resulting from the operation and retirement of former manufactured-gas plant
sites. The ICC order concluded that utilities will be allowed to collect
from customers their prudently incurred costs paid to third parties over a
five-year period with no recovery from customers of carrying costs on the
unrecovered balance. Based on the ICC's ruling that carrying costs on
unrecovered cleanup costs will not be allowed, the Company and other utilities
appealed the ICC order to the Illinois Appellate Court, Third District.
Other parties also filed appeals of the ICC order, contesting the ICC's
ruling that cleanup costs may be recovered from customers and that those
costs may be recovered through a tariff rider. In December 1993, the
Appellate Court issued its opinion affirming the ICC's order in all respects.
In February 1993, an intervenor filed a petition for leave to appeal
the Appellate Court decision with the Illinois Supreme Court. In April 1993,
the ICC approved tariffs filed by the Company that provide for recovery of such
costs that fall within the guidelines of the ICC's September 1992 Order
and were incurred by the Company subsequent to January 1, 1993. The Company
is also pursuing recovery of cleanup costs from its insurance carriers.
Water Quality
The Federal Water Pollution Control Act Amendments of 1972 require that
National Pollutant Discharge Elimination System permits be obtained from
USEPA (or, when delegated, from individual state pollution control agencies)
for any discharge into navigable waters. Such discharges are required
to conform with the standards, including thermal, established by USEPA and
also with applicable state standards.
Enforcement of discharge limitations is accomplished in part through
the regulatory permitting process similar to that described previously under
"Air Quality". Presently, the Company has approximately two dozen
permits for discharges at its power stations and other facilities, which
must be periodically renewed.
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In addition to obtaining such permits, each source of regulated
discharges must be operated within the limitations prescribed by applicable
regulations. Verification of such compliance is usually accomplished by
monitoring results reported to regulatory authorities and inspections by
such authorities.
The Baldwin permit was reissued during the fourth quarter of 1993
and is due for renewal in the fourth quarter of 1997. The Hennepin NPDES
permit was reissued in 1992 and is due for renewal in the third quarter of
1997. The Clinton permit was reissued in 1990 and is due for renewal in
the second quarter of 1995. The Vermilion, Wood River and Havana permits
were reissued in 1991. These permits are due for renewal in the fourth quarter
of 1995.
Operations at the Vermilion Plant (Plant) may be affected by
allegations that continued discharge of certain levels of effluents from the
ash pond at the Plant into the Middle Fork of the Vermilion River violates
state water quality standards. Although both the Illinois Environmental
Protection Agency and the Illinois Department of Conservation have
supported the Company's position that current effluent discharge limitations,
applied to the Plant since these standards first were adopted, continue to
be appropriate, both the Illinois Pollution Control Board, in a 1993 decision
currently under appeal by the Company, and a citizens group have challenged
the Company's ability to continue to discharge these effluents at current
levels, and the citizens group has notified the Company that it may
bring suit against the Company and the United States and Illinois
Environmental Protection Agencies to prevent such discharges. The Company is
investigating compliance options to determine the least cost response
should the most restrictive limitations be imposed and believes that it can
avoid any material adverse impact on financial condition and operations.
Other Issues
Hazardous and nonhazardous wastes generated by the Company must be
managed in accordance with federal regulations under the Toxic Substances
Control Act, the Comprehensive Environmental Response, Compensation and
Liability Act, and the Resource Conservation and Recovery Act (RCRA) and
additional state regulations promulgated under both RCRA and state law.
Regulations promulgated in 1988 under RCRA govern the Company's use of
underground storage tanks. The use, storage, and disposal of certain toxic
substances, such as polychlorinated biphenyls (PCB's) in electrical equipment,
are regulated under the Toxic Substances Control Act. Hazardous substances
used by the Company are subject to reporting requirements under the
Community-Right-To-Know Act. The State of Illinois has been delegated
authority for enforcement of these regulations under the Illinois Environ-
mental Protection Act and state statutes. These requirements impose
certain monitoring, recordkeeping, reporting, and operational requirements
which the Company has implemented or is implementing to assure compliance.
The Company does not anticipate that compliance will have a material
adverse effect on its financial position or results of operations.
Between June 1983 and January 1985, the Company shipped various
materials containing PCB's to the Martha C. Rose Chemicals, Inc. (Rose)
facility in Holden, Missouri for proper treatment and disposal. Rose,
pursuant to permits issued by USEPA, had undertaken to dispose of PCB
materials for the Company and others, but failed in part to do so. As a
result of such failure, PCB materials were being stored at the facility.
In 1986, the Company joined with a number of other generators to efficiently
and economically cleanup the facility. The Steering Committee, consisting of
the Company and 15 other entities has received USEPA's approval to
implement the Remedial Design Work Plan (Plan). All work is scheduled for
completion by December, 1994. The Steering Committee is required to
monitor the site for a minimum of five years after completion of the Plan.
At the present time, the Company does not believe its ratable share of
potential liability related to the cost of future activities at the Rose site
will have a material adverse effect on its financial condition or results of
- 23 -
operations. The Company, along with fourteen other steering committee
members, reached a settlement with all but one of the non-
participating potentially liable entities to recover their ratable share of
these costs.
Electric and Magnetic Fields
The possibility that exposure to electric and magnetic fields emanating
from power lines, household appliances and other electric sources may result
in adverse health effects has been a subject of increased public,
governmental and media attention. Lawsuits have been filed against several
utilities seeking recovery for personal injury or loss of property values
allegedly resulting from EMF emanating from power lines or substations, or
to have such facilities relocated. A considerable amount of scientific
research has been conducted on this topic without definitive results. Research
is continuing to resolve scientific uncertainties. It is too soon to tell
what, if any, impact these actions may have on the Company's financial
position and results of operation.
Environmental Expenditures
Operating expenses for environmentally-related activities in
1993 were approximately $50 million (including the incremental costs of
alternative fuels to meet environmental requirements). The Company's
accumulated capital expenditures (including AFUDC) for environmental
protection programs since 1969 have reached approximately $780 million.
This accumulated amount of capital expenditures through 1993 has been
reduced to reflect a pro rata share of the disallowance of Clinton plant costs.
Research and Development
The Company's research and development expenditures during 1993,
1992 and 1991 were approximately $6.4 million, $3.7 million and $7.3 million,
respectively. The increased research and development costs in 1993 are
primarily due to increased dues to the Electric Power Research Institute and
increased alternate fuel testing at the Baldwin Power Station. The
higher 1991 amount was due to incremental coal transportation costs associated
with test burns of western low-sulfur coal at Baldwin, Hennepin and
Havana power stations.
Regulation
Under the Illinois Public Utilities Act, the ICC has broad powers of
supervision and regulation with respect to the rates and charges of the
Company, its services and facilities, extensions or abandonment of service,
classification of accounts, valuation and depreciation of property,
issuance of securities, and various other matters. The Illinois Public
Utilities Act was amended effective January 1, 1986 to include certain
provisions specifying criteria for the inclusion of utility plant investment
in rate base. These provisions state in substance that the ICC shall include
in a utility's rate base only the value of its investment which is both
prudently incurred and used and useful in providing service to
customers; that no new electric generating plant or significant addition to
existing facilities shall be included in rate base unless the ICC determines
that such plant or facility is reasonable in cost, prudent and used and useful
in providing utility service to customers; and that the ICC is empowered to
determine whether a utility's generating capacity is in excess of that
reasonably necessary to provide adequate and reliable service and to make
appropriate and equitable adjustments to rates upon a finding of excess
capacity, provided that any such determination and adjustment with respect
to generating capacity existing or under construction prior to
January 1, 1986 shall be limited to the determination and adjustment, if
any, appropriate under the law then in effect.
- 24 -
The Company is exempt from all the provisions of the Public Utility
Holding Company Act of 1935 except Section 9(a)(2) thereof. That section
requires approval of the Securities and Exchange Commission prior to certain
acquisitions by the Company of any securities of other public utility
companies or public utility holding companies.
The Company is subject to regulation under the Federal Power Act by the
FERC as to rates and charges in connection with the transmission of electric
energy in interstate commerce and the sale of such energy at wholesale
in interstate commerce, the issuance of debt securities maturing in
not more than 12 months, accounting and depreciation policies, and certain
other matters.
The FERC has declared the Company exempt from the Natural Gas Act
and the orders, rules, and regulations of the Commission thereunder.
The Company is subject to the jurisdiction of the NRC with respect to
Clinton. NRC regulations control the granting of permits and licenses
for the construction and operation of nuclear power stations and subject
such stations to continuing review and regulation. Additionally, the NRC
review and regulatory process covers decommissioning, radioactive waste,
environmental and radiological aspects of such stations. In general, the NRC
continues to propose new and revised rules relating to the operations and
maintenance aspects of nuclear facilities. It is unclear whether such
proposed rules will be adopted and what effect, if any, such adoption will
have on the Company.
The Company is subject to the jurisdiction of the Illinois Department
of Nuclear Safety (IDNS) with respect to Clinton. IDNS and the NRC entered
a memorandum of understanding which allows IDNS to review and regulate
nuclear safety matters at state nuclear facilities. The IDNS review and
regulatory process covers radiation safety, environmental safety, emergency
preparedness and emergency response. IDNS continues to propose new and
revised state administrative code through legislative approval. It is
unclear if such proposed rules will be adopted and what effect, if any,
such adoption will have on the Company. However, the NRC has the final
authority over such nuclear facilities.
Executive Officers of the Registrant
Name of Officer Age Position
Larry D. Haab 56 Chairman, President and Chief Executive Officer
Charles W. Wells 59 Executive Vice President
Larry F. Altenbaumer 46 Senior Vice President and Chief Financial
Officer
Paul L. Lang 53 Senior Vice President
J. Stephen Perry 55 Senior Vice President
Larry S. Brodsky 45 Vice President
Wilfred Connell 56 Vice President
John G. Cook 46 Vice President
Larry L. Idleman 55 Vice President
Rodney A. Smith 46 Vice President
Leah Manning Stetzner 45 Vice President, General Counsel and
Corporate Secretary
Alec G. Dreyer 36 Controller
Robert A. Schultz 53 Treasurer
- 25 -
The present term of office of each of the above executive officers
extends to the first meeting of the Company's Board of Directors after the
Annual Election of Directors. There are no family relationships among the
executive officers and directors of the Company.
Each of the above executive officers, except for Ms. Stetzner,
Dr. Dreyer and Mr. Schultz, has been employed by the Company for more than
five years in executive or management positions. Prior to election to the
positions shown above, the following executive officers held the following
positions since January 1, 1989.
Mr. Haab was elected Chairman in June 1991. Prior to being elected
Chief Executive Office in April 1991 and President in April 1989, he was
Executive Vice President and Senior Vice President.
Mr. Altenbaumer was elected Senior Vice President and Chief Financial
Officer in June 1992. Prior to being elected Vice President, Chief
Financial Officer and Controller in June 1990, he was Controller and
Treasurer.
Mr. Lang was elected Senior Vice President in June 1992. He joined the
Company as Vice President in July 1986.
Mr. Perry was elected Senior Vice President in June 1992. Prior to
being elected Vice President in December 1989, he was Assistant Vice
President and Manager of Nuclear Program Coordination at Clinton.
Mr. Cook was elected Vice President in June 1992. He previously held
the positions of Manager of Clinton Power Station and Manager of Nuclear
Planning and Support.
Mr. Smith's employment with the Company ended on December 31, 1993.
Ms. Stetzner was elected Vice President, General Counsel and Corporate
Secretary in February 1993. Prior to joining the Company as General Counsel
and Corporate Secretary in 1989, she was Associate General Counsel with
Burlington Northern Railroad Company.
Mr. Dreyer joined the Company as Controller in June 1992. He
previously was a Senior Audit Manager with Price Waterhouse.
Mr. Schultz was elected Treasurer in July 1989. He previously was
Director of Planning and Programming at Clinton.
Operating Statistics
The information under the captions "Selected Statistics" on
page 48 of the Illinois Power Company 1993 Annual Report is incorporated
herein by reference.
Item 2. Properties
The Company owns and operates electric generating stations at Havana,
Wood River, Hennepin, Baldwin, and near Danville, Illinois (designated as
the Vermilion station), totaling 3,460,000 kilowatts of net summer capability.
The Company has an ownership in the Clinton power station (Clinton) of
86.8% and Soyland Power Cooperative, Inc. owns the remaining 13.2%. The
- 26 -
Company's portion of net summer output capability of Clinton is 810,000
kilowatts. The Company also owns other gas turbine generating facilities,
at three locations, with an aggregate capability of 146,000 kilowatts.
The Company owns an interconnected electric transmission system of
approximately 2,800 circuit miles, operating from 69,000 to 345,000 volts
and a distribution system which includes about 36,900 circuit miles of
overhead and underground lines.
All outstanding first mortgage bonds issued under the Mortgage and
Deed of Trust dated November 1, 1943 are secured by a first mortgage
lien on substantially all of the fixed property, franchises and rights of the
Company with certain exceptions expressly provided in the mortgage
securing the bonds. All outstanding New Mortgage Bonds issued under the
General Mortgage and Deed of Trust dated November 1, 1992, are secured by
a lien on the Company's properties used in the generation, purchase,
transmission, distribution and sale of electricity and gas, which lien is
junior to the lien of the Mortgage and Deed of Trust dated November 1, 1943.
Item 3. Legal Proceedings
Fuel and Purchased Gas Adjustment Clauses
The ICC holds annual public hearings to determine whether each
utility's fuel adjustment clause and purchased gas adjustment clause reflect
actual costs of fuel and gas prudently purchased and to reconcile amounts
collected with actual costs, with the possibility of surcharges or refunds
to reflect amounts under-collected or over-collected. See "1987 Uniform
Fuel Adjustment Clause Reconciliation" reported under "Clinton Power
Station" in Item 1 for information regarding a February 1992 order from
the ICC.
Environmental
See "Environmental Matters" reported under Item 1 for information
regarding legal proceedings concerning environmental matters.
Peabody Coal Company and Arch Coal Sales Company, Inc.
See "Coal" reported under "Fuel Supply" in Item 1 for information
regarding certain legal proceedings relating to the Clean Air Act.
Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of security holders
during the fourth quarter of the fiscal year ended December 31, 1993.
At a special meeting of shareholders held on February 9, 1994, the
Company's shareholders approved an agreement and plan of merger
providing for the creation of a new holding company. See "Business" under
Item 1 for a description of the holding company formation.
- 27 -
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information under the caption "Quarterly Financial Information and
Common Stock Data (Unaudited)" on page 46 of the Illinois Power Company 1993
Annual Report is incorporated herein by reference.
Item 6. Selected Financial Data
The information under the caption "Selected Financial Data" on page 47
of the Illinois Power Company 1993 Annual Report is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information under the caption "Management's Discussion and Analysis"
on pages 18 through 25 of the Illinois Power Company 1993 Annual Report is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements on pages 27 through 46 and Report of
Independent Accountants on page 26 of the Illinois Power Company 1993 Annual
Report are incorporated herein by reference. With the exception of the
aformentioned information and the information incorporated in Items 5, 6,
7, and 8, the Illinois Power Company 1993 Annual Report is not to be
deemed filed as part of this Form 10-K Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information relating to directors is set forth in Part III of
this Annual Report on Form 10-K. The information relating to executive
officers is set forth in Part I of this Annual Report on Form 10-K.
- 28 -
Item 11. Executive Compensation
The following table sets forth a summary of the compensation of the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the years indicated.
Summary Compensation Table
Long Term
Annual Compensation Compensation
Awards
Other Restricted Shares All Other
Name and Bonus Annual Stock Awards Underlying Compensation
Principal Position Year Salary (A) Compensation (B) Options (C)
Larry D. Haab 1993 $437,500 $22,531 $13,199 $22,531 20,000 shs. $3,555
Chairman, President 1992 403,958 28,883 7,099 16,000 shs. 3,373
and Chief Executive Officer 1991 364,375 22,044 N/A
Charles W. Wells 1993 $265,875 $12,629 $ 9,697 $12,629 6,500 shs. $5,341
Executive Vice 1992 252,500 16,160 7,034 6,000 shs. 5,129
President 1991 240,958 14,605 N/A
Paul L. Lang 1993 $205,625 $ 9,767 $ 7,508 $ 9,767 6,000 shs. $ 527
Senior Vice President 1992 188,667 13,490 4,472 5,000 shs. 536
1991 175,417 10,638 N/A
J. Stephen Perry 1993 $205,625 $10,590 $ 6,421 $10,590 6,000 shs. $ 316
Senior Vice President 1992 188,667 12,075 4,672 5,000 shs. 384
1991 175,417 10,638 N/A
Larry F. Altenbaumer 1993 $187,750 $ 8,918 $ 7,093 $ 8,918 6,000 shs. $2,009
Senior Vice President 1992 166,500 10,656 3,588 5,000 shs. 1,867
and Chief Financial 1991 150,33 9,176 N/A
Officer
- 29 -
A)The amounts shown in this column are the cash award portion of grants made
to these individuals under the Executive Incentive Compensation Plan,
including amounts deferred under the Executive Deferred Compensation Plan.
See Plan description in footnote (B) below.
B)This table sets forth stock unit awards for 1993 under the Company's
Executive Incentive Compensation Plan. One-half of each year's award under
this plan is converted into stock units representing shares of the Company's
Common Stock based on the closing price of the Common Stock on the last
trading day of the award year. The other one-half of the award is paid to
the recipient in cash in the following year and is included in the Summary
Compensation Table as Bonus paid in the award year. Stock units awarded in
a given year, together with cash representing the accumulated dividend
equivalents on those stock units, become fully vested after a three-year
holding period. Stock units are converted into cash and paid based on the
closing price of the Common Stock on the first trading day of the distribution
year. Participants (or beneficiaries of deceased participants) whose
employment is terminated by retirement on or after age 55, disability or
death receive the present value of all unpaid awards on of such termination.
Participants whose employment is terminated for reasons other than
retirement, disability or death forfeit all unvested awards. In the
event of a termination of employment within two years after a change in
control of the Company (as defined in the Employee Retention Agreement
described below), without good cause or by any participant with good reason,
all awards of the participant become fully vested and payable. As of
December 31, 1993, named executive officers were credited with the
following total aggregate number of unvested stock units under the Executive
Incentive Compensation Plan since its inception, valued on the basis of the
closing price of the Company's Common Stock on December 31, 1993: Mr. Haab,
3,374 units valued at $74,650; Mr. Wells, 1,992 units valued at $44,083;
Mr. Lang, 1,557 units valued at $34,454. Mr. Perry, 1,528 units valued at
$33,813; Mr. Altenbaumer, 1,319 units valued at $29,200. Although stock
units have been rounded, valuation is based on total stock units, including
partial shares.
C)The amounts shown in this column are Company contributions under the Incentive
Savings Plan (including the market value of shares and sale of electricity
and gas, which lien is junior to the lien of the Mortgage and Deed of Trust
dated November 1, 1943).
- 31 -
The following tables summarize grants during 1993 of stock options under the
Company's 1992 Long Term Inc. Compensation Plan and awards outstanding at year
end for the individuals named in the Summary Compensation Table. No options
were exercisable or exercised during 1993.
Option Grants in 1993
Individual Grants
% of Total Exercise Grant
Options Granted or Base Date
Options to Employees Price Per Expiration Present
Name Granted(a) in 1993 share Date Value(b)
Larry D. Haab 20,000 shs. 27 % $24.25 6/9/2003 $135,200
Charles W. Wells 6,500 shs. 9 % 24.25 6/9/2003 43,940
Paul L. Lang 6,000 shs. 8 % 24.25 6/9/2003 40,560
J. Stephen Perry 6,000 shs. 8 % 24.25 6/9/2003 40,560
Larry F. Altenbaumer 6,000 shs. 8 % 24.25 6/9/2003 40,560
a)Each option becomes exercisable on March 31, 1997. In addition to the
specified expiration date, the grant expires on the first anniversary of the
recipient's death and/or the 90th day following retirement, and is not
exercisable in the event recipient's employment terminates. In the event
of a public tender for all or a portion of the stock, or if a proposal to
merge or consolidate the Company with another company is submitted to the
shareholders for a vote, the Compensation and Nominating Committee may
declare the option immediately exercisable.
b)These options have been valued using the Black-Scholes option pricing model.
Disclosure of the grant date present value, using the Black-Scholes model or
potential realizable value assuming 5% and 10% annualized growth rates, is
mandated; however, the Company does not necessarily view the Black-Scholes
pricing methodology, or any other methodology, as a valid or accurate means
of valuing stock option grants. The Company elected to use the standard
Black-Scholes model, which uses the following factors: fair market value
of share at grant; option exercise price; term of the option; current yield
of the stock; risk-free interest rate; volatility of the stock. The fair
market value of the stock on June 9, 1993 was $24.25; the exercise price
of the options is $24.25; and the term option is ten years. The annual
dividend rate on the Company's Common Stock on June 9, 1993 was $0.80 for
a yield of 3.3 percent. The risk-free interest rate used was 5.96 percent,
based on the ten-year U.S. Treasury bond yield on May 14, 1993. The
volatility of the stock used was .245. This figure is based on the absolute
volatility (annualized standard deviation of the logarithms of the prior stock
performance) for the 36-month period ending March, 1993. This is a relatively
high volatility for an electric utility due, in part, to the Company's nuclear
plant construction cost recovery disallowances, related write-offs, and
temporary suspension of common stock dividend payments during this period.
The value thus determined, $6.76 share, was not discounted.
- 31 -
Aggregated Option and Fiscal Year-End Option Value Table
Value of
Unexercised
Number of In-the-Money
Unexercised Options at
Options at 1993 Year-End
1993 Year-End
Exercisable/
Exercisable/ Unexercisable
Name Unexercisable (None in-the-money)
Larry D. Haab 0 shs./36,000 shs. 0/0
Charles W. Wells 0 shs./12,500 shs. 0/0
Paul L. Lang 0 shs./11,000 shs. 0/0
J. Stephen Perry 0 shs./11,000 shs. 0/0
Larry F. Altenbaumer 0 shs./11,000 shs. 0/0
Pension Benefits
The Company maintains a Retirement Income Plan for Salaried Employees
(the "Plan") providing pension for all eligible salaried employees of the
Company. In addition to the Plan, the Company also maintains a nonqualified
Supplemental Retirement Income Plan for Salaried Employees of Illinois Power
Company (the "Supplemental Plan") that covers all elected officers eligible to
participate in the Plan and provides for payments from general funds of the
Company of any monthly retirement income not payable under the Plan because of
benefit limits imposed by law or because of certain Plan rules limiting the
amount of credited service accrued by a participant.
The following table shows the estimated annual pension benefits on a
straight life annuity basis payable upon retirement based on specified annual
average earnings and years of credited service classifications, assuming
continuation of the Plan and Supplemental Plan and employment until age 65.
This table does not show, but any actual pension benefit payments would
be subject to, the Social Security offset.
- 32 -
Estimated Annual Benefits (rounded)
Annual
Average 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs.
Earnings Service Service Service Service Service
$125,000....... $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500
150,000....... 45,000 60,000 75,000 90,000 105,000
175,000....... 52,500 70,000 87,500 105,000 122,500
200,000....... 60,000 80,000 100,000 120,000 140,000
250,000....... 75,000 100,000 125,000 150,000 175,000
300,000....... 90,000 120,000 150,000 180,000 210,000
350,000....... 105,000 140,000 175,000 210,000 245,000
400,000....... 120,000 160,000 200,000 240,000 280,000
450,000....... 135,000 180,000 225,000 270,000 315,000
500,000....... 150,000 200,000 250,000 300,000 350,000
550,000....... 165,000 220,000 275,000 330,000 385,000
600,000.......... 180,000 240,000 300,000 360,000 420,000
The earnings used in determining pension benefits under the Plan are the
participants' regular base compensation, as set forth under salaries in
the compensation table.
At December 31, 1993, for purposes of both the Plan and the Supplemental
Plan, Messrs. Haab, Wells, Altenbaumer, Lang and Perry had completed 28, 30, 21,
7 and 9 years of credited service, respectively.
Employee Retention Agreements
The Company has entered into Employee Retention Agreements with
each of its executive officers. Under each of these agreements, the
officer would be entitled to receive a lump sum cash payment if his or
her employment were terminated by the Company without good cause or
voluntarily by the officer for good reason within two years following a
change in control of the Company (as defined in the Agreement). The amount of
the lump sum payment would be equal to (1) 36 months' salary at the
greater of the officer's salary rate in effect on the date the change in
control occurred or the salary rate in effect on the date the change in the
officer's employment with the Company terminated; plus (2) three times the
largest bonus earned by the officer during the three calendar years
preceding termination of employment. Under the agreement, the officer would
continue, after any such termination of employment, to participate in and
receive benefits under other benefit plans of the Company. Such
coverage would continue for 36 months following termination of
employment, or, if earlier, until the officer reached age 65 or was
employed by another employer; provided that, if the officer was 50 years of
age or older at the time of such termination, then coverage under health,
life insurance and similar welfare plans would continue until the officer
became 55 years of age, at which time he or she would be eligible to
receive the type of coverage extended to employees of the Company who
elect early retirement.
- 33 -
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following are the only holders known by the Company to be the
beneficial owners of more than five percent of any class of the Company's
outstanding stock.
Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
Serial Preferred American Express Company 303,245 shares(1) 9.7%
Stock, Without American Express Tower
par value World Financial Center
New York, NY 10285
Serial Preferred American General 242,000 shares(2) 7.4%
Stock, $50 par Corporation and
value Subsidiaries
2929 Allen Parkway
Houston, TX 77019
Common Stock FMR Corp. 7,026,460 shares(3) 9.3%
82 Devonshire St.
Boston, MA 02109
Common Stock Mellon Bank Corporation 5,363,000 shares(4) 7.1%
One Mellon Bank Center
Pittsburgh, PA 15258
1) According to its Form 4 filing, American Express Company and its
Subsidiaries beneficially own 303,245 shares of Serial Preferred Stock,
without par value, as of February 18, 1994, as to which beneficial ownership
is disclaimed, with sole power to vote and dispose of all shares. American
Express Company was late in filing a Statement of Changes in Beneficial
Ownership relating to a redemption by the Company of certain shares of
serial preferred stock without par value.
2) According to its Schedule 13G filing dated February 11, 1994, American
General Corporation and Subsidiaries beneficially own 242,000 shares of
Serial Preferred Stock, $50 par value (consisting of 211,100 shares of 8.00%
Cumulative Preferred Stock, and 30,900 shares of 8.24% Cumulative Preferred
Stock), and have shared power to vote or direct voting and shared power to
dispose or direct disposition of all of such shares.
3) According to its Schedule 13G filing dated February 11, 1994, FMR Corp. owns
7,026,460 shares of Common Stock, with sole power to vote or direct the vote
of 1,022,800 shares and sole power to dispose or direct the disposition of
all shares.
4) According to its Schedule 13G filing dated February 10, 1994, Mellon Bank
Corporation and Subsidiaries beneficially own 5,363,000 shares of Common
Stock, with sole power to vote 3,786,000 shares, shared power to vote
202,000 shares, sole power to dispose of 4,355,000 shares and shared power
to dispose of 1,008,000 shares.
- 34 -
The names of the Board of Directors and certain information, including
their principal occupation during the last five years and ownership of
securities of the Company, with respect to each are shown below:
Year in Shares of
Which Common Stock
Name of Director, Age, Business First of the
Experience and Other Information Elected Company
a Beneficially
Director Owned as of
January 31, 1994
RICHARD R. BERRY, 62 1988 2,108
Prior to retirement in February, 1990,
Mr. Berry was Executive Vice President and
Director of Olin Corporation, Stamford,
Connecticut, a diversified manufacturer
concentrated in chemicals, metals and
aerospace/defense products, since June,
1983. (1)(2)(5)
LARRY D. HAAB, 56 1986 9,264(6)
Chairman, President and Chief Executive
Officer of the Company since June, 1991,
Mr. Haab has been an employee of the
Company since 1965. He is a director of
First Decatur Bancshares, Inc., The First
National Bank of Decatur and Firstech,
Incorporated. (1)(4)(5)
GROVER J. HANSEN, 70 1981 8,063(7)
Prior to retirement in January, 1984, Mr.
Hansen was President and Chief Operating
Officer of the First Federal Savings and
Loan Association of Chicago, Chicago,
Illinois, since 1971. He was a director
of Peoples Energy Corporation until
retirement from that position in February,
1994. (1)(2)(3)
DONALD E. LASATER, 68 1981 2,713
Prior to retirement in April, 1989, Mr.
Lasater was Chairman of the Board and
Chief Executive Officer of Mercantile
Bancorporation, Inc., St. Louis, Missouri,
a bank holding company, since 1970. He is
a director of Interco Incorporated,
General American Life Insurance Company
and A.P. Green Industries, Inc. (1)(2)(5)
- 35 -
DONALD S. PERKINS, 66 1988 6,676(8)
Prior to retirement in June, 1983, as
Chairman of the Executive Committee, Mr.
Perkins was Chairman of the Board and
Chief Executive Officer of Jewel
Companies, Inc., Chicago, Illinois, a
diversified retailer, from 1970 to 1980.
He is a director of American Telephone &
Telegraph Company, Aon Corporation,
Cummins Engine Company, Inc., Inland Steel
Industries, Inc., KMart Corporation,
LaSalle Street Fund, Inc., The Putnam
Funds, Springs Industries, Inc., and Time
Warner, Inc. (3)(4)
ROBERT M. POWERS, 62 1984 6,000(9)
Prior to retirement in December, 1988, Mr.
Powers was President and Chief Executive
Officer of A. E. Staley Manufacturing
Company, Decatur, Illinois, a processor of
grain and oil seeds, since 1980. He is
Chairman of the Board of A. E. Staley
Manufacturing Company, and a director of
Tate & Lyle, PLC. (3)(4)
WALTER D. SCOTT, 62 1990 2,600
Professor of Management and Senior Austin
Fellow, J.L. Kellogg Graduate School of
Management, Northwestern University,
Evanston, Illinois, since 1988. Mr. Scott
is a director of Chicago Title and Trust
Company, Chicago Title Insurance Company
and Intermatic Incorporated. (1)(4)
RONALD L. THOMPSON, 44 1991 1,735
Chairman and Chief Executive Officer of
Midwest Stamping and Manufacturing Co.,
Bowling Green, Ohio, a manufacturer of
automotive parts, since 1993. He was
President and Chief Executive Officer and
a director of The GR Group, Inc., St.
Louis, Missouri (a diversified holding
company with interests in manufacturing
and service activities), from 1980 to
1993. (3)(4)
WALTER M. VANNOY, 66 1990 2,100
Vice Chairman, Figgie International, Inc.
(a diversified operating company serving
consumer, industrial, technical, and
service markets worldwide), since 1994,
and President of Vannoy Associates,
Lynchburg, Virginia, a consulting company,
1989-1994. He is a director of Figgie
International, Inc., and Chempower, Inc.
(2)(5)
- 36 -
MARILOU von FERSTEL, 56 1990 2,676
Executive Vice President and General
Manager of Ogilvy Adams & Rinehart, Inc.,
a public relations firm in Chicago, since
June, 1990. She had previously been
Managing Director and Senior Vice
President of Hill and Knowlton, Chicago,
Illinois, a public relations consulting
firm, from May, 1981 to June, 1990. Ms.
von Ferstel is a director of Walgreen
Company. (2)(3)(4)
CHARLES W. WELLS, 59 1976 7,885(6)(10)
Executive Vice President of Illinois Power
Company since 1976. Mr. Wells has been an
employee of the Company since 1956. He
was elected a Vice President in 1972. He
is a director of First of America -
Decatur N.A. (1)(5)
JOHN D. ZEGLIS, 46 1993 1,008
Senior Vice President-General Counsel and
Government Affairs of American Telephone
and Telegraph Company, Basking Ridge, New
Jersey, a diversified communications
company, since 1989. He had been Senior
Vice President-General Counsel from 1986
to 1989. He is a director of the
Helmerich & Payne Corporation in Tulsa,
Oklahoma. (2)(4)
VERNON K. ZIMMERMAN, 65 1973 6,564(10)
Director of the Center for International
Education Research and Accounting, and
Distinguished Service Professor of
Accountancy, University of Illinois,
Urbana, Illinois, since August, 1985. He
is a director of First Busey Corporation,
Busey Corporation, and ICH Corporation.
(1)(2)(5)
(1) Member of the Finance Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation and Nominating Committee.
(4) Member of the Corporate Strategy Committee.
(5) Member of the Nuclear Operations Committee.
(6) Includes 3,929 and 6,354 shares held in the accounts of Messrs. Haab and
Wells, respectively, under the Company's Incentive Savings Plan.
- 37 -
(7) Includes 5,540 shares to which Mr. Hansen is entitled through the
Company's Deferred Compensation Plan for Certain Directors.
(8) In addition to the shares shown, Mr. Perkins, as trustee of The Putnam
Funds, has shared voting and investment power over 443,000 shares of
Common Stock, as to which he disclaims beneficial ownership.
(9) Mr. Powers'wife owns 1,200 shares of Preferred Stock, as to which he
does not disclaim beneficial ownership.
(10) Includes 1,000 and 1,932 shares held by wives of Messrs. Wells and
Zimmerman, respectively.
The Chief Executive Officer and four other most highly paid executive
officers beneficially own the following shares of equity securities of the
Company:
Shares of Common Stock
Beneficially Owned
Executive Officer as of January 31, 1994
Larry D. Haab 9,264
Charles W. Wells 7,885
Paul L. Lang, Senior Vice President 2,236
J. Stephen Perry, Senior Vice President 1,151
Larry F. Altenbaumer, Senior Vice President
and Chief Financial Officer 3,241
Except as indicated above, no director or any executive officer owns any
other equity securities of the Company. No director or executive officer owns
as much as one percent of the Common Stock. All executive officers and directors
as a group own 78,751 shares of the Common Stock (less than one percent).
The nature of beneficial ownership for shares shown, unless otherwise
indicated, is sole voting and investment power.
Directors of the Company who are not salaried officers ("Outside
Directors") receive a retainer fee of $18,000 per year. Outside Directors
who also chair Board committees receive an additional $2,000 per year
retainer. Outside Directors receive a grant of 600 shares of the Company's
Common Stock on the date of each Annual Shareholders Meeting,
representing payment in lieu of attendance-based fees for all Board and
Committee meetings to be held during the subsequent one-year period. Outside
Directors elected to the Board between Annual Shareholders Meetings are paid
$850 for each Board and Committee meeting attended prior to the first Annual
Shareholders Meeting after their election to the Board. The Company has a
Retirement Plan for Outside Directors. Under this plan, each Outside Director
who has attained age 65 and has served on the Board for a period of 60 or
more consecutive months is eligible for annual retirement benefits at
the rate of the annual retainer fee in effect when the director retires.
These benefits, at the discretion of the Board, may be extended to
Outside Directors who have attained the age of 65 but not served on the Board
for the specified period. The benefits are payable for a number of months
equal to the number of months of Board service, subject to a maximum of 120
months, and cease upon the death of the retired Outside Director.
Pursuant to the Company's Deferred Compensation Plan for Certain Directors,
any director who is not a salaried officer or employee of the Company may
elect to defer all or any portion of his or her fees until termination of
- 38 -
his or her services as a director. Such deferred dollar amounts are converted
into stock units representing shares of the Company's Common Stock with
the value of each stock unit based upon the last reported sales price of
such stock at the end of each calendar quarter. Additional credits are
made to the participating director's account in dollar amounts equal to
the dividends paid on the Common Stock which the director would have
received if the director had been the record owner of the shares
represented by stock units, and are converted into additional stock units.
Upon termination of a participating director's services as a director,
payment of his or her deferred fees is made in shares of Common Stock in
an amount equal to the aggregate number of stock units credited to his or her
account. Such payment is made in such number of annual installments as the
Company may determine beginning in the year following the year of
termination.
Item 13. Certain Relationships and Related Transactions
None.
- 39 -
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this report.
(1) Financial Statements:
Page in
Annual Report
to Stockholders*
Report of Independent Accountants 26
Statements of Income for the three
years ended December 31, 1993 27
Balance Sheets at December 31, 1993 and 1992 28
Statements of Cash Flows for the three years
ended December 31, 1993 29
Statements of Retained Earnings (Deficit) for
the three years ended December 31, 1993 29
Statements of Preferred and Preference Stock at
December 31, 1993 and 1992 30
Statements of Long-Term Debt at December 31,
1993 and 1992 31
Notes to Financial Statements 32 - 46
Page in Form 10-K
(2) Financial Statement Schedules:
Report of Independent Accountants
on Financial Statement Schedules 43
V Utility 44 - 46
VI Accumulated Depreciation 47 - 49
VIII Valuation and Qualifying Accounts 50 - 52
X Supplementary Income Statement Information 53
* Incorporated by reference from the indicated pages of the 1993 Annual Report.
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
- 40 -
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued)
(3) Exhibits
The exhibits filed with the Form 10-K are listed in the Exhibit Index
located elsewhere herein. All management contracts and compen-
satory plans or arrangements set forth in such list are marked with
a ~.
(b) Reports on Form 8-K since September 30, 1993:
A Current Report on Form 8-K, dated October 15, 1993, was filed
reporting under Item 5, Other Events.
A Current Report on Form 8-K, dated February 9, 1994, was filed
reporting under Item 5, Other Events.
- 41 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 Larry D. Haab
Larry D. Haab, Chairman, President
and Chief Executive Officer
Date: March 30, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
Signature Title Date
Larry D. Haab Chairman,President, Chief
Larry D. Haab Executive Officer and Director
(Principal Executive Officer)
Larry F. Altenbaumer Senior Vice President
Larry F. Altenbaumer and Chief Financial Officer
Principal Financial Officer)
Alec G. Dreyer Controller
Alec G. Dreyer
(Principal Accounting Officer)
Richard R. Berry
Richard R. Berry
Grover J. Hansen
Donald E. Lasater
Donald E. Lasater
Donald S. Perkins March 30, 1994
Donald S. Perkins
Robert M. Powers
Robert M. Powers
Walter D. Scott
Walter D. Scott Director
Ronald L. Thompson
Ronald L. Thompson
Walter M. Vannoy
Walter M. Vannoy
Marilou von Ferstel
Marilou von Ferstel
Charles W. Wells
Charles W. Wells
John D. Zeglis
John D. Zeglis
Vernon K. Zimmerman
Vernon K. Zimmerman
- 42 -
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors of
Illinois Power Company
Our audits of the financial statements referred to in our report dated February
9, 1994, appearing on page 26 of the 1993 Annual Report to Stockholders of
Illinois Power Company (which report and financial statements are incorporated
by reference in this Annual Report on Form 10-K), also included an audit of
the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In
our opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related financial statements.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for income taxes.
\S\ Price Waterhouse
PRICE WATERHOUSE
One Boatmen's Plaza
St. Louis, Missouri
February 9, 1994
- 43 -
ILLINOIS POWER COMPANY
SCHEDULE V - UTILITY PLANT
Balance at Balance at
beginning of Other changes- end of
period Additions add (deduct)- Period
Classification January 1, 1993 at cost Retirements describe December 31, 1993
(Millions of Dollars)
Electric -
Intangible $ 16.1 $ 7.2 $ - $ - $ 23.3
Steam production 833.6 43.2 3.8 12.8 (1) 885.8
Nuclear 3,169.7 22.0 - 122.2 (1,4,&5) 3,313.9
Hydraulic production - - - - -
Internal combustion engine 19.5 - - - 19.5
Transmission 287.5 8.1 2.9 11.5 (1 & 4) 304.2
Distribution 842.1 54.2 11.8 5.5 (1) 890.0
General 173.2 41.2 6.5 (2.6)(1,4,&6) 205.3
Plant held for future use 30.3 (1.5) 0.1 - 28.7
Construction work in progress 176.9 41.8 - - 218.7
Total electric plant 5,548.9 216.2 25.1 149.4 5,889.4
Gas -
Intangible - - - - -
Production 4.3 - - - 4.3
Underground storage 31.4 26.7 0.2 0.1(1) 58.0
Local storage - - - - -
Transmission 54.0 22.0 0.1 0.1(1) 76.0
Distribution 380.9 17.0 3.1 0.7(1) 395.5
General 18.0 2.0 0.9 - 19.1
Plant held for future use 2.3 - 0.9 - 1.4
Construction work in progress 31.7 (12.9) - - 18.8
Gas stored underground (non-
current) 15.8 - - 1.0(2 & 3) 16.8
Total gas plant 538.4 54.8 5.2 1.9 589.9
TOTAL $6,087.3 $ 271.0 $ 30.3 $ 151.3 $6,479.3
( ) Credit
(1) Gross-up to Plant ($162 million - Electric and $.9 million - Gas) for
Net-of-Tax AFUDC in accordance with FAS 109.
(2) Transfer of ($2.7 million) from Gas Stored Underground (Noncurrent) to
Underground Storage at the Hillsboro Storage Field.
(3) Transfer of $3.7 million from Inventory to Gas Stored Underground
(Noncurrent) at the Hillsboro Storage Field.
(4) Transfer between accounts - Clinton Unitization [Nuclear - ($7.8 million),
Transmission - $9.7 million, General Plant - ($1.9 million)]
(5) Includes ($11.6 million) deferred Clinton costs.
(6) Includes ($1 million) capital lease property.
- 44 -
ILLINOIS POWER COMPANY
SCHEDULE V - UTILITY PLANT
Balance at Balance at
beginning of Other changes - end of
period Additions add (deduct) - period
Classification January 1, 1992 at cost Retirements describe December 31, 1992
(Millions of Dollars)
Electric -
Intangible $ 15.3 $ .8 $ - $ - $ 16.1
Steam production 823.5 13.0 2.9 - 833.6
Nuclear 3,173.0 (7.3) (4.0) - 3,169.7
Hydraulic production - - - - -
Internal combustion engine 19.5 - - - 19.5
Transmission 283.7 4.0 .2 - 287.5
Distribution 804.5 43.9 6.3 - 842.1
General 169.8 16.7 13.3 - 173.2
Plant held for future use 8.6 - - 21.7 (1) 30.3
Acquisition adjustment 3.9 - 3.9 - -
Construction work in progress 88.2 110.4 - (21.7)(1) 176.9
Total electric plant 5,390.0 181.5 22.6 - 5,548.9
Gas -
Intangible - - - - -
Production 6.2 .5 - (2.4)(2) 4.3
Underground storage 28.7 .5 .1 2.3 (3) 31.4
Local storage - - - - -
Transmission 53.8 .6 .1 ( .3)(2) 54.0
Distribution 370.0 13.9 3.0 - 380.9
General 17.1 3.5 2.6 - 18.0
Plant held for future use .1 - - 2.2 (2) 2.3
Construction work in progress 13.8 17.9 - - 31.7
Gas stored underground (non-
current) 13.6 - - 2.2 (3&4) 15.8
Total gas plant 503.3 36.9 5.8 4.0 538.4
TOTAL $ 5,893.3 $ 218.4 $ 28.4 $ 4.0 $ 6,087.3
( ) Credit
(1) Transfer of $21.7 million from CWIP to Plant held for future use due to
suspended scrubber project.
(2) Transfer of $2.2 million to Plant held for future use and $.5 million
to Non-utility property
from Production ($2.4 million) and Transmission Plan ($.3 million).
(3) Transfer of $2.3 million from Gas stored underground (noncurrent) to
Underground storage at the
Hillsboro Storage Field.
(4) Transfer of $4.5 million from Inventory to Gas stored underground
(noncurrent) at the Hillsboro Storage
Field.
- 45 -
ILLINOIS POWER COMPANY
SCHEDULE V - UTILITY PLANT
Balance at Balance at
beginning of Other changes - end of
period Additions add (deduct)- period
Classification January 1, 1991 at cost Retirements describe December 31, 1991
(Millions of Dollars)
Electric -
Intangible $ .6 $ 14.7 $ - $ - $ 15.3
Steam production 802.0 25.1 3.6 - 823.5
Nuclear 3,167.7 9.4 4.1 - 3,173.0
Hydraulic production - - - - -
Internal combustion engine 19.4 .1 - - 19.5
Transmission 287.8 (3.7) .4 - 283.7
Distribution 771.5 40.7 7.7 - 804.5
General 153.4 18.3 3.2 - 169.8
Plant held for future use 8.6 - - 1.3 (1) 8.6
Acquisition adjustment 3.9 - - - 3.9
Construction work in progress 70.9 17.3 - - 88.2
Total electric plant 5,285.8 121.9 19.0 1.3 5,390.0
Gas -
Intangible - - - - -
Production 6.2 - - - 6.2
Underground storage 25.4 1.2 .1 2.2 (2) 28.7
Local storage - - - - -
Transmission 52.8 1.2 .2 - 53.8
Distribution 359.1 14.4 3.5 - 370.0
General 16.2 1.1 .2 - 17.1
Plant held for future use .1 - - - .1
Construction work in progress 6.8 7.0 - - 13.8
Gas stored underground (non-
current) 12.0 - - 1.6 (2&3) 13.6
Total gas plant 478.6 24.9 4.0 3.8 503.3
TOTAL $ 5,764.4 $ 146.8 $ 23.0 $ 5.1 $ 5,893.3
( ) Credit
(1) Reflects acquisition of capital lease property - computers and computer
equipment - and their subsequent amortization.
(2) Transfer of $2.2 million from Gas stored underground (noncurrent) to
Underground storage at the Hillsboro Storage Field.
(3) Transfer of $3.8 million from Inventory to Gas stored underground
(noncurrent) at the Hillsboro Storage Field.
- 46 -
ILLINOIS POWER COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION
Balance at Additions Balance at
beginning of charged to Other changes - end of
period cost and add (deduct) - period
Classification January 1, 1993 expenses Retirements describe December 31, 1993
(Millions of Dollars)
Electric -
Intangible $ 5.7 $ 3.3 $ - $ - $ 9.0
Steam production 498.3 21.3 5.0 7.9 (1) 522.5
Nuclear 496.1 87.7 0.4 24.6 (1&2) 608.0
Hydraulic production - - - - -
Internal combustion engine 16.9 0.5 - - 17.4
Transmission 144.7 4.8 2.6 1.0 (1) 147.9
Distribution 388.6 20.0 14.7 3.3 (1) 397.2
General 51.9 4.8 (3) 6.1 0.2 (1) 50.8
Plant held for future use - - - - -
Acquisition adjustment - - - - -
Construction work in progress - - - - -
Total electric plant 1,602.2 142.4 28.8 37.0 1,752.8
Gas -
Intangible - - - - -
Production 5.2 0.2 - (2.2) (5) 3.2
Underground storage 16.1 1.0 0.2 0.1 (1) 17.0
Local storage - - - - -
Transmission 27.9 1.7 - (0.2) (1&5) 29.4
Distribution 151.1 16.0 3.9 0.5 (1) 163.7
General 7.2 1.0 (4) 0.9 - 7.3
Plant held for future use - 0.1 0.8 1.9 (5) 1.2
Construction work in progress - - - - -
Gas stored underground (non-
current) - - - - -
Total gas plant 207.5 20.0 5.8 0.1 221.8
TOTAL $ 1,809.7 $ 162.4 $ 34.6 $ 37.1 $ 1,974.6
( ) Credit
(1) Includes Depreciation Reserve of $38.8 million (Electric) and $.7 million
(Gas) associated with FAS 109 compliance.
(2) Includes $1.8 million associated with write-off of deferred Clinton costs.
(3) Includes provision of approximately $.5 million for transportation
equipment harged to clearing accounts.
(4) Includes provision of approximately $.9 million for transportation equipment
charged to clearing accounts.
(5) Transfer of $1.9 million in Accumulated Provision associated with
reclassification of the Danville Propane Plant
to Account 105 and $.6 million associated with Galesburg Propane Plant
transfer to Account 121.
- 47 -
ILLINOIS POWER COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION
Balance at Addition Balance at
beginning of charged to Other changes - end of
period cost and add (deduct) - period
Classification January 1, 1992 expenses Retirements describe December 31, 1992
(Millions of Dollars)
Electric -
Intangible $ 2.7 $ 3.0 $ - $ - $ 5.7
Steam production 481.7 20.4 3.8 - 498.3
Nuclear 406.5 88.0 (1.6) - 496.1
Hydraulic production - - - - -
Internal combustion engine 16.5 .4 - - 16.9
Transmission 139.4 4.6 (.7) - 144.7
Distribution 378.1 19.0 8.5 - 388.6
General 60.5 4.3 12.9 - 51.9
Plant held for future use - - - - -
Acquisition adjustment 3.9 - 3.9 - -
Construction work in progress - - - - -
Total electric plant 1,489.3 139.7 26.8 - 1,602.2
Gas -
Intangible - - - - -
Production 4.9 .2 (.1) - 5.2
Underground storage 15.4 .7 - - 16.1
Local storage - - - - -
Transmission 26.6 1.5 .2 - 27.9
Distribution 139.7 15.7 4.3 - 151.1
General 8.5 1.0 2.3 - 7.2
Plant held for future use - - - - -
Construction work in progress - - - - -
Gas stored underground (noncurrent) - - - - -
Total gas plant 195.1 19.1 6.7 - 207.5
TOTAL $ 1,684.4 $ 158.8 $ 33.5 $ - $ 1,809.7
( ) Credit
- 48 -
ILLINOIS POWER COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION
Balance at Additions Balance at
beginning of charged to Other changes - end of
period cost and add (deduct) - period
Classification January 1, 1991 expenses Retirements describe December 31, 1991
(Millions of Dollars)
Electric -
Intangible $ .5 $ 2.2 $ - $ - $ 2.7
Steam production 460.6 26.7 5.6 - 481.7
Nuclear 322.8 88.0 4.3 - 406.5
Hydraulic production - - - - -
Internal combustion engine 15.7 .8 - - 16.5 -
Transmission 130.3 8.0 ( 1.1) - 139.4
Distribution 361.0 26.0 8.9 - 378.1
General 57.2 6.1 2.8 - 60.5
Plant held for future use - - - - -
Acquisition adjustment 3.9 - - - 3.9
Construction work in progress - - - - -
Total electric plant 1,352.0 157.8 20.5 - 1,489.3
Gas -
Intangible - - - - -
Production 4.6 .3 - - 4.9
Underground storage 15.0 .6 .2 - 15.4
Local storage - - - - -
Transmission 24.6 1.5 ( .5) - 26.6
Distribution 129.3 15.2 4.8 - 139.7
General 7.8 .8 .1 - 8.5
Plant held for future use - - - - -
Construction work in progress - - - - -
Gas stored underground (non-
current) - - - - -
Total gas plant 181.3 18.4 4.6 - 195.1
TOTAL $ 1,533.3 $ 176.2 $ 25.1 $ - $ 1,684.4
( ) Credit
- 49 -
ILLINOIS POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
____________________________________________________________________________________
Additions
Balance at Charged to Balance at
beginning of Charged to other end of
period cost and accounts- Deductions- period
Description January 1, 1993 expenses describe describe December 31, 1993
(Millions of Dollars)
Reserve deducted in the balance sheet
from the asset to which it applies -
Nonutility property-Depreciation $ 1.7 $ 0.8 $ - $(0.1) $ 2.6
Uncollectible accounts $ 4.0 $ 5.9 $ - $ 5.9 $ 4.0
- 50 -
ILLINOIS POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
________________________________________________________________________________________
Additions
Balance at Charged to Balance at
beginning of Charged to other end of
period cost and accounts- Deductions- period
Description January 1, 1992 expenses describe describe December 31, 1992
(Millions of Dollars)
Reserve deducted in the balance sheet
from the asset to which it applies -
Nonutility property-Depreciation $ 1.7 $ .1 $ - $ .1 $ 1.7
Uncollectible accounts $ 6.5 $ 3.6 $ - $ 6.1 (1) $ 4.0
(1) Includes $2.5 million reduction to the reserve for uncollectible accounts.
- 51 -
ILLINOIS POWER COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
_______________________________________________________________________________________
Additions
Balance at Charged to Balance at
beginning of Charged to other end of
period cost and accounts- Deductions- period
Description January 1, 1991 expenses describe describe December 31, 1991
(Millions of Dollars)
Reserve deducted in the balance sheet
from the asset to which it applies -
Nonutility property-Depreciation $ 1.6 $ .1 $ .1 $ .1 $ 1.7
Uncollectible accounts $ 6.5 $ 8.3 $ - $ 8.3 $ 6.5
- 52 -
ILLINOIS POWER COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
__________________________________________________________________________________
Supplementary Income Statement Information
Following is a tabulation of taxes, other than income taxes charged to
expense for the three year period ended 1993
December 31,
1993 1992 1991
(Millions of Dollars)
Taxes, Other Than Income Taxes
(General Taxes),
Charged to Operating Expenses:
Real Estate $ 25.8 $ 20.6 $ 23.2
Illinois Public Utility 45.6 47.5 48.3
Tax on Invested Capital 28.9 30.0 31.5
Payroll 17.5 16.3 15.0
Other 17.4 16.9 16.1
135.2 131.3 134.1
Less-charged to other income & balance
sheet accounts 9.6 9.1 8.4
Total per Statement of Income $125.6 $122.2 $125.7
- 53 -
Exhibit Index
Exhibit Description Page Number
3(a) Restated Articles of Incorporation, as amended
through April 19, 1984. Filed as Exhibit 19 to
the Quarterly Report on Form 10-Q under the
Securities Exchange Act of 1934 for the quarter
ended June 30, 1984. (File No. 1-3004) *
3(b) Amendment to the Restated Articles ofIncorporation
of the Company, dated April 19, 1989. Filed as
Exhibit 19 to the Quarterly Report on Form 10-Q
under the Securities Exchange Act of 1934 for the
quarter ended March 31, 1989. (File No. 1-3004). *
3(c) Statement of Resolution Establishing Series
of Cumulative Preferred Stock, Adjustable Rate
Series B, dated April 29, 1985. Filed as Exhibit
4(b) to the Quarterly Report on Form 10-Q for the
quarter ended March 31, 1985. Registration
No. 2-90809. *
3(d) Statement of Resolution Establishing Series of
8.52% Cumulative Preferred Stock, dated February
20, 1986. Filed as Exhibit 4(b) to the Current
Report on Form 8-K dated February 18, 1986.
Registration No. 33-2867. *
3(e) Statement of Resolution Establishing Series of
8.00% Cumulative Preferred Stock, dated December
18, 1986. Registration No. 33-10683. Filed as
Exhibit 3(f) to the Annual Report on Form 10-K
under the Securities Exchange Act of 1934 for
the year ended December 31, 1986. *
3(f) By-laws of the Company, as amended through
April 14, 1993. Filed as Exhibit 3(g) to the
Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993. *
- 54 -
Exhibit Index (Continued)
Exhibit Description Page Number
3(g) Statement of Resolution Establishing Series of
7.75% Cumulative Preferred Stock, dated June 9, 1993. 63
4(a) Mortgage and Deed of Trust dated November 1,
1943. Filed as Exhibit 2(b) Registration
No. 2-14066. *
4(b) Supplemental Indenture dated October 1, 1966.
Filed as Exhibit 2(i) Registration No. 2-27783. *
4(c) Supplemental Indenture dated October 1, 1971.
Filed as Exhibit 2(r) Registration No. 2-59465. *
4(d) Supplemental Indenture dated May 1, 1974. Filed
as Exhibit 2(v) Registration No. 2-51674. *
4(e) Supplemental Indenture dated May 1, 1977. Filed
as Exhibit 2(w) Registration No. 2-59465. *
4(f) Supplemental Indenture dated July 1, 1979.
Filed as Exhibit 2 to the Quarterly Report on Form
10-Q under the Securities Exchange Act of 1934 for the
quarter ended June 30, 1979. *
4(g) Supplemental Indenture dated March 1, 1985.
Filed as exhibit 4(a) to the Quarterly Report on Form
10-Q under the Securities Exchange Act of 1934
for the quarter ended March 31, 1985 (File No. 1-3004). *
4(h) Supplemental Indenture No. 1 dated February 1,
1987, providing for $25,000,000 principal amount of
7 5/8% First Mortgage Bonds, Pollution Control Series F,
due December 1, 2016. Filed as Exhibit 4(ii) to the
Annual Report on Form 10-K under the Securities Exchange
Act of 1934 for the year ended December 31,
1986 (File No. 1-3004). *
- 55 -
Exhibit Index (Continued)
Exhibit Description Page Number
4(i) Supplemental Indenture No. 2 dated February 1, 1987,
providing for $50,000,000 principal amount of 7 5/8%
First Mortgage Bonds, Pollution Control Series G,
due December 1, 2016. Filed as Exhibit 4(jj) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31,
1986 (File No. 1-3004). *
4(j) Supplemental Indenture No. 3 dated February 1, 1987,
providing for $75,000,000 principal amount of 7 5/8%
First Mortgage Bonds, Pollution Control Series H,
due December 1, 2016. Filed as Exhibit 4(kk) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31, *
4(k) Supplemental Indenture dated July 1, 1987,
providing for $33,755,000 principal amount of
8.30% First Mortgage Bonds, Pollution Control
Series I, due April 1, 2017. Filed as Exhibit 4(ll)
to the Annual Report on Form 10-K under the Securities
and Exchange Act of 1934 for the year ended
December 31, 1987 (File No. 1-3004). *
4(l) Supplemental Indenture dated December 13, 1989,
providing for $300,000,000 principal amount of
Medium-Term Notes, Series A. Filed as Exhibit 4
(nn) to the Annual Report on Form 10-K under the
Securities and Exchange Act of 1934 for the year
ended December 31, 1989. (File No. 1-3004). *
4(m) Supplemental Indenture dated July 1, 1991,
providing for $84,710,000 principal amount of 7 3/8% First
Mortgage Bonds due July 1, 2021. Filed as Exhibit
4(mm) to the Annual Report on Form 10-K under the
Securities and Exchange Act of 1934 for the year
ended December 31, 1991 (File No. 1-3004). *
4(n) Supplemental Indenture No. 1 dated June 1, 1992. Filed
as Exhibit 4(nn) to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992 (File No. 1-3004). *
- 56 -
Exhibit Index (Continued)
Exhibit Description Page Number
4(o) Supplemental Indenture No. 2 dated June 1, 1992. Filed as
Exhibit 4(oo) to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992 (File No. 1-3004). *
4(p) Supplemental Indenture No. 1 dated July 1, 1992. Filed as
Exhibit 4(pp) to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992 (File No. 1-3004). *
4(q) Supplemental Indenture No. 2 dated July 1, 1992. Filed as
Exhibit 4(qq) to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992 (File No. 1-3004). *
4(r) Supplemental Indenture dated September 1, 1992,
providing for $72,000,000 principal amount of 6 1/2%
First Mortgage Bonds due September 1, 1999. Filed
as Exhibit 4(rr) to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992 (File No. 1-3004). *
4(s) General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(cc) to the Annual
Report on Form 10-K under the Securities and Exchange
Act of 1934 for the year ended December 31, 1992
(File No. 1-3004). *
4(t) Supplemental Indenture dated February 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(dd) to the Annual Report on Form
10-K under the Securities and Exchange Act of 1934
for the year ended December 31, 1992 (File No. 1-3004). *
4(u) Supplemental Indenture dated February 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(ee) to the Annual
Report on Form 10-K under the Securities and Exchange
Act of 1934 for the year ended December 31, 1992
(File No. 1-3004). *
- 57 -
Exhibit Index (Continued)
Exhibit Description Page Number
4(v) Supplemental Indenture No. 1 dated March 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(ff) to the Annual Report on Form
10-K under the Securities and Exchange Act of 1934
for the year ended December 31, 1992 (File No. 1-3004). *
4(w) Supplemental Indenture No. 1 dated March 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(gg) to the Annual
Report on Form 10-K under the Securities and Exchange
Act of 1934 for the year ended December 31, 1992
(File No. 1-3004). *
4(x) Supplemental Indenture No. 2 dated March 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(hh) to the Annual Report on Form
10-K under the Securities and Exchange Act of 1934
for the year ended December 31, 1992 (File No. 1-3004). *
4(y) Supplemental Indenture No. 2 dated March 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as of
November 1, 1992. Filed as Exhibit 4(ii) to the Annual
Report on Form 10-K under the Securities Exchange Act
of 1934 for the year ended December 31, 1992
(File No. 1-3004). *
4(z) Supplemental Indenture dated July 15, 1993, to Mortgage
and Deed of Trust dated November 1, 1943. Filed as
Exhibit 4(jj) to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993 (File No. 1-3004). *
4(aa) Supplemental Indenture dated July 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as
of November 1, 1992. Filed as Exhibit 4(kk) to the
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993 (File No. 1-3004). *
- 58 -
Exhibit Index (Continued)
Exhibit Description Page Number
4(bb) Supplemental Indenture dated August 1, 1993, to
Mortgage and Deed of Trust dated November 1,
1943. Filed as Exhibit 4(ll) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993
(File No. 1-3004). *
4(cc) Supplemental Indenture dated August 1, 1993, to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(mm) to the
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993 (File No. 1-3004). *
4(dd) Supplemental Indenture dated October 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(nn) to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993.
(File No. 1-3004). *
4(ee) Supplemental Indenture dated October 15, 1993, to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(oo) to the
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993. *
4(ff) Supplemental Indenture dated November 1, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(pp) to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993
(File No. 1-3004). *
4(gg) Supplemental Indenture dated November 1, 1993, to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(qq) to the
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993 (File No. 1-3004). *
4(hh) Supplemental Indenture dated February 1, 1994, to
Mortgage and Deed of Trust dated November 1, 1943. 65
- 59 -
Exhibit Index (Continued)
Exhibit Description Page Number
10(a) Group Insurance Benefits for Managerial Employees of
Illinois Power Company as amended January 1, 1983.
Supersedes the Group Insurance Benefits for
Managerial Employees of Illinois Power Company as
amended April 1, 1980 and filed as Exhibit 10(a)
to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year
ended December 31, 1983 (File No. 1-3004).~ *
10(b) Illinois Power Company Deferred Compensation Plan
for Certain Directors, as amended April 10, 1991. Filed
as Exhibit 10(b) to the Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the year ended
December 31, 1991 (File No. 1-3004).~ *
10(c) Illinois Power Company Incentive Savings Trust
and Illinois Power Company Incentive Savings
Plan and Amendment I thereto. Filed as Exhibit
10(d) to the Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the
year ended December 31, 1984 (File No. 1-3004).~ *
10(d) Illinois Power Company Director Emeritus Plan
for Outside Directors. Filed as Exhibit 10(e)
to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year
ended December 31, 1989 (File No. 1-3004).~ *
10(e) Description of Illinois Power Company's
Executive Incentive Compensation Plan. Filed
as Exhibit 10(f) to the Annual Report on Form
10-K under the Securities Exchange Act of
1934 for the year ended December 31, 1989
(File No. 1-3004).~ *
- 60 -
Exhibit Index (Continued)
Exhibit Description Page Number
10(f) Illinois Power Company Employee Retention
Plan and Agreement. Filed as Exhibit 10(g) to
the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year
ended December 31, 1989 (File No. 1-3004).~ *
10(g) Illinois Power Company Incentive Savings Plan,
as amended and restated effective January 1, 1991.
Filed as Exhibit 10(h) to the Annual Report on
Form 10-K under the Securities Exchange Act of
1934 for the year ended December 31, 1990
(File No. 1-3004).~ *
10(h) Illinois Power Company Stock Plan for Outside
Directors as amended and restated by the Board of
Directors on April 9, 1992 and as further amended
April 14, 1993. 71
10(i) Retirement and Consulting Agreement entered into
as of June 1, 1991 between Illinois Power Company
and Wendell J. Kelley. Filed as Exhibit 10(i) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December
31, 1991 (File No. 1-3004).~ *
10(j) Illinois Power Company Retirement Plan for Outside
Directors, as amended through December 11, 1991.
Filed as Exhibit 10(j) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1991 (File No. 1-3004).~ *
10(k) Illinois Power Company 1992 long-term Incentive
Compensation Plan. Filed as Exhibit 10(k) to the
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992 (File No. 1-3004).~ *
- 61 -
Exhibit Index (Continued)
Exhibit Description Page Number
10(l) Illinois Power Company Executive Deferred
Compensation Plan 73
12 Computation of ratio of earnings to fixed
charges. 92
13 Illinois Power Company 1993 Annual Report. 93
21 Subsidiaries of Illinois Power Company. 125
23 Consent of Independent Accountants. 126
_____________________________
* Incorporated herein by reference.
~ Management contract and compensatory plans or arrangements.
- 62 -
Exhibit 3(g)
Extract From Minutes of a Meeting of the
Board of Directors of Illinois Power Company
Held June 9, 1993
RESOLVED, that pursuant to the authority vested in the
Board of Directors under the terms and provisions of Article
V of the Restated Articles of Incorporation of the Company,
there is hereby established, as a series of the authorized
Serial Preferred Stock, $50 par value, of the Company, a
series to be known and designated as 7.75% Cumulative
Preferred Stock (such series being herein called the "New
Preferred Stock"), the relative rights and preferences of
which, in addition to those applicable to all Serial
Preferred Stock as class, as stated in said Article V, are
hereby fixed and determined as follows:
(a) The number of shares constituting the new
Preferred Stock shall be 870,000.
(b) The annual dividend rate on the New Preferred
Stock shall be $3.875 per share in cash, and no more, and the
date from which dividends on all shares of the New Preferred Stock
issued prior to the record date for the first dividend payment on
the new Preferred Stock shall be cumulative shall be the date of
issue thereof.
(c) The New Preferred Stock is not redeemable prior to
July 1, 2003. On or after July 1, 2003, the new Preferred Stock
shall be redeemable, in whole or in part, at the option of
the Company. The redemption price for the New Preferred Stock
(exclusive of accrued and unpaid dividends), to be paid in
cash, shall be $50 per share.
(d) The amount payable to the holders of the New
Preferred Stock upon voluntary or involuntary
dissolution, liquidation or winding up
of the affairs of the Company or upon any
distribution of its capital shall be at the rate
of $50 per share in cash (exclusive of accrued
and unpaid dividends).
RESOLVED, that in light of the possibility that the
Company's balance of retained earnings may become negative
as a result of recording additional losses due to adverse
decisions with respect to the Illinois Commerce Commission's
August 7, 1992 rate order on appeal, there be and hereby is
declared out of retained earnings of the Company a $.4317
per share dividend on the New Preferred Stock, when and if
such New Preferred Stock is issued, payable on August 1,
1993, and a $.96875 per share payable dividend on the New
Preferred Stock, payable on each of November 1, 1993,
February 1, 1994 and May 1, 1994, to holders of record at
the close of business on the applicable record dates in
proportion to their respective holdings; provided, however,
that payment is contingent on satisfaction, at the
- 63 -
time of payment, of the financial tests set forth in the Illinois
Commerce Commission Order dated March 24, 1993 in Docket 92-
0415 authorizing payment of dividends on the Company's
outstanding Preferred and Common Stock in the event that the
Company's retained earnings are insufficient to pay such
dividends with respect to the aggregate amount of dividends
on outstanding Preferred Stock and Common Stock to be paid
at each payment date, including the dividends declared
hereby and payment being otherwise lawful at the time made;
and provided further, that if any such payment of dividends
on new Preferred Stock cannot be made on each respective
dividend payment date set forth above, then the payment of
each such dividend shall be deferred until the earliest date
on which such dividends may be paid, and in the event of
such deferral, any payment in arrears shall be made to
holders of record on the applicable record date which is
related to the scheduled dividend payment date on which
payment is made.
I, LEAH MANNING STETZNER, Vice President, General
Counsel and Corporate Secretary of ILLINOIS POWER COMPANY,
do hereby certify that the foregoing is a true and correct
copy of a certain resolution duly adopted by the Board of
Directors of said Company at a meeting of said Board duly
convened and held on the 9th day of June, 1993 at which
meeting a quorum of said Board was present and voting
throughout, and that said resolution has not been altered or
amended and is in full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the corporate seal of said Illinois Power Company
this 9th day of June, 1993.
Secretary
- 64 -
Exhibit 4(hh)
ILLINOIS POWER COMPANY
TO
HARRIS TRUST AND SAVINGS BANK,
as Trustee
SUPPLEMENTAL INDENTURE
Dated February 1, 1994
TO
Mortgage and Deed of Trust
Dated November 1, 1943
- 65 -
Supplemental Indenture, dated the first day of
February, Nineteen hundred and ninety-four (1994)
(hereinafter referred to as the "Supplemental Indenture"),
made by and between ILLINOIS POWER COMPANY, a corporation
organized and existing under the laws of the State of
Illinois (hereinafter called the "Company"), party of the
first part, and HARRIS TRUST AND SAVINGS BANK, a
corporation organized and existing under the laws of the
State of Illinois (hereinafter called the "Trustee"), as a
Trustee under the mortgage and Deed of Trust dated November
1, 1943, hereinafter mentioned, party of the second part;
WHEREAS, the Company has heretofore executed and
delivered its Mortgage and Deed of Trust dated November 1,
1943 (hereinafter referred to as the "Original Indenture"),
to the Trustee, for the security of the First Mortgage Bonds
of the Company issued and to be issued thereunder
(hereinafter called the "Bonds"); and
WHEREAS, pursuant to the terms and provisions of the
Original Indenture there were created and authorized by
various Supplemental Indentures First Mortgage Bonds of
various series, including a series known as First Mortgage
Bonds, Pollution Control Series K ("Pollution Control Series
K Bonds") which was created and authorized by Supplemental
Indenture No. 1 dated June 1, 1992 ("Supplemental Indenture
No. 1 of June 1, 1992") and
WHEREAS, the Pollution Control Series K Bonds were duly
issued under and secured by the Indenture and Supplemental
Indenture No. 1 of June 1, 1992 in the aggregate principal
amount of $35,615,000, bearing interest at a rate of seven
and three-tenths per cent (7.30%) per annum; and
WHEREAS, the Company deems it advisable that
Supplemental Indenture No. 1 of June 1, 1992 be amended as
herein provided, and the holder of the outstanding Pollution
Control Series K Bonds has duly consented to this amendment
and the execution of this Supplemental Indenture and has
delivered to the Trustee an instrument duly setting forth
such consent;
WHEREAS, the Company, in the exercise of the powers and
authority conferred upon and reserved to it under the
provisions of the Original Indenture, and pursuant to
appropriate resolutions of the Board of Directors, has duly
resolved and determined to make, execute and deliver to the
Trustee a Supplemental Indenture in the form hereof for the
purposes herein provided; and
WHEREAS, all conditions and requirements necessary to
make this Supplemental Indenture a valid, binding and legal
instrument have been done, performed and fulfilled and the
execution and delivery hereof have been in all respects duly
authorized;
- 66 -
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
THAT Illinois Power Company, in consideration of the
purchase and ownership from time to time of the Bonds and
the service by the Trustee, and its successors, under the
Original Indenture and of One Dollar to it duly paid by the
Trustee at or before the ensealing and delivery of these
presents, the receipt whereof is hereby acknowledged, hereby
covenants and agrees to and with the Trustee and its
successors in the trust under the Original Indenture, for
the benefit of those who shall hold the Bonds and coupons,
if any, appertaining thereto, as follows:
ARTICLE I.
AMENDMENT TO SUPPLEMENTAL INDENTURE NO. 1 OF JUNE 1, 1992.
SECTION 1. Wherever in Supplemental Indenture No. 1 of June
1, 1992 reference is made to interest on the Pollution
Control Series K Bonds at the rate of seven and tree-tenths
per cent (7.30%) per annum, Supplemental Indenture No. 1 of
June 1, 1992 is hereby amended to read "five and seven-
tenths per cent (5.70%)" in lieu of "seven and three-tenths
per cent (7.30%)" in each and every place where the term
"seven and three-tenths per cent (7.30%)" shall occur.
ARTICLE II.
MISCELLANEOUS PROVISIONS.
SECTION 1. Except as amended by this Supplemental
Indenture, all of the provisions of the Indenture and
Supplemental Indenture No. 1 of June 1, 1992 shall remain in
full force and effect, and from and after the effective date
of this Supplemental Indenture shall be deemed to have been
amended as herein set forth.
SECTION 2. This Supplemental Indenture may be
simultaneously executed in any number of counterparts, each
of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, said Illinois Power Company has
caused this Supplemental Indenture to be executed on its
behalf by its Chairman and President, one of its Executive
Vice Presidents, one of its Senior Vice Presidents or one of
its Vice Presidents and its corporate seal to be hereto
affixed and said seal and this Indenture to be attested by
its Secretary or one of its Assistant Secretaries; and said
Harris Trust and Savings Bank, in evidence of its
- 67 -
acceptance of the trust hereby created, has caused this Indenture to be
executed on its behalf by its President or one of its Vice
Presidents and its corporate seal to be hereto affixed and
said seal and this Indenture to be attested by its secretary
or one of its Assistant Secretaries; all as of the first day
of February, one thousand nine hundred and ninety-four.
ILLINOIS POWER COMPANY
(CORPORATE SEAL) BY__\s\ LARRY F. ALTENBAUMER
Senior Vice President and
Chief Financial
Officer
ATTEST:
__\s\__Gary B. Pasek _________
Assistant Secretary
HARRIS TRUST AND SAVINGS BANK,
Trustee
(CORPORATE SEAL) BY__\s\_J. Bartoline_______________
Vice President
ATTEST:
__\s\_D. G. Donovan_______
- 68 -
STATE OF ILLINOIS ) SS.:
COUNTY OF MACON )
BE IT REMEMBERED, that on this 27th day of January,
1994, before me, the undersigned Anita F. Ricker, a Notary
public within and for the County and State aforesaid,
personally came L. F. Altenbaumer, Senior Vice President and
Chief Financial Officer, and G. B. Pasek, Assistant
Secretary, of Illinois Power Company, a corporation duly
organized, incorporated and existing under the laws of the
State of Illinois, who are personally known to me to be such
officers, and who are personally know to me to be the same
persons who executed as such officers the within instrument
of writing, and such persons duly acknowledged that they
signed, sealed and delivered the said instrument as their
free and voluntary act as such Vice President and Assistant
Secretary, respectively, and as the free and voluntary act
of said Illinois Power Company for uses and purposes therein
set forth.
IN WITNESS WHEREOF, I have hereunto subscribed my name
and affixed my official seal on the day and year last above
written.
__\s\ Anita S. Ricker___
Notary Public, Macon County,
Illinois
My Commission Expires on June 28, 1997.
(NOTARIAL SEAL)
STATE OF ILLINOIS ) SS.:
COUNTY OF COOK )
BE IT REMEMBERED, that on this 26th day of January,
1994, before me, the undersigned Marianne Cody, a Notary
Public within and for the County and State aforesaid,
personally came J. Bartolini, Vice President, and D. G.
Donovan, Assistant Secretary, of Harris Trust and Savings
Bank, a corporation duly organized, incorporated and
existing under the laws of the State of Illinois, who are
personally known to me to be the same persons who executed
as such officers the within instrument of writing, and such
persons duly acknowledged that they signed, sealed and
delivered the said instrument as their free and voluntary
act as such Vice President and Assistant Secretary,
respectively, and as the free and voluntary act of said
Harris Trust and Savings Bank for the uses and purposes
therein set forth.
- 69 -
IN WITNESS WHEREOF, I have hereunto subscribed my name
and affixed my official seal on the day and year last above
written.
_______\s\ Marianne Cody______________
Notary Public, Cook County, Illinois
My Commission Expires on May 29, 1997.
(NOTARIAL SEAL)
Return to: This Instrument was prepared by
ILLINOIS POWER COMPANY SCHIFF, HARDIN & WAITE
Real Estate Dept. F-14 7200 Sears Tower
500 S. 27th Street Chicago, IL 60606
Decatur, IL 62525
- 70 -
Exhibit 10(h)
ILLINOIS POWER COMPANY
STOCK PLAN FOR OUTSIDE DIRECTORS
As Amended and Restated April 9, 1992
And As Further Amended April 14, 1993
1. HISTORY AND PURPOSE
The Stock Plan for Outside Directors (the "Plan") was
established by Illinois Power Company (The "Company")
to increase the stock ownership interests of directors in
the Company and thereby provide further incentive to
directors to work toward the long-term best interests of the
Company and its shareholders. The following provisions
constitute an amendment, restatement and continuation of
the Plan as in effect immediately prior to April 9, 1992,
the "Effective Date" of the Plan as set forth herein.
2. ELIGIBILITY
Only outside directors of the Company (i.e., directors
who are not officers or employees of the Company or any
of its subsidiaries or affiliates) are eligible to
participate in the Plan.
3. GRANT OF STOCK
Each outside director elected to the Board of Directors
of the Company (the "Board") at each annual
shareholders meeting of the Company (beginning with the
1993 annual shareholders meeting) shall receive 600
shares of common stock of the Company as soon as practicable
after such meeting.
Such shares shall be obtained from one or both of the
following sources:
(a) Shares may be purchased on the open market for the
accounts of directors by a broker selected by
the chief financial officer of the Company,
or his delegate. If shares are obtained in accordance
with this paragraph 3(a), they shall be transferred directly
to the director, and shall not be transferred
to or held by the Company. The cost of
obtaining such shares shall be paid by the Company.
- 71 -
(b) Treasury shares may be used, to the extent
permitted by applicable law.
The shares so transferred represent payment for all
Board and committee meetings to be held during the one-
year period prior to the next annual shareholders
meeting. Nothing in this paragraph 3 shall be construed to
prevent the Board from awarding cash meeting fees to any
outside director, which cash fees shall be in addition to
the amounts granted to the outside directors in accordance
with the other provisions of this paragraph 3.
Outside directors elected to the Board between annual
shareholders meetings shall be paid in cash for
attendance at meetings prior to the first annual
shareholders meeting after their election to the Board.
4. ADJUSTMENT TO SHARES
In the event of any change in the outstanding shares of
the common stock of the Company by reason of any stock
dividend, split, reverse split, spin-off,
recapitalization, merger, consolidation, combination,
exchange of shares or other similar change, the number of
shares of stock to be awarded to each director under the
Plan shall be equitably adjusted by the Board.
5. AMENDMENT
The Plan may be amended by the Board, except that, to
the extent necessary to comply with Rule 16b-
3(c)(2)(ii), issued pursuant to the Securities Exchange
Act of 1934, the provisions of the Plan may not be
amended more than once in any six month period, other than
to comport with changes in the Employee Retirement
Income Security Act of 1974, as amended, or the Internal
Revenue Code, as amended, and applicable regulations
thereunder.
- 72 -
Exhibt 10(1)
ILLINOIS POWER COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
- 73 -
TABLE OF CONTENTS
SECTION 1 -1-
General -1-
1.1. Purpose -1-
1.2. Effective Date -1-
1.3. Related Companies and Employers -1-
1.4. Administration -1-
1.5. Plan Year -1-
1.6. Applicable Laws -1-
1.7. Gender and Number -1-
1.8. Notices -2-
1.9. Form and Time of Elections -2-
1.10. Benefits Under Qualified Plans -2-
1.11. Evidence -2-
1.12. Action by Employers -2-
1.13. Defined Terms -2-
SECTION 2 -2-
Participation -2-
2.1. Participant -2-
2.2. Deferral Election -3-
2.3. Compensation -4-
2.4. Plan Not Contract of Employment -4-
SECTION 3 -4-
Plan Accounting -4-
3.1. Accounts -4-
3.2. Adjustment of Accounts -4-
3.3. Crediting Under Deferral Election -5-
3.4. Investment Return Rates -5-
3.5. Employee Selection of Investment Return
Rate -5-
3.6. Protected Investment Return Rates -6-
SECTION 4 -7-
Distributions -7-
4.1. General -7-
4.2. Distribution Election -7-
4.3. Unforeseeable Emergency -7-
4.4. Sale of Business -8-
4.5. Designation of Beneficiary -8-
4.6. Distributions to Disabled Persons -8-
4.7. Benefits May Not be Assigned -9-
4.8. Offset -9-
- 74 -
SECTION 5 -9-
Change in Control -9-
5.1. Distribution on Change in Control -9-
5.2. Change in Control Definition -9-
SECTION 6 -10-
Source of Benefit Payments -10-
6.1. Liability for Benefit Payments -10-
6.2. No Guarantee -11-
6.3. Transfer to Related Employer -11-
SECTION 7 -11-
Committee -11-
7.1. Powers of Committee -11-
7.2. Delegation by Committee -12-
7.3. Information to be Furnished to Committee -12-
7.4. Liability and Indemnification of Committee -12-
SECTION 8 -13-
Amendment and Termination -13-
Appendix A
- 75 -
ILLINOIS POWER COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
General
.1. Purpose. Illinois Power Company Executive Deferred
Compensation Plan (the "Plan") has been established by
Illinois Power Company (the "Company") so that it, and each
of the Related Companies which, with the consent of the
Company, adopts the Plan may provide its eligible key
management employees with an opportunity to build additional
financial security, thereby aiding such companies in
attracting and retaining employees of exceptional ability.
.2. Effective Date. The "Effective Date" of the Plan is
December 8, 1993. No deferrals of Compensation shall be
permitted under the Plan for any Plan Year with respect to
Compensation otherwise payable by any Employer during that
year unless the Employer has specifically adopted the Plan
with respect to such year.
.3. Related Companies and Employers. The term "Related
Company" means any company during any period in which it
owns at least fifty percent of the voting power of all
classes of stock of the Company entitled to vote, and any
company during any period in which at least fifty percent of
the voting power of all classes entitled to vote is owned,
directly or indirectly, by the Company or by any other
company that is a Related Company by reason of its ownership
of stock of the Company. The Company and each Related
Company that adopts the Plan for the benefit of its eligible
employees are referred to below collectively as the
"Employers" and individually as an "Employer".
.4. Administration. The authority to control and manage
the operation and administration of the Plan shall be vested
in the Compensation and Nominating Committee (the
"Committee") of the Board of Directors of the Company. In
controlling and managing the operation and administration of
the Plan, the Committee shall have the rights, powers and
duties set forth in Section 7.
.5. Plan Year. The term "Plan Year" means the calendar
year.
.6. Applicable Laws. The Plan shall be construed and
administered in accordance with the laws of the State of Illinois
- 76 -
to the extent that such laws are not preempted by
the laws of the United States of America.
.7. Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the
singular shall include the plural and the plural shall
include the singular.
.8. Notices. Any notice or document required to be filed
with the Plan Administrator or the Committee under the Plan
will be properly filed if delivered or mailed by registered
mail, postage prepaid, to the Plan Administrator, in care of
the Company, at its principal executive offices. The Plan
Administrator may, by advance written notice to affected
persons, revise such notice procedure from time to time.
Any notice required under the Plan may be waived by the
person entitled to notice.
.9. Form and Time of Elections. Unless otherwise
specified herein, each election required or permitted to be
made by any Participant or other person entitled to benefits
under the Plan, and any permitted modification or revocation
thereof, shall be in writing filed with the Plan
Administrator at such times, in such form, and subject to
such restrictions and limitations as the Plan Administrator
shall require.
.10. Benefits Under Qualified Plans. Compensation of any
Participant that is deferred under the Plan, and benefits
payable under the Plan, shall be disregarded for purposes of
determining the benefits under the Illinois Power Company
Incentive Savings Plan (the "Savings Plan"), the Illinois
Power Company Retirement Income Plan for Salaried Employees,
and any other plan that is intended to be qualified under
section 401(a) of the Internal Revenue Code of 1986.
.11. Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other
information which the person acting on it considers
pertinent and reliable, and signed, made or presented by the
proper party or parties.
.12. Action by Employers. Any action required or permitted
to be taken by any Employer shall be by resolution of its
Board of Directors, or by a duly authorized officer of the
Employer.
.13. Defined Terms. Terms used frequently with the same
meaning are indicated by initial capital letters, and are defined
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throughout the Plan. Appendix A contains an
alphabetical listing of such terms and the locations in
which they are defined.
2
Participation
.1. Participant. Any individual who is an Eligible
Employee for any Plan Year shall be eligible to participate
in the Plan for the Plan Year, subject to the terms of the
Plan. For purposes of the Plan, the term "Eligible
Employee" for any Plan Year shall mean any employee of the
Company who is an elected officer of the Company for that
Plan Year.
.2. Deferral Election. An Eligible Employee shall
participate in the Plan by electing to defer payment of a
portion of his Compensation pursuant to the terms of a
"Deferral Election". An individual's Deferral Election
shall be subject to the following:
(a) An individual who, prior to the beginning of any
Plan Year, satisfies the requirements of an Eligible
Employee for the Plan Year, shall be eligible to
file a Deferral Election with respect to his
Compensation for that Plan Year. Such Deferral
Election shall be filed before the first day of that
year (or at such earlier time as may be established
by the Committee).
(b) An individual who, prior to the beginning of any
Plan Year, has not satisfied the requirements of an
Eligible Employee for the Plan Year, but who becomes
an Eligible Employee during the Plan Year, shall be
eligible to file a Deferral Election with respect to
his Compensation for that Plan Year, subject to the
limits of paragraph 2.2(d). Such Deferral Election
shall be filed within thirty days (or such shorter
period as may be specified by the Committee) after
he first becomes an Eligible Employee for the year.
(c) If the Plan first becomes effective with respect to
the employees of any Employer during any Plan Year,
and an employee of that Employer becomes an Eligible
Employee on the date the Plan becomes effective,
such employee shall be eligible to file a Deferral
Election with respect to Compensation for that Plan
Year, subject to the limits of paragraph 2.2(d). Such Deferral
- 78 -
Election shall be filed within thirty
days (or such shorter period as may be specified by
the Committee) after the date the Plan becomes
effective.
(d) To the extent elected by a Participant, and subject
to the terms of the Plan, a Participant's Deferral
Election for any Plan Year shall apply to his
Compensation for that Plan Year. The terms of a
Deferral Election shall be subject to any conditions
and limitations that may be imposed by the
Committee. Except as otherwise provided in this
subsection 2.2, a Deferral Election shall be
irrevocable for the Plan Year to which it applies.
In no event may a Deferral Election cover
Compensation earned prior to the date the election
is completed and filed in accordance with the Plan.
(e) The Committee may revoke an individual's Deferral
Election as of the date on which the individual
ceases to be an Eligible Employee.
(f) Each Deferral Election shall be revoked as of the
date on which a Change in Control occurs, and no new
Deferral Election shall be accepted for any date
after the date of a Change in Control.
(g) Subject to the terms of the Plan, the Participant
shall specify, as part of his Deferral Election, and
in accordance with subsection 4.2, the time and form
of distribution of the amounts deferred pursuant to
such election.
.3. Compensation. For purposes of the Plan, a
Participant's "Compensation" from any Employer for any Plan
Year means any short-term incentive payable to him under the
Illinois Power Company Executive Incentive Compensation Plan
for that year (regardless of whether it is otherwise payable
to him during that year or during a later year).
.4. Plan Not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in
the Plan will not give any employee the right to be retained
in the employ of any Employer nor any right or claim to any
benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.
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Plan Accounting
.1. Accounts. The Plan Administrator shall establish an
Account for each Plan Year for each Participant who has
filed a Deferral Election. If a Participant is employed by
more than one Employer in any Plan Year, and his
Compensation otherwise payable from such Employers is
reduced pursuant to the Plan, a separate Account shall be
established for the Participant with respect to the
Compensation for the Plan Year from each such Employer.
.2. Adjustment of Accounts. Each Account shall be
adjusted in accordance with this Section 3 in a uniform, non-
discriminatory manner, as of such periodic "Accounting
Dates" as may be determined by the Plan Administrator from
time to time (which Accounting Dates shall be not less
frequent than quarterly). As of each Accounting Date, the
balance of each Account shall be adjusted as follows:
(a) first, charge to the Account balance the amount of
any distributions under the Plan with respect to
that Account that have not previously been charged;
(b) then, adjust the Account balance for the applicable
Investment Return Rate(s); and
(c) then, credit to the Account balance the amount to be
credited to that Account in accordance with
subsection 3.3 that have not previously been
credited.
.3. Crediting Under Deferral Election. The balance of a
Participant's Account for any Plan Year shall be credited,
in accordance with the provisions of paragraph 3.2(c), with
the amount by which his Compensation for the year is reduced
pursuant to a Deferral Election. Such crediting shall occur
as of the date on which such Compensation would otherwise
have been paid to the Participant by the Employer were it
not for the reduction made pursuant to the Deferral Election
or, if such date is not an Accounting Date, as of the first
Accounting Date occurring thereafter.
.4. Investment Return Rates. The "Investment Return
Rate(s)" with respect to the Account(s), or portions of the
Account(s), of any Participant for any period shall be the
Investment Return
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Rate(s) elected by the individual from
among the following alternatives in accordance with
subsection 3.5:
(a) The Investment Return Rates described in paragraph
3.6(b), provided that no Investment Return Rate
based on stock or other securities of the Company
shall be offered under this paragraph 3.6(a).
(b) The return from such other investment alternatives
(if any) for that period which, in the discretion of
the Committee, are offered from time to time under
this paragraph 3.4(b).
Subject to the provisions of subsection 3.6, and any other
applicable provisions of the Plan, the Committee may
eliminate any Investment Return Rate alternative at any
time; provided, however, that the Company may not
retroactively eliminate any Investment Return Rate
alternative.
.5. Employee Selection of Investment Return Rate. Subject
to the terms of the Plan, a Participant may elect the
Investment Return Rate(s) that will apply to all of his
Accounts for any Plan Year, by filing an election with the
Plan Administrator as to such Investment Return Rate(s),
subject to the following:
(a) if the Investment Return Rate(s) being selected is
for the first year in which an Eligible Employee
participates in the Plan, the election as to
Investment Return Rate(s) must be filed by the due
date for filing the Participant's Deferral Election
for that year, or at such earlier time as may be
established by the Plan Administrator; and
(b) in all other cases, the election must be filed prior
to the beginning of such Plan Year, or at such
earlier time as may be established by the Plan
Administrator.
The same Investment Return Rate(s) shall apply to all
Accounts of a Participant for any Plan Year. To the extent
permitted by the Committee, the Participant may elect to
have different Investment Return Rates apply to different
portions of his Account balances for any Plan Year.
.6. Protected Investment Return Rates. At all times the
Plan is in effect, the Plan shall provide that the Investment Return
- 81 -
Rate(s) offered to each Participant shall include the Investment
Return Rate described in paragraph 3.6(a), or each of the
Investment Return Rates described in paragraph 3.6(b).
(a) The Investment Return Rate described in this
paragraph 3.6(a) for any period shall be the sum of:
(i) the short-term borrowing rate for the Company
for the period, plus (ii) 2.0 percentage points.
(b) The Investment Return Rates described in this
paragraph 3.6(b) for any period shall be each of the
respective rates of investment return provided by
each of the investment funds available under the
Savings Plan for that period, subject to the
following:
(i) The rate of investment return with respect
to the Company Stock Fund under the Savings
Plan (or any investment fund based primarily
on the return on stock or other securities
of the Company, or any successor to the
Company) need not be included as an
Investment Return Rate under this Plan.
(ii) The net investment return provided by an
investment fund under the Savings Plan shall
be the rate determined after reduction for
any investment management fee or other,
similar administrative fee or charge, to the
extent that such fee or charge is applied
under the Savings Plan in determining the
net investment return of such fund.
(iii) The net investment return from an investment
fund under the Savings Plan shall not be
reduced to reflect income taxes paid or
payable with respect to such return;
provided, however, that if, after the
Effective Date, there is a material change
in the applicable income tax laws, the rate
of investment return may be adjusted by the
Company to reflect income taxes to the
extent that the Company reasonably
determines such adjustment is necessary to
preserve the benefit of the Plan, as
originally established, for the Participants
and the Company.
(iv) The Investment Return Rates offered pursuant to
this paragraph 3.6(b) shall be revised from time
- 82 -
to time to reflect changes in the investment
funds offered under the Savings Plan; provided,
however, that the recognition (with respect to
this Plan) of any such changes in the investment
funds offered by the Savings Plan may, in the
discretion of the Company, be delayed for up
to twelve months after such change is
effective under the Savings Plan.
Nothing in this subsection 3.6 shall be construed to require
the Plan to permit a Participant to select between the
Investment Return Rate described in paragraph 3.6(a), and
the Investment Return Rates described in paragraph 3.6(b),
with respect to the same period.
4
Distributions
.1. General. Subject to this Section 4 and Section 5
(relating to change in control), the balance of a
Participant's Account with respect to any year shall be
distributed in accordance with the Participant's Deferral
Election applicable to that Account. In no event shall the
amount distributed with respect to any Participant's Account
as of any date exceed the amount of the Account balance as
of that date.
.2. Distribution Election. A Participant's Deferral
Election for any year shall specify the manner (including
the time and form of distribution) in which the Account
attributable to such election shall be distributed, subject
to such restrictions and limitations as may be imposed by
the Committee.
.3. Unforeseeable Emergency. Prior to the date otherwise
scheduled for distribution of his benefits under the Plan,
upon a showing of an unforeseeable emergency, a Participant
may elect to accelerate payment of an amount not exceeding
the lesser of (a) the amount necessary to meet the emergency
or (b) the sum of his Account balance(s) under the Plan.
For purposes of the Plan, the term "unforeseeable emergency"
shall mean an unanticipated emergency that is caused by an
event beyond the control of the Participant (or the control
of the beneficiary, if the amount is payable to a
beneficiary) and that would result in severe financial
hardship to the individual if early withdrawal were not
permitted. The determination of "unforeseeable emergency" shall
- 83 -
be made by the Plan Administrator, based on such
information as the Plan Administrator shall deem to be
necessary.
.4. Sale of Business. If all or a substantial portion of
the assets and business of an Employer (the "Selling
Employer") is sold or otherwise transferred to a company
(the "Purchaser") that is not a Related Company (a "Sale
Transaction"), and in connection with the Sale Transaction,
any Participant is employed by the Purchaser, then the
Selling Employer may, in its sole discretion, discharge all
obligation to the Participant by accelerating the date on
which the Participant's Plan benefits are payable; provided,
however, that any such acceleration shall be effective only
if (i) the payment is made not later than 180 days following
the date of the Sale Transaction, and (ii) the lump sum
payable in settlement of the Employer's obligations to the
Participant under the Plan is equal to 100% of the
Participant's Account balances as of the date of payment.
.5. Designation of Beneficiary. Each Participant from
time to time, by signing a form furnished by the Plan
Administrator, may designate any legal or natural person or
persons (who may be designated contingently or successively)
to whom his benefits under the Plan are to be paid if he
dies before he receives all of his benefits. A beneficiary
designation form will be effective only when the signed form
is filed with the Plan Administrator while the Participant
is alive and will cancel all beneficiary designation forms
filed earlier. Except as otherwise specifically provided in
this subsection 4.5, if a deceased Participant failed to
designate a beneficiary as provided above, or if the
designated beneficiary of a deceased Participant dies before
him or before complete payment of the Participant's
benefits, his benefits shall be paid to the legal
representative or representatives of the estate of the last
to die of the Participant and his designated beneficiary.
.6. Distributions to Disabled Persons. Notwithstanding
the provisions of this Section 4, if, in the Plan
Administrator's opinion, a Participant or beneficiary is
under a legal disability or is in any way incapacitated so
as to be unable to manage his financial affairs, the Plan
Administrator may direct that payment be made to a relative
or friend of such person for his benefit until claim is made
by a conservator or other person legally charged with the
care of his person or his estate, and such payment shall be
in lieu of any such payment to such Participant or
beneficiary. Thereafter, any benefits under the Plan to
which such Participant or beneficiary is entitled shall be paid to such
- 84 -
conservator or other person legally charged with the care of his
person or his estate.
.7. Benefits May Not be Assigned. Neither the Participant
nor any other person shall have any voluntary or involuntary
right to commute, sell, assign, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable
hereunder, or any part hereof, which are expressly declared
to be unassignable and non-transferable. No part of the
amounts payable shall be, prior to actual payment, subject
to seizure or sequestration for payment of any debts,
judgements, alimony or separate maintenance owed by the
Participant or any other person, or be transferred by
operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.
.8. Offset. Notwithstanding the provisions of subsection
4.7, if, at the time payments are to be made under the Plan,
the Participant or beneficiary or both are indebted or
obligated to any Employer or Related Company, then the
payments remaining to be made to the Participant or the
beneficiary or both may, at the discretion of the Plan
Administrator, be reduced by the amount of such
indebtedness, or obligation, provided, however, that an
election by the Plan Administrator not to reduce any such
payment shall not constitute a waiver of the claim for such
indebtedness or obligation.
5
Change in Control
.1. Distribution on Change in Control. Upon the
occurrence of a Change in Control, each Participant shall
receive a lump sum distribution equal to 100% of the
Participant's Account balances determined as of the date of
the Change in Control. Such distributions shall be made to
Participants regardless of any elections that may otherwise
be applicable to them under the Plan, and shall be made as
soon as practicable after the date of such Change in
Control, but in no event later than 15 days after the
occurrence of such Change in Control. Payments under this
subsection 5.1 shall be in lieu of any amounts that would
otherwise be payable after the date as of which the
Participant's Account balance is determined for purposes of
payment under this subsection.
- 85 -
.2. Change in Control Definition. For purposes of the
Plan, a "Change in Control" will be deemed to occur on the
earliest of the existence of one of the following and the
receipt of all necessary regulatory approvals therefor:
(a) the acquisition by an entity, person or group
(including all Affiliates or Associates of such
entity, person or group) of beneficial ownership, as
that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, of capital stock of
the Company entitled to exercise more than 20% of
the outstanding voting power of all capital stock of
the Company ("Voting Power");
(b) the effective time of (i) a merger or consolidation
of the Company with one or more other corporations
as a result of which the holders of the outstanding
Voting Power of the Company immediately prior to
such merger or consolidation (other than the
surviving or resulting corporation or any Affiliate
or Associate thereof) hold less than 80% of the
Voting Power of the surviving or resulting
corporation, (ii) a transfer of a majority of the
Voting Power other than to an entity of which the
Company owns at least 80% of the Voting Power, or
(iii) a transfer (other than a sale/leaseback
transaction) of a Substantial Portion of the
Property of the Company other than to an entity of
which the Company owns at least 80% of the Voting
Power unless, within ten (10) days after such
transfer of Property, the Board of Directors of the
Company as constituted immediately before such
transfer determines that such transfer shall not be
a Change in Control hereunder; or
(c) the election to the Board of Directors of the
Company, of directors constituting a majority of the
number of the directors in office unless such
directors were recommended for election by the
existing Board of Directors.
For purposes of this subsection 5.2, (A) the term
"Affiliate" or "Associate" shall have the meaning set forth
in Rule 12b-2 under the Securities Exchange Act of 1934; and
(B) the term "Substantial Portion of the Property of the
Company" shall mean 80% of the aggregate book value of the
assets of the Company and its Affiliates and Associates as
set forth in the most recent balance sheet of the Company,
prepared on a consolidated basis, by its regularly employed,
independent public accountants.
- 86 -
Source of Benefit Payments
.1. Liability for Benefit Payments. Subject to the
provisions of this Section 6, an Employer shall be liable
for payment of benefits under the Plan with respect to any
Participant to the extent that such benefits are
attributable to the deferral of Compensation otherwise
payable by that Employer to the Participant. Any disputes
relating to liability of Employers for benefit payments
shall be resolved by the Committee.
.2. No Guarantee. Neither a Participant nor any other
person shall, by reason of the Plan, acquire any right in or
title to any assets, funds or property of the Employers
whatsoever, including, without limitation, any specific
funds, assets, or other property which the Employers, in
their sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a
contractual right to the amounts, if any, payable under the
Plan, unsecured by any assets of the Employers. Nothing
contained in the Plan shall constitute a guarantee by any of
the Employers that the assets of the Employers shall be
sufficient to pay any benefits to any person.
.3. Transfer to Related Employer. If a Participant leaves
the employ of an Employer (the "Original Employer") and
becomes the employee of another Employer or a Related
Company (the "New Employer") then, with the consent of the
Original Employer and the New Employer, but without the
consent of the Participant, the liability of the Original
Employer to the Participant under the Plan may be
transferred to the New Employer. In the event of such
transfer:
(a) The Original Employer shall thereafter have no
obligation to the Participant under the Plan.
(b) The New Employer's rights and obligations with
respect to the Participant shall be governed by the
terms of the Plan, with the New Employer substituted
for the Original Employer under the Plan with
respect to the obligation to pay benefits to the
Participant.
- 87 -
The New Employer shall not be required to give
effect to the Participant's Deferral Election with
respect to remuneration earned at the New Employer.
7
Committee
.1. Powers of Committee. Responsibility for the day-to-
day administration of the Plan shall be vested in the Plan
Administrator, which shall be the Committee. The authority
to control and manage all other aspects of the operation and
administration of the Plan shall also be vested in the
Committee. The Committee is authorized to interpret the
Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, and to determine the terms
and provisions of any agreements made pursuant to the Plan,
and to make all other determinations that may be necessary
or advisable for the administration of the Plan. Except as
otherwise specifically provided by the Plan, any
determinations to be made by the Committee under the Plan
shall be decided by the Committee in its sole discretion.
Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on
all persons.
.2. Delegation by Committee. The Committee may allocate
all or any portion of its responsibilities and powers to any
one or more of its members and may delegate all or any part
of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be
revoked at any time. Until the Committee takes action to
the contrary:
(a) The chief executive officer of the Company shall be
delegated the power and responsibility to take all
actions assigned to or permitted to be taken by the
Committee under Section 2, Section 3, and Section 4
(other than the powers and responsibility of the
Plan Administrator).
(b) The powers and responsibilities of the Plan
Administrator shall be delegated to the Employee Services
Department of the Company, subject to such direction as
may be provided to the Employee Services Department from
- 88 -
time to time by the Committee and the chief executive
officer of the Company.
.3. Information to be Furnished to Committee. The
Employers and Related Companies shall furnish the Committee
with such data and information as may be required for it to
discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's
employment, termination of employment, leave of absence,
reemployment and Compensation shall be conclusive on all
persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must
furnish the Committee such evidence, data or information as
the Committee considers desirable to carry out the Plan.
.4. Liability and Indemnification of Committee. No member
or authorized delegate of the Committee shall be liable to
any person for any action taken or omitted in connection
with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Employers
be liable to any person for any such action unless
attributable to fraud or willful misconduct on the part of a
director or employee of the Employers. The Committee, the
individual members thereof, and persons acting as the
authorized delegates of the Committee under the Plan, shall
be indemnified by the Employers against any and all
liabilities, losses, costs and expenses (including legal
fees and expenses) of whatsoever kind and nature which may
be imposed on, incurred by or asserted against the Committee
or its members or authorized delegates by reason of the
performance of a Committee function if the Committee or its
members or authorized delegates did not act dishonestly or
in willful violation of the law or regulation under which
such liability, loss, cost or expense arises. This
indemnification shall not duplicate but may supplement any
coverage available under any applicable insurance.
8
Amendment and Termination
The Committee may, at any time, amend or terminate the
Plan, subject to the following:
(a) Subject to the following provisions of this Section
8, no amendment or termination may materially
adversely affect the rights of any Participant or
beneficiary under the Plan.
- 89 -
(b) The Committee may revoke the right to defer
Compensation under the Plan; provided, however, that
no such revocation shall apply to the Compensation
of any Participant to the extent that the revocation
is adopted by the Committee after the date the
Compensation is otherwise required to be credited to
the Participant's Account under the Plan.
(c) The Committee may amend the Plan to eliminate any
Investment Return alternative; provided, however,
that the Plan may not be amended to retroactively
eliminate any Investment Return alternative, and
further provided that the provisions of subsection
3.6 (relating to Protected Investment Return Rates)
may not be amended or otherwise modified to
materially adversely affect any Participant's rights
under that subsection without the express written
consent of such Participant.
(d) The Plan may not be amended to delay the date on
which benefits are otherwise payable under the Plan
without the consent of each affected Participant.
The Committee may amend the Plan to accelerate the
date on which Plan benefits are otherwise payable
under the Plan; provided, however, that any such
amendment (and any termination of the Plan having
the effect of such acceleration) shall be effective
only if the acceleration results in payment of a
lump sum of all benefits for all Participants at
substantially the same time; and further provided
that the lump sum payable in settlement of each
Employer's obligations to each Participant under the
Plan shall be equal to 100% of each Participant's
Account balances as of the date of payment.
(e) Notwithstanding any other provision of the Plan to
the contrary, the Committee may not delegate its
rights and responsibilities under this Section 8;
provided, however, that, the Board of Directors of
the Company may, from time to time, substitute
itself, or another committee of the Board of
Directors of the Company, for the Compensation and
Nominating Committee under this Section 8.
- 90 -
APPENDIX A
Accounting Dates -- 3.2
Affiliate -- 5.2
Associate -- 5.2
Change in Control -- 5.2
Company -- 1.1
Committee -- 7.0
Compensation -- 2.3
Deferral Election -- 2.2
Effective Date -- 1.2
Eligible Employee -- 2.1
Employer -- 1.3
Investment Return Rate -- 3.4
New Employer -- 6.3
Original Employer -- 6.3
Plan -- 1.1
Plan Year -- 1.5
Purchaser -- 4.4
Related Company -- 1.3
Retirement Plan -- 1.10
Sale Transaction -- 4.4
Savings Plan -- 1.10
Selling Employer -- 4.4
Substantial Portion of the
Property of the Company -- 5.2
Unforeseeable Emergency -- 4.3
Voting Power -- 5.2
- 91 -
ILLINOIS POWER COMPANY EXHIBIT 12
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(Thousands of Dollars)
Year Ended December 31, Supplemental** Supplement Supplemental **
1989 1989 1990 1990 1991 1992 1993 1993
Earnings Available for Fixed Charges:
Net Income (Loss) per "Statement of Income" $(288,432) $(288,432) $(78,484) $(78,484) $109,244 $122,088 $ (55,751) $ (55,751)
Add:
Income Taxes:
Current ( 43,577) ( 43,577) 21,307 21,307 29,369 22,930 25,260 25,260
Deferred - Net 91,764 91,764 36,545 36,545 45,990 63,739 82,057 82,057
Allocated income taxes ( 9,306) ( 9,306) 2,608 2,608 ( 1,348)( 6,632) (12,599) (12,599)
Investment tax credit - Deferred ( 8,787) ( 8,787) ( 14,121) ( 14,121) ( 11)( 519) (782) (782)
Income tax effect of disallowed costs (105,482) (105,482) ( 24,759) ( 24,759) - - (70,638) (70,638)
Interest on long-term debt 216,029 216,029 191,559 191,559 176,179 160,795 154,110 154,110
Amortization of debt expense and
premium-net, and other interest charges 7,846 7,846 13,162 13,162 9,004 12,195 17,007 17,007
One-third of all rentals (Estimated to be
representative of the interest
component) 4,185 4,185 5,053 5,053 4,996 5,117 5,992 5,992
Interest on In-Core Fuel 8,020 8,020 6,802 6,802 8,862 8,278 6,174 6,174
Disallowed Clinton plant costs - 451,244 - 160,328 - - - 270,956
Earnings (loss) available for fixed charges $(127,740) $323,504 $159,672 $320,000 $382,285 $387,991 $150,830 $421,786
Fixed charges:
Interest on long-term debt $216,029 $216,029 $191,559 $191,559 $176,179 $160,795 $154,110 $154,110
Amortization of debt expense and
premium-net, and other interest charges 27,004 27,004 31,093 31,093 25,553 25,785 27,619 27,619
One-third of all rentals (Estimated to be
representative of the interest
component) 4,185 4,185 5,053 5,053 4,996 5,117 5,992 5,992
Total Fixed charges $247,218 $247,218 $227,705 $227,705 $206,728 $191,697 $187,721 $187,721
Ratio of earnings to fixed charges (0.52)* 1.31 0.70 * 1.41 1.85 2.02 0.80 * 2.25
* Earnings are inadequate to cover fixed charges. Additional earnings of
$374,958, $68,033 and 36,891 for 1989, 1990, and 1993,
respectively, are required to attain a one-to-one ratio of Earnings to
Fixed Charges.
** Supplemental ratio of earnings to fixed charges presented to exclude
Disallowed Clinton plant costs.
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Exhibit 13
Illinois Power Company 1993 Annual Report
The Illinois Power Company 1993 Annual Report was
filed with the Securities and Exchange Commission.
REFERENCE: IPWR10EX13
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EXHIBIT 21
ILLINOIS POWER COMPANY
Name of State or Other Name Subsidiary
Subsidiary Jurisdiction of Incorporation Doing Business Under
Electric Energy, Illinois Electric Energy,
Inc. Inc.
IP Gas Supply Company Illinois IP Gas Supply
Company
Illinois Power Fuel Illinois Illinois Power Fuel
Company Company
IP Group, Inc. Illinois IP Group, Inc.
Illinova Corporation Illinois Illinova Corporation
IP Merging Corporation Illinois IP Merging
Corporation
IPG Dominguez, Co. Illinois Illinois
Dominguez, Co.
IPG Lap Cogen, Inc. Illinois IPG Lap Cogen, Inc.
IPG Aztec, Co. Illinois IPG Aztec, Co.
IPG Panorama, Co. Illinois IPG Panorama, Co.
IPG Canfield, Co. Illinois IPG Canfield, Co.
IPG Western, Inc. Illinois IPG Western, Inc.
IPG Eastern, Inc. Illinois IPG Eastern, Inc.
IPG Ferndale, Inc. Illinois IPG Ferndale, Inc.
IPG Frederickson, Inc. Illinois IPG Frederickson,
Inc.
IPG Sterling, Co. Illinois IPG Sterling, Co.
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EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-22068), the
Registration Statement on Form S-8 (No. 33-60278), and the
Registration Statement on Form S-8 (No. 33-66124), and in
the Prospectuses constituting part of the Registration
Statement on Form S-3 (No. 33-50173), the Registration
Statement on Form S-3 (No. 33-52048), the Registration
Statement on Form S-3 (No. 33-62506), and the Registration
Statement on Form S-3 (No. 33-25699) of Illinois Power
Company of our report dated February 9, 1994, appearing on
page 26 of the Annual Report to Stockholders which is
incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on
the Financial Statement Schedules, which appears on page 43
of this Form 10-K.
\s\ Price Waterhouse
PRICE WATERHOUSE
March 25, 1994
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