ML20104A238

Annual Rept 1978

ML20104A238
Person / Time
Site:	Clinton
Issue date:	02/27/1979
From:	ILLINOIS POWER CO.
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ML20104A236	List: ML20104A233 ML20104A238
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NUDOCS 7903050370
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Ill/NOIS I!ETiBNIS E0ieilDSC!(if pgygg 3 esc _n,amangg;;

COMPANY so-wtl% z W 2-2Ftc) AnnualReport 39030563sy 1978

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1 ILLINDIS POWER COMPANY MM f&

AnnualReport 1978 CONTENTS Page Highlights of 1978 . .. .... .... .. ..... .. .... 2 Letter to Stockholders .. ... ............. . . ..... 3 The Annual Report Earnings, Revenues, and Sales . . . . . . . .. ... . 4 Financing . . . . . . . . . . . .... . .. ... . ... 4 Stock Ownership Plans . . .. . .. .... 4 Request for Rate Relief .. . ....... . .. 6 Construction Program . . . ... . . . . 6 Gas Service . ... . . . . .. ... 8 Electric Service . .. .. .. .. . .. .. . 8 Systems Reliability . . . .. ....... ........ 9 Fuel Supply . . . . . .. 9 Environmental Protection ... ... .. . . . ... 9 Research and Daelopment . . . . . 10 Consumer Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Board of Directors .. .. .. .. .. .. ...... . . 12 The Board and Officers ... . .. ... .. 13 Financial Statements .. .. .. .. ... .. ... 14 Management's Discussion and Analysis of The Statements of income . . .. . . 25 Two Year Dividends and Stock Prices by Quarters . 26 Operating Statistics . ... . . .. .. ... 27 Map ..... .. . .... . .. . . . . .. . ... Inside Back Cover M - %\l%2.

Ikdki 2-2.VI9 1903050351 lilinois Power Company is a public utility engaged primarily in the generation, transmission, distribution and sale of electric energy and the distribution and sale of natural gas in the State of Illinois.

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I Highlights of 1978 1977 1978 increase 12,951 13,574 4.8 Electric sales-kilowatt-hours (millions)

$383,567 $452,207 17.9 Electric revenues (thousands) 938 1,035 10.3 Gas sales-therms (millions)

$183.820 $219,807 19.6 Gas revenues (thousands)

$567,387 $672,014 18.4 Total operating revenues (thousands)

$ 73,664 $ 82,361 11.8 Net income (thousands)

$ 60,407 $ 66,662 10.4 Earnings available for common stock (thousands) 22,52: 24,302 7.9 Average number of shares outstanding (thousands)

$2.68 $2.74 2.2 Earnings per share of common stock What We Received and What We Paid Out or Set Aside 1977 1978 1978 % We Received From-(Thousands of Douars)

$383,567 $452,207 67.3 Sales of electricity 183,820 219,807 32.7 Sales of gas

$567,387 $672,014 100.0 We Paid or Set Aside For-S 52,427 $ 61,173 9.1 Payrolls and benefits to employees engaged in operations 117,812 145,486 21.6 Gas purchased for resale 8,664 5,505 .8 iower purchased for resale (30,855) (47,078) (7.0) Power interchanged-net 148,553 207,082 30.8 Fuel for electric plants 35,288 38,692 5.8 Materials and other expenses 47,188 51,569 7.7 Recovery of cost of property due to wear and obsolescence 71,277 79,468 11.8 Taxes-federal, state and local 19,573 22,793 3.4 Investmer't tax credit deferred-net Use of funds invested in our business-(20,183) (28,929) (4.3) Allowance for funds used during construction 43,979 53,892 8.0 . Interest-including short-term loans 13.590 15,699 2.3 Preferred stock dividends 50,051 56,252 8.4 Common stock dividends 10,023 10,410 1.6 Future use in our business

$567,387 $672,014 100.0 2

l TO Our Stockholders:

Last y:ar's results, while showing to pay inflated costs, support needed Continuing troubles in the oil-som3 improvement over 1977, were construction, and provide adequate producing countries of the Middle

! not as good as we had hoped. return to our investors. East make it ever more urgent to Earnings were adversely affected by There are two underlying public reduce our dependency upon their two rather severe ice storms, a issues in the electric rate case. One oil at the prices they decide to prolonged coal strike, and an is the inclusion in the rate base of charge. The notion that solar energy incr:ase in electric sales that was some $240 million of the $500 million or the wind can be developed in

! below our expectations. During we have invested in the nuclear time to substitute significantly for thD coal strike we wers able to station we are building near Clinton, coal and nuclear fuels during the continue full electric service.We Illinois. This pay-as-you-go principle remainder of this century is not sn r:sponded promptly to the is indispensable to our ability to meet alternative;it is a delusion.

l divistation caused by the ice the energy requirements of our We believe that our customers storms. I am proud of the way our customers at the lowest possible appreciate the low rates and reliable employees handled these costs to them in the 1980's. service we have traditionally j

em:rg:ncies. The second issue is our decision provided. The coal strike of last Our ability to provide reliable to build a nuclear generating station. year and the severe winter weather s rvice at low rates is a result of This is an issue in our rate case only of the last three years-with I decisions and actions taken years because the anti-nuclear forces have shortages that forced school and L ego. We are now planning and chosen to make it one. Their public industry closings in many other building for the years ahead. As we stand is that they are fighting our rate sections of the country-gave us a do so, the most critical problem we case to stop or delay the construction chance to show our customers that i face is the ability to finance our of our station at Clinton, which is we are able to plan and build to see i

construction program. We have scheduled to start producing them through these emergencies.

be n, and are now, a financially electricity before the end of 1982. We believe that the facts will show strong utility. We want to remain so. The entire electric utility industry- that our continued financial health is it is for this reason that we filed with private, public, and cooperative- in their best interests as well as the th3 Illinois Commerce Commission and the Carter Administration, as well bestinterests of our stockholders.

a rcqu:st for a generalincrease in as previous administrations, are in Sincerely, our cl ctric and gas rates on accord that the energy needs of our Jrnuary 9,1979. nation can be met between now and Th3 rate filing is a complete and the end of the century only by recurate documentation of our building additional coal-burning and Wendell J. Kelley needs. Additional revenue is needed nuclear generating stations. Chairman and President 3

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Earnings per share of our common stock compared to 7.2 per cent in 1977. Sal:s were $2.74 for 1978, compared to $2.68 to our residential customers increased Earnings, Revenues, earned in 1977. The higher earnings in only 3.8 per cent in 1978, reflecting the and Sales 1978 reflect increased sales of both apparent conservation efforts by our electricity and gas and the effect of rate customers and slightly cooler weather increases granted by the Illinois during the 1978 summer as compared to Commerce Commission in June,1977. 1977. Sales to commercial and industrial 1978 eamings were, however, adversely customers, although adversely affected affected by the continuing increased by the United Mine Workers of America costs of operating our business and by coal strike during the first quarter of 1978, the increased capital costs of our showed an increase of 5.1 per cent due to construction program. In addition,1978 the economic growth of our territory.

earnings reflect the financialimpact of the Net interchange sales of electric energy ice storms which struck the central area of to other electric utilities were about S47 our service territory in late March and the million in 1978, an increase of southern area of our service territory on approximately 52.6 per cent above December 31. the 1977 level. This was made Total revenues for the Company were possible by an increased demand for S672 million, an increase of $105 million electric energy by other utilities, by the or 18.4 per cent over 1977. Electric Company having Edequate coal supplies revenues of $452 million for 1978 were up to make such sales, and by the

$69 million or 17.9 per cent. They reflect comparatively favorable prices at which the rate increase effective June 16,1977, the Company was able to provide the recovery of increased fuel costs and electric energy.

increased kilowatt-hour sales. Our gas Therm gas sales increased by 10.3 revenues were S220 million, an increase per cent in 1978 compared to a 5.1 of $36 million or 19.6 per cent over 1977. per cent decrease in 1977. This increase They reflect the effect of the rate order results primarily from improved levels of effective June 16,1977, the recovery of gas supply from our pipeline suppliers, increased costs of natural gas, and increased sales to our space heating increased therm sales. customers due to the colder weather in Kilowatt-hour sales of electricity 1978 than in 1977, and two releases of increased by 4.8 per cent in 1978 gas for new customers.

The financing requirements of our 1978 were $312 million. We estimate 1979 construction program plus the refunding capital requirements at S310 million for Financing of $15 million of first mortgage bonds construction purposes and $15 million to which matured on February 1,1978 refund a bond issue maturing on July 1, resulted in two major security issues 1979. To meet these requirements we during the year. In May,2.5 million shares anticipate approximately S170 million of of common stock were sold to a group of permanent financing in 1979, with the underwriters at a price of $23.55 per share balance to be provided through short-for a total of $58.9 million. The shares term borrowing and internally generated were offered to the public by the funds. The types, amounts, and timing underwriters at $24.25 per share. In of these permanent financings have not August, we sold $100 million of first yet been determined.

mortgage bonds,8%% series due 2008, The sale of ownership interests totaling at a price of 99.125 per cent of the 20 per cent in Unit No.1 of the Clinton principal amount for an effective annual nuclear power station to two electric interest cost of 8.96 per cent. The net cooperatives was completed in October.

proceeds to the Company were S99.1 Construction estimates and financing million. requirements reflect the sale.

Our 1978 construction expenditures Stock Ownership The Automatic Reinvestment and Stock Ownership Plan were amended effective Plans Purchase Plan and the Employees Stock August 1,1978 to provide that shares 4

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I Electric Revenues Gas Revenues (MILLIONS OF DOLLARS) (MILLIONS OF DOLLARS) 460 460 440 440 420 420 400 400 380 380 360 360 l

340 340 320 I 320 300 -

300 280 -

280 2W - -

2M 240 - -

240 220 - - -

220 200 - - -

200 180 - - - -

180 160 - - - - -

160 140 - - - - - - -

140 -

120 - - - - - - - - -

120 - -

100 - - - - - - - - - 100 - - -

80 - - - - - - - - -

80 - - - - - - -

80 _._ - - - - _ _ _ - 60 _ - _ _ - - - - -

40 - - - - - - - - - 40 - - - - - - - - -

20 - - - - - - - - - 20 - - - - - - - - -

0 0 69 70 71 72 73 74 75 76 77 78 69 70 71 72 73 74 75 76 77 78 Electric Peak Loads Gas Peak Loads (IN THOUSANDS OF KW) (IN THOUSANDS OF THERMS) 3000 9000 2800 8400 2600 7800 2400 - -

7200 2200 - - - - 6600 - -

2000 - - - - -

6000 - - - -

1800 - - - - - - -

3400 - - - - - - - - -

1000 - - - - - - - - -

4800 - - - - - - - - -

1400 - - - - - - - - -

4200 - - - - - - - - -

1200 - - - - - - - - -

3600 - - - - - - - - -

1000 - - - - - - - - - 3000 - - - - - - - - -

800 - - - - - - - - -

2400 - - - - - - - - -

600 - - - - - - - - -

1800 - - - - - - - - -

400 - - - - - - - - - 1200 - - - - - - - - -

200 - - - - - - - - - 600 - - - - - - - - -

0 0 69 70 71 72 73 74 75 76 77 78 69 70 71 72 73 74 75 76 77 78 5

purchased through the reinvestment of and other material from D. F. M:ek, dividends and interest will be at 95 Secretary and Treasurer, Illinois Power per cent of market price instead of the Company,500 South 27th Street, previous 100 per cent. Although our Decatur, lilinois 62525.

experience is limited, to date the The Tax Reduction Act Stock Ownership additional participation in response to Plan and Trust (TRASOP) established in this change has been gratifying. 1977 was amended to permit the These plans have become an important Company one-half of one per cent factor in raising new capital since their investment tax credit in addition to the inception in January,1976. Approximately one per cent credit taken in 1977. This 7,950 security holders and 630 employees one-half of one per cent is allowed by law are now participating, and more than if common stock equalin value is 374,000 shares of new issue common contributed to the Plan and if the amount stock have been purchased through the is matched by voluntary employee plans, resulting in additional capital of contributions. We were pleased that 64 approximately $9,150,000. The per cent of our employees eligibla to reinvestment of dividends and interest participate made matching contributions.

may be an even more significant factor including the employees' matc'*g in obtaining capital in the future, as contributions, we have issued 209,987 more stockholders and bondholders shares to the plan. Approximately take advantage of the discount available $5,320,000 of additional ccpital has been on investment of ir.terest and dividends. provided to the Company in 1977 and Security holders interested in obtaining 1978 as a result of the provisions more information about the reinvestment of the Plan.

plan may obtain a copy of the prospectus A decision was made in 1978 to seek both electric and gas rate design. A new increases in electric and gas rates, and " time-of-day" electric rate will be offered Request for Rate Relief the request was filed on January 9,1979 to certain residential customers on a with the Illinois Commerce Commission. If voluntary basis, and a change in our approved, the proposed electric rates residential Rate 1 (small use) will allow would increase estimated 1980 annual an estimated additional 50,000 customers revenues by about $69 million, or 14 per to move to this lower rate structure. All of cent. The proposed gas rates would our gas rates have been changed to increase estimated 1980 annual rev3nues eliminate the " declining block" rate by about $23 million, or 7.9 per cent. design concept.

We requested that approximately $240 The Illinois Commerce Commission is million of construction work in progress be permitted 11 months to issue a decision.

included in the electric rate base. If this Accordingly, an order is expected to be is granted, no allowance for funds used entered in early December,1979.

during construction will be capitalized on The Federal Energy Regulatory the amount included in rate base. Commission approved an electric rate With the entire proposed rate increases, increase of 14.5 per cent to the nine Illinois Power Company's electric rates electric cooperatives served by lilinois would still be among the lowest of the Power Company, effective October 1, major utilities operating in the state and 1978. This will result in an annual increase our gas rates would compare favorably. in Company revenues of $2.4 million.

This filing includes some changes in The 450,000 kilowatt electric generating on the construction of our 950,000 unit under construction at the Havana kilowatt nuclear Unit No.1 located Construction Program power station since 1974 was completed at Clinton, Illinois. Activities have been and placed in commercial operation concentrated in the power block area and in June,1978.The new unit burns low in completion of the earth work.

sulfur coal. The installation of reinforced concrete Substantial progress has been made walls, columns and floors in the power 6

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block area has continu d.The turbine from adjacent properties to accommodate pedestal concrete work has been formation of the 5,000 acre lake and ,

completed. Work was initiated on the constiuction of a discharge flume. l reinforced concrete wall of the The lake was filled by May, and several l containment buildir:g in 1978 and will preparations were begun during 1978 for continue into 1979. its future recreational use.These Structural and supporting members aro activities included stocking the lake with ,

being constructed in the containment 2.5 million fish and seeding nearly 500 I building to support the reactor pressure acres of land where construction was vessel when it is lifted into place in 1979. finished.

Several additional major pieces of Construction expenditures for 1979 equipment, including turbine-generator are anticipated to be $310 million.

parts and the condensers, have been Approximately $289 million will be for received and will be installed as electric facilities and $21 million for gas construction progresses. Installation of facilities. For the five year period,1979 equipment and piping and electrical through 1983, construction expenditures systems has been started in completed are estimated at $1.3 billion. These elevations of the power block buildings. figures are exclusive of financial The remaining earthwork was participation in Clinton Unit No.1 by essentially completed in 1978. This electric cooperatives which became part consisted of modifying drainage facilities owners in 1978.

Record withdrawals were made from our These additional sales were made eight storage fields during the 1977-78 possible by improved long term forecasts Gas Service heating season. However, the supply of gas supply, the continuing effects of in these fields was restored to normal conservation and the conversion of some levels by the beginning of the 1978-79 industrial customers from limited firm heating season. service to interruptible service.

Two new releases of natural gas A major occurrence during the year of were made during the year. One was for significance to the gas industry was residential, commercial and all industrial Congress' passage of the Natural Gas uses, up to 3600 therms per day, for Policy Act. The anticipated higher gas customers who had applied by April 25, costs and the effects of the Act's 1978.The other release was to all incremental pricing provisions will be a customers whose requests for limited challenge to the Company's marketing quantities of gas for residential, skills in retaining existing industrial gas commercial or industrial space heating customers and in expanding gas service were received by Septembi 11,1978. to new uses.

The peak demand on the Company's management program, we expect long electric system came on September 19, term peak demand to increase about four Electric Service 1978. It was a demand of 2,825,010 per cent annually and kilowatt-hour kilowatts. This figure is less than one per consumption to increase at about five cent short of the Company's 1977 peak. per cent annually.

The past year's reduction in peak load We have succeeded in maintaining growth is attributable to moderate weather electric rates among the lowest in Illinois conditions, customer conservation efforts, while providing highly reliable service.

general economic conditions and pricing This has been accomplished despite pressures, particularly as related to the problems of regulatory lag, related residential sector during the traditional construction delays, environmental summer peak load period when the higher constraints, public intervention and the summer rates prevailed. absence of a clear, workable Federal As a result of our ongoing load energy policy.

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The Company is working closely with transmission and distribution systems in neighboring utilities, the Mid-America central Illinois in 1978. At the height of the Systems Reliability Interpool Network (MAIN) and the storm, more than 125,000 households National Electric Reliability Council served by lilinois Power were without (NERC) to assure the development of power. On New Year's weekend, another reliable transmission systems. severe storm damaged our system, The nationwide coal strike which began primarily in the southern and central parts on December 6,1977 and lasted through of our territory.

March 25,1978, tested the electric utility Hard work by our employees, a systems. Our generating and transmission concerted communication effort with our systems and interconnections were used communities and emergency agencies, extensively as we supplied large quantities the tremendous effort of our customers to of power and transported power from help and their fortitude in accepting the states west of the Mississippi River to inconveniences minimized potentially states further east. severe crisis situations.

An Easter weekend ice storm devastated Sufficient quantities of both coal and oil approximately 107 million tons. We expect allowed continuous generation and to complete negotiations early in 1979 for Fuel Supply electric service during the 110-day mine two additional long term coal supply workers strike without curtailment to our agreements.

customers. Coal inventories have since Fuel for the Clinton nuclear units been replenished and are at normal levels, through 1989 will be supplied under terms l

Coal was used for 92.3 per cent of the of two contracts with Kerr-McGee Nuclear electric peneration in 1978. Oil accounted Corporation. They provide for the f for 7.2 per cent and other fuels for purchase and conversion of approximately 0.5 per cent. 5.4 million pounds of uranium to be l

i The estimated average requirement for delivered to the Department of Energy coal is 7.6 million tons annually over the with whom we have 30 year contracts for next ten years. Future coal needs for our enrichment requirements. A contract existing coal-fired units are estimated to with the General Electric Company l

be 178 million tons, based on a useful provides approximately 15 years of fuel plant life of 40 years. Contracts in effect f abrication requirements each for Unit f as of December 31,1978, including No.1 and Unit No. 2.

t extension options, provide for delivery of Rules to implement the 1977 Amendments for a rule change which, if adopted, would E ivironmental to the Clean Air Act were proposed in put the station in compliance. A sulfur Protection 1978, and we also await final rules for the dioxide monitoring network and a Clean Water Act of 1977. The financial computer system used to predict the impact of these new laws upon the impact of emissions at ground level have Company cannot be fully determined until shown since April,1978 that air quality

) regulations are final. standards are not threatened by Baldwin Our Wood River, Hennepin, Vermilion emissions.

I and Havana powe. stations are in The Environmental Protection Agency compliance with ah Federal and State has proposed several alternative emission air regulations. Our Baldwin station meets standards applicable to new emitting all requirements except the State sulfur facilities such as fossil fuel power plants.

dioxide standard when generation levels The EPA-proposed alternatives would cost exceed about 80 per cent of fullload. the electric utility industry several billion The plant has received a variance from dollars more than those proposed and the Illinois Pollution Control Board until supported by the Company and other July 1,1979. We have petitioned the Board utilities.

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Our power stations continua to meet Conservation and Recovery Act, and the most of the current water effluent Toxic Substances Control Act.These requirements. Where we are out of regulations, when finalized, will affect ash compliance, construction is in progress disposal at all coal-fired power stations.

to satisfy the requirements. Studies are in progress to identify what we The Federal Clean Water Act of 1977 must do to comply with these requirements.

extensively modified the earlier Federal The Company's accumulated capital Water Pollution Control Act as amended in expenditures for environmental programs 1972. Increased emphasis has been are now more than $97 million.1978 placed on the control of potentially toxic operating expenses for environmental pollutants. In this respect, the concerns of rela'ed activities exceeded $51 million.

the Clean Water Act overlap those of the This araounted to approximately 11.3 Safe Drinking Water Act, Resource per cent of electric revenue.

In 1978, we continued our support of feasible manner as a fuel for future electric Research several research projects and technical generating plants on our system and the e id Development studies. Such expenditures for the year systems of other utilities.

were about $3.1 million. Included were in 1978, a final assessment of three funds for research in nuclear power, coal alternatives for a demonstration plant was ash use, air and water standards, coal completed, and our Wood River power gasification, solar, construction, load station was selected as a demonstration management and other technologies to facility. Final arrangements to begin meet future energy needs in environ- construction of a demonstration facility, mentally and economically acceptable with completion scheduled for 1982, are ways. expected to be made in 1979. Partial The largest single expenditure, $1.6 funding for construction is expected from million, was made through the Electric the State of Illinois.

Power Research Institute, an organization Our 1979 research and development of 540 public, private and cooperative expenditures are estimated at $2.3 million, utilities. including $430,000 for Kilngas and $1.8 1978 was our third year of support for million for the Electric Power Research the Allis-Chalmers Kilngas coal institute's program. EPRl's research gasification project. We provided $475,000 funding for 1979 totals $202 million, toward basic engineering, application including $89.4 million for fossil fuel and studies and demonstration assessment advanced systems; $54.6 million for activities during the year. nuclear power; $33.3 million for electrical The Kilngas process uses a rotary systems; $14.8 million for energy analysis ported kiln to produce low Btu gas which and environment; ar.d $1.4 million for has the potential for use in an environ- other expenditures.

mentally acceptable and economically The Company improved existing consumer estimated utility bills for new structures programs and launched new ones in 1978. to be built.

Consumer Affairs Illinois Power Company was the first We sponsored two energy efficiency utility in Illinois chartered to administer conferences for commercial and industrial the National Energy Watch, a program customers during the year which enabled designed to help residential customers them to observe first hand new energy determine if they are using energy wisely. conservation and unergy efficient products Two free programs continued during and processes.

the year were the summer energy audit The Company participated with the and computerized heat loss programs. State and consumer groups in structuring During the summer,18,442 customers new regulations governing credit and accepted our free energy " audit" of their collection practices.

homes. The computerized heat loss There were significant improvements program helps residential customers, made to the Company's computerized builders, and contractors determine on-line customer service system along I10 i

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COAL GASIFICATION This artist's concept shows the Allis-Chalmers Kilngas system as it would appear in relation to existing struc-tures at Illinois Power Company's Wood River power sta-tion. The coal gasification demonstration project could be operative in 1982. O O

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l with intensive training in consumir created within the Company in 1978 to relations for all customer contact people. begin to address consumer concerns Our " level payment" or budget through communication with government billing program was further promoted in agencies, organized consumer groups, 1978 and 20,000 additional customers and special groups such as senior chose to use it. citizens, minorities and labor.

A consumer affairs staff position was The Company's Board of Directors shown Presently there are committees constituted on page 13 represents a diverse range of in the following areas:

Board of Directors management expertise in the fields of Finance Committee manufacturing, publishing, finance, The Finance Comm.ttee i meets to review agriculture and education.

the Company's financial forecast and During 1978 Mr. Harold G. Meenen financing plans. Members of the retired on September 1, as Vice Chairman committee are:

of the Company after 28 years of service.

He will retire from the Board of Directors George E. Hatmaker, Chairman on March 29,1979. William C. Gerstner On March 30,1978 Mr. Richard P. Stone Wendell J. Kelley was elected to the Board. Mr. Stone is a Harold G. Meenen grain and seed farm operator from Keith R. Potter Springfield, Illinois. He also holds Boyd F. Schenk directorships in the Illinois Foundation Charles W. Wells Seeds, Inc. and the First National Bank Audit Committee of Springfield.

During the year, the Board continued the The audit committee recommends the practice of holding occasional meetings appointment of the Company's independent accountants, confers with in co:nmunities within the territory served the independent accountants, reviews the by the Company. Local business, scope of the audit and the results of professional, educational and political leaders are invited to these meetings for auditors' examinations. The members are:

an opportunity to discuss the Company's Vernon K. Zimmerman, Chairman past and future performance. Robert J. Burow in carrying out the Board's respon. John H. Leslie sibilities. members serve on various Richard P. Stone committees to study Company problems. Compensation and These committees make their recom- Organization Committee mendations to the full Board at its regular This committee reviews compensation of meetings for discussion and final dec,s,on.

ii elected company officers, reviews benefit plans and recommends nominees to fill vacancies on the Board of Directors.

The members are:

Keith R. Potter, Chairman Robert J. Burow Wendell J. Kelley John H. Leslie Boyd F. Schenk 12 )

Board of Directors Officers Wtindell J. Kelley Robert J. Burow Chairman and President Consultant and Retired Publisher Th3 Commercial-News William C. Gerstner Charles W. Wells Danville, Illinois Executive Vice Executive Vice President President Larry D. Haab Leonard J. Koch William C. Gerstner Vice President Vice President Ex:cutive Vice President of the Company Decatur, lilinois James O. McHood L N. Talbott Vice President Vice President George E. Hatmaker William E. Warren Corporate Director Vice President Springfield, filinois D. F. Meek Arthur E. Gray Secretary and Treasurer Controller and Assistant Secretary Wendell J. Kelley Chairman and Presidant of the Company Johnson Kanady J. B. Burdick Decrtt.r. Illinois Assistant to the President Assistant Treasurer John H. Leslie Chiirman of the Board of Signode Ccip3 ration (mr.nufacturer of steel and plastic strapping and packaging systems)

Glinview, Illinois Transfer Agent and Registrar Continental lilinois National Bank and Trust Harold G. Meer:en Company of Chicago Retirrd Vice Cha:rmaa of the Company 231 South LaSalle Street, Chicago, Illinois 60693 D:,catur, Illinois Stockholder Records and Dividend Disbursing Office Keith R. Potter D. F. Meek, Secretary and Treasurer Executive Vice President of Illinois Power Company International Harvester Company 500 South 27th Street (manufacturer of trucus; agncultural, construction, Decatur, Illinois 62525 tr.J industrial equipment; and gas turbines) (217) 424-7154 Chicago, lilinois The annual stockholders

• meeting will be held March 29, f 979, at the executive ottice of the Company at f 0 A.M. Proxies for this meeting will Boyd F. Schenk be requested by the management. A prory state-l President and Chief Executive Officer of ment wi/I be mailed to stockholders about March P t incorporated (processor and marketer of food products and other Consumer goods) I* ISIO-St. Louis, Missourt This report and the financial statements con-tained herein are submitted for the general in-formation of the stockholders of the Company as such and are not intended to induce, or to be Richard P. Stone used in connection with, any sale or purchase of Grain and Seed Farm Operator secunties.

Springfield, firinois

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Charles W. Wells Ex:cutive Vice President of the Company Dicatur, Illinois Vernon K. Zimmerman ILLINOIS POWER COMPANY De:n, College of Commerce and Business Administration Principal Office Univ:rsity of IJlinois Monticello, Illinois 61856 Urbana, Illinois Note: The principal occupation of each director Executive Office and officer of Illinois Power Company is 500 South 27th Street Decatur, Illinois 62525 that listed foffowing his name.

Phone (217) 424 6600 13 j

l Din;3 Sheets December 31, 1978 1977 (inOesands of ooirars)

ASSETS Utility Plant, at original cost Electric (includes construction work in progress of $487.546,000 and $520,867,000, respectively) . $1,952,401 $1,765.240 Gas (includes construction work in progiess of $5.217,000 and $3,697.000, respectively) .... .. . . .. 295,105 281,935 2,247,506 2,047,175 Less-Accumulated depreciation .. . . . .. . . 508,504 464,497 1,739,002 1,582.678 Nuclear fuel in process . . .. 13,983 13.410 Acquisition adjustment (less amortization of $1,188,000 and $942,000, respective!y) . . 2,744 2.990 1,755,729 1.599,078 Pollution Control Construction Funds held by Trustee .. .. - 2,999 investments and Other Assets . . . . .. . . .. . .. 7,892 8,846 Current Assets Cash .. .... ..... .. . . ..... . . 7,889 9,620 Temporary cash investments, at cost, which approximates market - 20,500 Accounts receivab!e (less a!!owances of $2,000,000 and $1,500,00'), respectively.

for doubtful accounts) . .. . 56,521 46,055 Materials and supplies, at average cost . 90,354 76,101 Prepayments and miscellaneous accounts receivable .. . .. 13,071 6,067 167,835 158,343 Deferred Charges Unamortized debt expcnse . . . . .. .. . ... 2,134 1,647 Other ... . .. . .. . .... . . . . ... . . . .. . .. . 4,916 5.749 7,050 7,396

$1,938,506 $1,776.662 CAPITAL AND LIABILITIES Capitalization Common stock-No par value. 30,000,000 shares authorized; 25.474,381 and 22.599,334 shares outstanding, respectively, stated at . . . .. . . $ 405,088 $ 337,218 Retained earnings . . . . . . ... . .. ...... . .. . .. .. ... .. ... 157,532 147,122 Less-Capital stock expense . . .. ... . . . . . .. .. . 3,427 3,048 Total common stock equity .. . .. . . ......... 559,193 481,292 Preferred stock (see details on page 15) .. . . .. .. 215,171 215.171 Long-term debt (see details on page 15) .. . . . .. .. . . 776,559 692,255 Total capitalization . .. . . . . . .. . . ... .. 1,550,923 1,388,718 Current Liabilities Accounts payable . .... ... . ... . .. ..... ... . ..... . .... .... 60,032 49,148 Notes payable . . .. .... ... . ... .. . .. .. .. ..... 10,000 -

Long-term debt maturing within one year .. .. . ........ 15,000 15,000 Dividends payable . . . . . .. .. .. ... . ... . ........ .. .. . .. . 18,458 16,808 Federal and state income taxes accrued . . . . . . . .... . .... 209 3,606 General taxes accrued ... . . . . ... ....... .... .. .......... . 25,818 22.243 Interest accrued . . ........ . .. . . . . . .... . 18,228 14,517 Other . . .. ... . ... . ... . ...... .. . . . ...... ......... . .. 16,868 16,663 164,613 137.985 Other Advances received with respect to the sale of ownership interests in the Clinton power station .. . ... . .. . . .... . .. ... .. . ... - 70,054 Accumulated deferred income taxes ... .... ...... ... . ...... ... . .. 134,664 114,389 Accumulated deferred investment tax credit . . .. ....... . ......... .. .. 88,306 65.516 222,970 249,959

$1,938,506 $1,776.66'

$60 notes 10 financial statements whlCh are an integist part Of these statements.

14

ILLINOls POWER COMPANY / ANNUAL REPORT 1978 [

Long-Term Debt cnd Preferred Stock December 31, 1978 1977 (Thousands of Dollars)

LNG-TERM DEBT First mortgage bonds *-

3%% series due 1978 . .... .. . ... . . ... . ... . .. $ - $ 15,000 2% % series due 1979 . . . . . . . . . . ........ ... .. .. ... ... . 15,000 15,000 2%% series due 1980 . ... ... .. . . . ... . . .. 10,000 10,000 3%% series due 1982 . . . .... .. . .... . . . .. 20,000 20,000 3%% series due 1983 . . .... . . .. . ......... . .......... 20,000 20,000 3%% series due 1986 . . . . . . .. ..... . . . ... . 20,000 20,000 4% series due 1988 . . . . .. ..... .. ... . .. . . ... .. . .. . 25,000 25,000 4% % series due 1993 . . . . . . . . . . . .. . . ............. .

35,000 35,000 5.85% series due 1996 . . ... ... .. .... .. . . .. .. ... .... 40,000 40,000 6%% series due 1998 . .. .. .. . .. . ....... . ... . 25,000 25,000 6%% series due 1998 ... ... . . .. . ... ... ... ..... . ... . 45,000 45.000 8.35% series due 1999 ... . . . .... . ... . . .. .. .. 35,000 35,000 9% series due 2000 . . . . . . . . . . . .. ... ........ ... . . ....... . 35,000 35,000 7.60% series due 2001 ... . ....... . . .. ... 35,000 35,000 7%% series due 2003 . . . . . . . . . . . . . .. .. . .. . . 60,000 60,000 6.60% series due 2004 (Pollution Control Series A) ... . . 8,500 8,500 10%% series due 2004 ... .......... . ... .. ...... . .. 50,000 50,000 8%% series due 2006 . . . . . . . . . . . . ......... . . ... . 100,000 100.000 6% series due 2007 (Pollution Control Series B) . ... ... . ... .. 18,700 18,700 8 % % series due 2007 . . . . . . . . . . . . . . . . . . . . .. ... . . . 100,000 100,000 8%% series due 2008 . . . ... ...... . ...... . . . 100,000 -

Total long. term debt ... .... . ... . . ....... . 797,200 712,200 Unamortized premium on debt . . . . . .... . .. . ..... .... 299 343 Unamortized discount on debt . . . . . . . . . . . . . . .. .. .. . ... .... ... (5,940) (5,288) 791,559 707.255 Less first mortgage bonds classified aa a current liability . . . . . . . 15,000 15,000

$776,559 $692.255

• Tha above tonds are secured by a first enortgage lien on substantially all of the fixed property. tranchises and rights of the Company with certain minor exceptions expressly provided in the enortgage securing the bonds.

The remaining balance of net bor dable additions at December 31.1978 was approximately $419,000,000.

PREFERRED STOOK Serial preferred steck, cumulative, $50 par value-Authorized 5,000,000 shares; outstanding 4,280.000 shares.

Series Shares Redemption prices 4.08 % 300.000 $51.50 ..... ... .. .. . .. .. ... ......... $ 15,000 $ 15.000 4 26 % 150,000 51.50 . .. . .. ..... .. . . ... . .. ... . 7,500 7.500 4.70 % 200,000 51.50 . .... .. ...... .... . ....... .. 10,000 10,000 4.42 % 150,000 51.50 . ... . ... . . .. .. .. . . . 7,500 7,500 4.20 % 180,000 52.00 . .. ..... ..... ... .. .. . ...... . 9,000 9,000 53.96 prior to August 1,1981 8.24 % 600,000 52.93 thereafter and prior to August 1,1986 ......... 30,000 30,000 51.90 thereafter 53.575 prior to July 1,1982 7.56 % 700.000 52.63 thereafter and prior to July 1,1987 ......... .. . 35,000 35,000 51.685 thereafter

' 55.55 prior to March 1,1981" 54.25 thereafter and prior to March 1,1986 50,000 50,000 8.94 % 1,000,000 , ... . .. . ..

52.90 thereafter and prior to March 1.1991 51.60 thereafter

55.29 prior to August 1.1982" 54.29 thereafter and prior to August 1,1987 50,000 50,000 8.00 % 1.000,000 ,

53.29 thereafter and pnor to August 1,1992

, 52.29 thereafter Premiurn on preferred stock . .. ..... .. .... . . . . . .. .. 1,171 1.171 Total preferred stock . . . . . . . ..... ............. ... .......... $215,171 $215,171

• • Not redeemable through a refunding operation at a cost to the Company of less than 8 92% per annum prior to March 1.1981 for the 8 94% series and 7.93% per annum prior to August 1.1982 for the 8 00% series.

15

. l

I St:tements cf In:ome For the Years Ended December 31, 1978 1977 1976 Operating Revenues Electric . .. ..... . ..... ....... . .. .. .. ....... $452,207 $383,567 $303,066 Gas . . . .. . ..... .... . ........ .. . . . .... 219,807 183,820 158,595 Steam . .. ......... . ... . . ...... .. - - -

Total . .. . .. .... .. . .......... .. 672,014 567.387 461,661 Operating Expenses and Taxes Fuel for electric plants . . . . . . . . . . . . . . . . . . . ... .. . .. 207,082 148,553 123,782 Power purchased for resale . .... ..... . ........ ..... . 5,505 8,664 7,092 Power interchanged-net . . ... .. ................. ..... (47,078) (30.855) (51.484:

Gas purchased for resale ... ..... .... .. ..... .. . .. . 145,486 117,812 91,476 Other cperating expenses . ................... ........... .. 70,463 59,827 53,295 Maintenance . .................. ........ ....... ... .. 33,954 28,919 25.726 Depreciation . . .. ... ....... ........ ... . .. . .. 51,569 47,188 45,556 General taxes . . . .. ...................... . ...... 54,325 46,974 40,368 State income taxes-current ....................... ............ 2,697 3.188 2.444

-def erred ( net ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,846 980 1,199 Federal income taxes-current . . . . . . . . . . ............. ...... 6,812 15,760 16,001

-deferred (net) ... ...... ...... .. ...... 18,638 9.053 11.433 investment tax credit deferred-net ... .... ..... ..... ....... 22,793 19.573 10,994 Total .. .... .................................... 574,092 475,636 377,882 Operating income . ... ...... .... . . ......... .... ... 97,922 91.751 83,779 Other Income Allowance for funds used during construction-All funds-prior to January 1,1977 . . . . . . .. . .. . . . ..,

- - 10,503 Other funds-after December 31.1976 ............. ..... ..... 21,321 15,137 -

Miscellaneous-net .. .. ........................... .. .. 9,402 5,709 3,174 Tctal ... . . . ........ .. ... ... .. 30,723 20,846 13,677 loc oma before interest charges . .... ..... .. . . . ...... .. 128,645 112.597 97,456 Interest Charg as interest on long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,453 42.091 35,927 Gther interest charges . .... .......................... .. .. 1,439 1,888 1,744 Allowance for borrowed funds used during construction-after December 31,1976 ..................................... (7,608) (5,046) -

Total ... ......... ............... . . .... 46,284 38,933 37,671 Net Income . . ... ...... ... .............. ........... 82,361 73,664 59.785 Preferred dividend requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,699 13,257 10,606 Net income applicable to common stock ....... ................... $ 66,662 S 60,407 $ 49.179 Weighted average number of common shares outstanding du rin g th e p e riod . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,302,139 22,521.013 20,369,958 Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.74 $2.68 $2.41 Cash dividends declared per common share . . . . . . . . . . . . . . . . . . . . . . . . $2.28 $2.22 $2.20 Retained Earnings For the Years Ended December 31, 1978 1977 (Thousands of Dollars)

Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $147,122 $137.099 N e t in c o m e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,361 73,664 229,483 210,763 Less-Cash dividends-Pref e rre d stoc k . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,699 13,590 Common stock, $2.28 and $2.22 per share, respectively . . . . . . . . . . . 56,252 50,051 71,951 63.641 Balance at End of Yea r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $157,532 $147,122 Sen notes to r:nancial statements which are an integral part of these statements.

16 )

ILLINOIS POWER COMPANY / ANNUAL REPORT 1978

[

1975 1974 1973 1972 1971 1970 1969 (Thousarids of Doitars)

$275,809 $221,126 $199,489 $177,209 $159,175 $149,046 $138,909 133,142 108,789 94,953 95,445 86,173 81,221 73,825

- - - - 48 166 126 408,951 329,915 294,442 272,654 245,396 230,433 212,860 88,725 63,013 41,408 34,470 31,892 23,518 17,545 5,591 4,727 4,179 3,671 3,156 4.726 5,081 (29,522) (18,321) (10.547) 266 (9,806) (6,886) 835 71,288 56,539 47,728 46,469 40,722 35,140 30,270 49,631 41,083 37,649 32,302 29,737 27,598 24,521 19,506 17,584 16.131 15,500 13,583 11,327 11,302 42,911 39,282 36,103 32,178 30,230 25,667 23,279 37,036 31,210 28,833 26,282 23,719 22,425 20,077 2,381 1,717 1,732 1,479 1,868 2,340 635 1,166 817 813 714 702 191 52 11,575 15,831 14,099 15,265 20,711 23,450 29,134 11,681 7,367 7,199 6,838 4,342 3,993 3,335 15,034 1,706 5,118 1,567 395 3.935 871 327,003 262,555 230,445 217,001 191,251 177,424 166,997 81,948 67,360 63.997 55,653 54,145 53,009 45,863 l

7,459 7,960 7,189 7,339 4,018 6,089 5,516 1,967 2,231 2.143 2,101 1,174 1,842 1,742 9,426 10,191 9.332 9,440 5,192 7,931 7,258 91,374 77,551 73,329 65,093 59,337 60,940 53,121 33,144 28,779 25,237 22,810 20,615 17,486 14,719 1,508 4,122 891 1,079 1,511 1,432 734 34,652 32,901 26,128 23,889 22,126 18,918 15,453 1 56,722 44,650 47,201 41,204 37,211 42,022 37,668 7,229 7,229 7,229 5,729 3,078 2,111 2,111

$ 49,493 3 37,421 $ 39,972 $ 35,475 $ 34,133 $ 39,911 $ 35.557 18,277,397 16,544,110 15,940,000 14,887,945 13,946,849 13,801,644 13,311,233

$2.71 $2.26 $2.51 $2.38 $2.45 $2.89 $2.67

$2.20 $2.20 $2.20 $2.20 $2.20 $2.10 $1.90 M

• l a Cli10tlSC b.CO, UE~""

To the Board of Directors of Illinois Power Company:

In our opinion, the accompanying balance sheets and related statements of income, of retained earnings and of sources of funds provided for gross property additions present fairly the financial position of Illinois Power Company at December 31,1978 and 1977, the results of its operations and the sources Report of of funds provided for gross property additions for the years then ended, in conformity with generally accepted accounting principles consistently applied. Also, in our opinion, the statements of income and g*P,gg of sources of funds provided for gross property additions for the eight years ended December 31,1976, Accountants which have been prepared from the applicable statements covered by our reports on each of those years, present fairly the financ:al information included therein. Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

February 1,1979 bdb ^ ^ @O .

17 t____._______________________ _ _ _____.________.______ _______ _____ ._ _. .. . __

Statement 3 cf Sour:cs cf Funds Pr;vided for Cross Property Additions For the Years Ended December 31, Total 1978 1977 1976 Funds Provided from Operations:

Net income . . . ........ .. . $ 522,488 $ 82.361 $ 73,664 $ 59.785 Items not requiring working capital-Depreciation, amortization and miscellaneous . 392.317 53,003 49,761 49,845 Deferred income taxes-net .. 92,359 20,484 10,033 12,632 Investment tax credit deferred-net . . . .. . 81,986 22,793 19.573 10,994 Allowance for funds used during construction . .. (105.185) (28,929) (20.183) (10,503)

Total funds provided from operations .. 983,965 149,712 132,848 122.753 Dividends on-Preferred stock . . (75,411) (15,699) (13,590) (10,979)

-Common stock . .. ...... .. (383,534) (56,252) (50,051) (45,226)

Net funds provided from operations . . 525,020 77,761 69,207 66,548 Funds Obtained from External Sources:

Proceeds from sale of-Common stock .. 308,788 67,870 3.788 63,712

-Preferred stock . ... ... 165,856 - 50,450 50.100 Capital stock expense . . . . . ..... (2.100) (379) (275) (525)

Proceeds from sale of bonds . . ....... . .... 542,200 100,000 118,700 100,000 Pollution control construction funds held by trustee - 2,999 (2,999) -

Proceeds from sale of ownership interests in the Clinton power station . . . . . ... . . .. 103,980 33,926 42,855 27.199 Net increase (decrease) in notes payable . .. . . . 10,000 10,000 -

(10,000)

Retirement of bonds .. .. . .. . .. (60.000) (15,000) -

(45,000)

Total funds obtained from external sources 1,068,724 199,416 212.519 185,486 Other Funds Provided (Used):

Net decrease (increase) in working capital * . . ... (30.939) 7,136 (19.414) (13.177)

Miscellaneous-net . .. .. .. .... . 2.585 (814) 1.371 965 Total other funds provided (used) ... (28,354) 6,322 (18,043) (12,212)

Total funds from above sources . . . . . . . . . . . . . . . . 1,565,390 283,499 263,683 239,822 Allowance for funds used during construction . 105,185 28,929 20,183 10,503 Gross property additions ....... ........ 51,670.575 $312,428 $283,866 $250,325 Decreate (Increase) In Components of Working Capital

• Cash and temporary investments . . . ..... .. $ 5,039 $ 22,231 $ (534) $(17.997)

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . (39,839) (10,466) (3,632) (8.313)

Materials and supplies . . . . . . . . . . . . .......... (82,829) (14,253) (24,868) (11.149)

Accounts payable . . . . . ... . ............. 47.926 10,884 9,832 6,429 Dividends payable . . .. . . ... 12,152 1,650 1.528 2,533 Ac c ru ed tax e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,862 178 (4,466) 5,529 Interest accrued . .... . . . ... ... 15,637 3,711 692 6,520 Other-net ... ...... ......................... 2,113 (6,799) 2,034 3,271 S (30,939) $ 7,136 g) $(13,177)

• Excluding notes payable and long-term debt maturing within one year.

Gross Property Additions and Retirements For the Years Ended December 31, Total 1978 1977 1976 Addltions -Eleetric ........................ $1.538,833 $296,597 $272,462 $239,936

-Gas .. .. ... .. ....... 131,742 15,831 11,404 10,389

$1,670,575 $312,428 $283,866 $250.325 Retirements-Electric ........................ $ 57.920 $ 6,247 $ 5.040 $ 8,010

-Gas........................... 18,886 2,280 1,746 2,034

-O th e r . . . . . . . . . . . . . . . . . . . . . . . . . 517 - - -

$ 77,323 $ 8,527 $ 6,786 S 10,044 see ,otes to I:nancial statements which are an integral part ct these statements 18

ILLINOIS POWER COMPANY / ANNUAL REPORT 1978 [p f

1975 1974 1973 1972 1971 1970 1969 (Thousands of Dollars)

$ 56,722 $ 44,650 $ 47,201 $ 41,204 $ 37,211 $ 42,022 $ 37,668 44,810 41,216 37,532 33,351 31,460 26,930 24,409 12,847 8,184 8,012 7,552 5,f 14 4,184 3,387 15,034 1,706 5,118 1,567 295 3S35 871 (7,459) (7,960) (7,189) (7.339) (4,018) (6 389) (5,516) 121,954 87,796 90,674 76.335 70,092 70,932 60,819 (7,229) (7.229) (7,229) (5,950) (3,284) (2,111) (2,111)

(41,338) (36,993) (35,068) (33,418) (30,778) (29,064) (25.346) 73,387 43,574 48,377 3G,967 36,030 39,807 33,362 47,256 27,894 - 43,306 20,400 15,737 18,825

- - - 35,177 30,129 - -

(186) (139) -

(242) (193) (80) (81)

- 58,500 60,000 - 35,000 35,000 35,000 (12,000) 19,000 (6,000) 8,000 (14,000) 3,000 12,000 35,070 105,255 54,000 86.241 71,336 53,657 _ 65,744 7,378 (27,781) 4,546 (160) 788 (3,096) 12,841 (407) (1,238) (1,743) 5,523 (1,399) 64 263 6,971 (29.019) 2,803 5.363 (611) (3,032) 13.104 115,428 119,810 105,180 128,571 106,755 90,432 112,210 7,459 7,960 7,189 7,339 4,018 6.089 5,516 -

$122,887 $127,770 $112,369 $135,910 $110,773 $ 96.521 $117,726

$ 1,996 $ (3,873) $ 1,985 $ (2,278) $ (1,520) $ 283 $ 4,746 12,749 (25,792) 1,842 (4,077) 26 344 (2,520)

(9,134) (11,944) (1,348) (3,685) (2,367) (1,917) (2,164) 6,983 3,186 (2,896) 8,321 421 (5,557) 10,323 1.210 962 - 1,487 948 942 892 (6.330) 5,101 4,094 (1,023) 2,540 1,872 1.367 (402) 2,827 379 (2) 660 468 784 306 1,752 490 1,097 80 469 (587)

Sy8 $(27,781) $ 4.546 $ (160) $ 788 $ (3,096) $ 12,841 1975 1974 1973 1972 1971 1970 1969 (inousanc:of Donars)

$112.234 $116,637 $ 98,646 $119,893 $ 94,524 $ 82,858 $105,046 10,653 11,133 13,723 16,017 16.249 13,663 12,680

$122.887 $127,770 $112.369 $135,910 $110.773 $ 96,521 $117,726

$ 7,420 $ 6,264 $ 5,7/2 $ 6,532 $ 4,645 $ 3,736 $ 4,284 1,695 2,014 2,126 2,309 1,358 1,400 1,804

- - - - 514 - 3

$ 9,115 $ 8,278 $ 7,868 $ 8,901 $ 6,517 $ 5,196 $ 6,091 19

Notes to Financial Statements Note 1--Summary of Accounting Policies: and tax depreciable lives of electric plant (other than

.The Company is subject to regulations of the Illinois ADR) was not normalized for financial statement pur-Commerce Commission and the Federal Energy Regu. poses prior to June,1977, but is being normalized sub-latory Commission. Because of the rate-making process, sequent thereto in accordance with the provisions of czrtain differences arise in the application of generally an Illinois Commerce Commission order of June,1977 accepted accounting principles as between regulated in an electric rate case. Since the level of rates ap-and non-regulated businesses. Such differences con. proved by the Commission included the normalization cern mainly the time at which various items enter into expense, there was no effect on net income.

the determination of net income in order to follow the Reductions in federal income taxes because of the principle of matching costs and revenues. The Com- investment tax credits have been deferred and are pany's principal accounting policies, including those being amortized to income over the life of the property based on this concept, are desenbed below, which gave rise to the investment tax credits.

Ut/lity Plant-The cost of additions to utility plant and Certain overhead and dismantling costs which are r: placements of units of property retired is capitalized. capitalized for book purposes but claimed currently as Cost includes labor, material, and an allocation of gen. deductions for income tax purposes are normalized.

eral and administrative costs plus an allowance for For purposes of computing income taxes, net de-funds used during construction as described later in preciable utility plant does not include the allowance t this note. Maintenance and repairs, including replace

• for funds used during construction which is capitalized ment of minor items of property, are charged to mainte* for financial statement purposes. Tho tax effect result-nance expense as incurred. When units of depreciable ing from this difference and certain other differences property are retired, the original cost and dismantling in the depreciation bases is reflected currently in net charges, less salvage, are charged to accumulated income.

depreciation.

Federal and state income taxes are allocated be-Depreciation-For financial statement purposes, depre. tween operating and non-operating income and ex-ciation is provided over the estimated lives of the varl. penses. The tax effects relating to non-operating activi-ous classes of electric and gas utility plant by applying ties are included in Other Income-Miscellaneous Net.

composite rates on a straight line basis. (Provisions Allowance for Funds Used During Construct /on-The in 1978 and 1977 for electric were equivalent to ap- Federal Energy Regulatory Commission ("FERC") Uni-proximately 3.4% and 3.5%, respectively, and for gas form System of Accounts defines Allowance for Funds in both 1978 and 1977 were approximately 2.9% of the Used During Construction ("AFDC") as the net cost average depreciable cost). for the period of construction of borrowed funds used for construction purposes and a reasonable rate on Income Taxes-For income tax purposes, the Company other funds when so used. AFDC is capitalized at a computes depreciation using the most liberalized lives rate which is related to the approximate overall cost and methods allowed by the Intemal Revenue Service, of capital reduced by the income tax effect of the The tax offect of additional deductions for income interest portion thereof. While cash is not realized 11x purposes, which result from (a) use of liberalized currently from such allowance, it is realized under the depreciation methods, (b) use of Class Life (ADR) rate making process over the service life of the related Systems, and (c) the amortization of certain facilities, property through increased revenues resulting from Is deferred and recognized in determination of net in- higher rate base and higher depreciation expenso, come for financial statement purposes when book pro.

The rato used in 1978 and 1977 in computing AFDC visions exceed deductions taken for tax purposes. The by the Company was 7% (the effective after tax rate) tax effect which results from the use of different book compounded semi annually, and tax depreciable lives of gas plant (other than ADR) is not normalized for financial statement purposes. The in accordance with a rato order of the Illinois Com-tax effect which results from the use of different book merce Commission, offectivo June 16,1977, the Com-se

pany excluded $79,866,000 of electric plant construc- commitments have a 360-day maturity from the time tion work in progress from the base on which the AFDC of issuance and carry an interest rate equivalent to was computed for the Havana power station Unit No. 6 the prime rate in effect at the time of issuance, adjusted which was placed in service on June 22,1978. Since to the prime rate in effect on the first day of each the order suthorized the inclusion of such expenditures calendar quarter thereafter. The Company has unwrit-in the rate base upon which the Company realizes ten agreements with banks committed for S80,000,000 revenues, there was no material effect on net income. of the total bank commitments to maintain average checking account balances equivalent to 10% of the Unbi/ led Revenue-The Company records revenue as commitments for borrowings from the banks or 15%

billed to its customers on a monthly cycle billing basis. of the borrowings outstanding, whichever is greater, At the end of each month, there is an undetermined The maximum aggregate amount of short-term bor-amount of unbilled electric and gas service which has Leen rendered from the latest date of each cycle billing rowings at any month-end during 1978 and 1977 was

$21,465,000 and $75,115,000, respectively. The aver-to the month-end. Revenues as determined by meters age daily short-term borrowings during these periods read but not billed at year-end became subject to approximated $13,100,000 and $19,500,000, respec-income taxes beginning in 1977. The income tax effect lively (calculated as an average of the daily borrowings of this book-tax timing difference in the recognition outstanding), with a weighted average interest rate of revenues is normalized.

of 7.9% and 6.3%, respectively (calculated by divid-Oebt Premium and Discount-Bond premium, discount Ing the interest expense during the period for such and related expenses are being amortized on a straight. borrowings by the average short term borrowings indi-line basis over the lives of the related issues. cated above).

I*4-I"" "' 8"*

Note 2-investments and Other Assets:

Investments and Other Assets are carried at cost, Income taus NW in N Sahms d Me consist of the following components:

except for the Company's investment at December 31, 1978 and 1977 of $3,983,000 and $3,977,000, respec- December st, tively, in IP Gas Supply Company, a wholly-owned 197s 1977 subsidiary. The investment in IP Gas Supply Company (Thousands of is for the purpose of acquiring interests in gas and Current taxes-oil leases. In accordance with an order from the lilinois Commerce Commission, the accounts of the included in Operating l

Expenses and Taxes . .,. $ 9,509 $18,948 subsidiary are not consolidated with the accounts of included in Other Income-l the Company but are accounted for as an investment Miscellaneous-net ... (4,899) (4,717) on the equity accounting method.

Total current taxes . . . 4,610 14.231 Note 3-Short term Loans and Compensating Deferred taxes-Balances: Book-tax depreciation At December 31, 1978 notes payable consisted of differences-net .. ' 5,7S4 10,190

$10,000,000 in commercial paper bearing in:erest at Certain overhead and an average rate of 10.7% and maturing between Janu- dismantling costs ary 29,1979 and February 13,1979. At December 31, capitalized-net ....., . 4,511 3,909 1477 there were no notes pafable. Book tax revenue recog@on Grences 2M M,4 The Company had unused commitments of 20,484 10,033

$104,440,000 for short term bank borrowings at De- Total deferred taxes cember 31,1978. Unused bank commitments are held Investment tax credit deferred-not 22,793 19.573 available to support the amount of commercial paper , , ,,..

outstanding at any time. Bank borrowings under such Total income taxes , $47,887 $43,837 21

Notes (continued)

Income taxes are less than the amount which would mon stock have been designated for issuance. The be computed by applying the statutory income tax Company also has an Employees Stock Ownership rates to pre-tax income; the principal differences are Plan for which 75,000 shares of common stock have as follows: been designated for issuance. Under these plans the Company issued 211,985 shares during 1978 and Year Ended December 31, 95,520 shares during 1977.

1978 1977 (Thousands of The Company has also established a Tax Reduc-Donars) tion Act Stock Ownership Plan and Trust in order to Computed tax expense at take advantage of the provisions of the Tax Reduction f

statutorf ederal and state Act of 1975, as amended, permitting the Company a income tax rates . . . . . . . . $65.228 $58,844 d 1% p Reductions in income taxes vided common stock of the Company equal in value resulting from- to the additional credit is contributed to the Trust. In Allowance for hads used 1978 this plan was amended to take advantage of dcrirq co.w etion . . . . . . 14,487 10,108 additional investment tax credit up to % of 1o/o pro-vided that such amount is matched by employee con-Bos inx depret ation tributions and that common stock of the Company equal di ferences for t.nich deferred tM are not in value to the additional credit and the employee provided . ......... 1,679 2,733 contributions is contributed to the Trust. In accordance 2,166 with the provisions of this plan, 250,000 shares of Other-not . . ............ 1,175 common stock have been designated for issuance.

Total income taxes . . . $47,887 $43,837 During 1978 and 1977,163,062 and 46,925 shares of common stock, respectively, were issued to the Trust.

Note 5-Pension Costs:

The Company has pension plans covering all officers Note 7-Sale of interest in Clinton Power Station:

and employees. Pension costs, which are funded as On October 16, 1978, pursuant to agreements en-accrued, include current service cos's plus unfunded tered into in August 1976, the Company sold a 10.5%

prior service costs which are being amortized over a interest to Soyland Power Cooperative, Inc. and a 9.5%

period of about 25 years. The Company s pension interest to Western Illinois Power Cooperative, Inc. in the plans were amended during 1978 to provide increased Clinton power station currently under construction. The benefits. The cost of the pension plans was $5,670,000 and $4,520,000 during 1978 and 1977, respectively. sales aggregated $103,980,000, substantially all of Based on the latest actuarial report, the unfunded prior which had been previously advanced to the Company, service costs at December 31, 1978 were approxl. Subsequent to the sale each party is responsible for mately $18,500,000. Pension fund assets exceeded its portion of construction expenditures. The Company's the actuarially-computed value of vested benefits at 80% interest in the power station, including land, December 31,1978. nuclear fuel in process, and allowance for funds used during construction applicable to the Company's inter.

est was $490,152,000 at December 31,1978. The sales Note 6-Capital Stock:

agreements include the provisions that the Company The Company issued 2,500,000 shares of common will exercise control over construction and operation of stock, no par value, in 1978. In 1977, the Company the generating station, the parties will share electricity issued 1,000,000 shares of 8% cumulative preferred generated in proportion to their interests and the Com-stock, $50 par valu ' pany will have certain obligations to provide replace-The Company has an Automatic Reinvestment and mont power to the cooperatives when the units are out Stock Purchase Plan for which 500,000 shares of com- of service.

l 22

f I

Note 8-Commitments and Contingent Liabilities: Note 10-Quarterly FinancialInformation (Unaudited):

R f:rence should be made to " Construction Pro-gram" and " Financing" in the forepart of this annual The following information, in the opinion of the Com-r: port for information concerning construction expendi- pany, includes all adjustments (which include only tures. normal recurring adjustments) necessary for a fair statement of the results of operations for the period.

The Company has been named as a defendant in a suit filed on January 30,1978 in the United States 1ers ten District Court for the Northern District of Illinois by (Thousands of Donere sev:n Illinois municipalities which are interconnected p,7c*M"$

with the Company and which own electric distribution First quarter syst:ms. The complaint alleges that the Company indl* Operating revenues . . . . . . . . $197,925 $163,852 vidually and/or in combination with others (l) restrained Operating income . . . . . . . . 30,376 30,781 trada and commerce in electric power in the State of Net income . . . . . . . . . . . . . . 26,406 26,145 Illinois. (ii) monopolized interstate trade and com- Net income applicable to m:rce in the distribution and sale of electric power common stock . . . . . . . . . . 22,482 23,220 and (iii) applied rate computation provisions in inter-

, Earnings per common conn:ction agreements with plaintiffs substantially to share . . . . . . . . . . . . . . . . . 99c $1.03 less:n competition. The complaint seeks declaratory and injunctive relief and damages against the Com. Second quarter Operating revenues . . . . . . . . 148,632 116,019 pany in an amount estimated at $15,000.000 which Operating income . . . . . . . . . 23,818 16,054 plaintiffs asked be trebled as provided by antitrust law to $45,000,000. The damages are exclusive of interest Net income . . . . . . . . . . . . . . . 20,981 11,739 and costs. The Company has been advised by its Net income applicable to couns:t that in their opinion the Company has, under common stock . . . . . . . . . . 17,056 8,814 th] present state of the law, meritorious defenses to the Eamings per common issu s raised by the complaint. While it is not possible s ha re . . . . . . . . . . . . . . . . . 71c 39c 13 predict the outcome of litigation, after consulting Third quarter with its counsel, the Company believes that it has not Operating revenues . . . . . . . . 160,458 143,797 violated the antitrust laws. Operating income . . . . . . . . . 26,085 27.429 Net income . . . . . . . . . . . . . . . 21,5m 22,02 Note 9-Replacement Cost information Net income applicable to (Unaudited).

• common stock . . . . . . . . . . 17,589 19,129 The replacement cost of the utility plant in service as Eamings per common Cf December 31,1978 and 1977 is significantly higher share ................. 70c 85c than the historical cost reported in the financial state- Fourth quarter ments and as replaced would require a substantially Operating revenues . . . . . . . . 164,999 143,719 greater capital investment due to inf,ation and environ- Operating income . . . . . . . . 17,643 17,487 mental regulations. However, additional costs incurred 13,461 13,168 Net income . . . . . . . . . . . . . .

by the Company in replacing any of its utility plant will Net income applicable to be reflected in the rate base used by the various 9,535 9, W common sM . . . . . . . . . .

regulatory bodies in determining the amount of the Earnings per common return to which the Company is entitled. The Company sha re . . . . . . . . . . . . . . . . . 37c 41c has computed the replacement costs of its utility plant and the related effect on depreciation expense in Quarterly earnings per common share are based on accordance with Securities and Exchange Commission weighted average number of shares outstanding during requirements and such data is reported in its Form the quarter, and the sum of the quarters may not equal 10-K. annual earnings per common share.

23 N_____-___-_______-__________-______

Notes (continued)

Note 11-Segments of Business:

The Company is a public utility engaged in the tric energy and the distribution and sale of natural generation, transmission, distribution and sale of elec- gas.

Year Ended December 31,1978 Year Ended December 31,1977 Total Total Electric Gas Company Electric Gas Company (Thousands of Dollars) (Thousands of Dollars)

Operating information-Operating revenues .. .. $ 452,207 $219,807 $ 672,014 $ 383.567 $183,820 $ 567,387 Operating expenses, excluding provision for income taxes 327,374 193,932 521,306 265,144 161.938 427,082 Pre-tax operating income . ... .. 124,833 25,875 150,708 118.423 21,882 140.305 Allowance for funds used during construction ( AFDC) . . .. . 28,823 106 28,929 20.097 86 20,183 Pre-tax operating income, including AFDC . . . . $ 153,656 $ 25,981 179,637 $ 138.520 $ 21,968 160,488 Other (income) and deductions (9,402) (5,709)

Interest charges .... ..... 53,892 43.979 Provision for income taxes . 52,786 48.554 Net income per accompanying statements of income . . . . . . . . . . $ 82,361 $ 73,664 Other information-Depreciation . ..... . .

.... $ 43,316 $ 8,253 $ 51,569 $ 39,216 $ 7,972 $ 47,188 Capital expenditures . $ 296,597 $ 15,831 $ 312,428 $ 272,462 $ 11,404 $ 283,866 Investment information-Identifiable assets (a) . .

. . . $1,603,847 $245,492 $1,849,339 $1,448,508 $232,113 $1,680,621 Nonutility plant and other investments . . . .... . .. .. 7,892 8,846 Assets utilized for overall Corr pany operations . . ...... ...... 81,275 87,195 Total assets . . . . . . . $1,938,506 $1,776,662 (a) Utility plant, nuclear fuelin process and acquisition adjustment less accumulated depreciation and amortiza-tion, pollution control construction funds held by trustee, fuel, natural gas stored underground and materials and supplies.

i 24

Management'c Discussion and Analysis of The Statements cf In:ome R:ference is made to the Statements of Income, Notes to Financial Statements, Electric Operating Statistics and Gas Operating Statistics for information concerning the results of operations for the period 1974 through 1978.

Th] factors having significant impact on the results of operations and earnings per common share since January 1, 1976 are as follows:

Operating Revenues The increases in electric revenues for 1977 and 1978 were the result of a general rate increase of 11.3%

cffective June 16,1977 and the rate increases to nine wholesale electric cooperative customers of 30% effective June 1,1977 and 14.5% effective October 1,1978; increases in kilowatt-hour sales of 7.2% for 1977 and 4.8% for 1978; and the recovery of increased fuel costs. The rate increases, increased kilowatt-hour sales and recovery of

( increased fuel costs (calculated on the base cost of fuel in effect January 1.1976) accounted for approximately 30%,27% and 43%, respectively, of the 1977 revenue increase,and 23%,15% and 62%, respectively,of the 1978 rev:nue increase.

The major factor accounting for the increase in gas revenues of $25.225.000 in 1977 was the recovery of the increased cost of natural gas. In 1978 the major factors affecting the revenue increase of $35,987,000 were the increased therm sales and the recovery of the increasr d cost of natural gas. Other factors affecting gas revenues w:re the rate order effective June 16,1977 and the changes in the limited firm gas service rate in August 1976, 1977 and 1978. Therm sales decreased 5.1% in 1977 and increased 10.3% in 1978 reflecting the differences in weath:r conditions during the heating seasons, changes in the availability of natural gas for sales to interruptible customers, release of gas to new customers, and customer conservation efforts.

Operating Expenses and Taxes The cost of fuel for electric plants increased $24.8 million and $58.5 million, respectively, in 1977 and 1978.

Th31977 increase resulted from increased prices of fuel which were partially offset by reduced kilowatt-hour gen-cration. In 1978 the increased cost of fuel primarily reflects the continuing escalation of fuel prices as well as an incr:ase in kilowatt hour generation.

Power purchased for resale increased in 1977 and decreased in 1978 primarily due to changes in the availability of off-peak power from Electric Energy, Inc.

The 1977 credit for power interchanged-net decreased about $21 million due to a reduced market demand, redue:d generating capacity available for such sales to other utilities, the need to build-up coal inventory in prepara-tion for the strike by mine workers and increased purchases of interchange power caused by two major electric g:n: rating units being temporarily out of service during most of May,1977. The credit for power interchanged-net incr:ased about $16 million for 1978 which was the combined result of increased generating capacity available for such sales to other utilities, a favorable market for interchange sales, and higher prices for the energy sold due to increased fuel costs.

The cost of gas purchased for resale increased in 1977 primarily as a result of higher prices paid for gas. The 1978 increase reflects both higher prices paid for gas and increased therm sales.

Other operating expenses and maintenance costs increased in 1977 and 1978 as a result of increased ex-

[

t p:nscs for wages and employee benefits as well as the continuing effect of inflationary trends in various other exp:nses. In addition,1978 operating expenses reflect the expenses incurred in the testing of Unit No. 6 at Havana f power station prior to being placed in commercial service, and maintenance expense reflects the additional ex-p;ns:s associated with the March and December,1978 ice storms.

Depreciation in 1978 increased primarily as a result of the addition of Unit No. 6 at the Havena power station which began commercial operation on June 22,1978.

General taxes increased in 1977 and 1978 primarily due to higher lilinois Public Utility taxes resulting from In-creas:d revenues, and higher real estato and personal property taxes resulting from increased assessed valuations and higher tax rates.

The investment tax credit deferred net increased in 1977 and 1978 primarily due to the construction program for Havana Unit No. 6 and Clinton Unit No.1. For a detailed analysis of income tax components, see Note 4 of " Notes to Financial Statements",

25

Other Income The changes in the amount of allowance for funds used during construction in 1977 and 1978 relate to the amount of construction work in progress and the discontinuance of capitalization of allowance for funds used during construction on approximately $80 million of construction work in progress included in the rate base between June 16,1977 and June 22,1978, as explained in Note 1 of " Notes to Financial Statements" Also, after December 31, 1976, a portion of the allowance for funds used during construction is classified as a reduction of interest charges.

The increase in miscellaneous-net in 1977 and 1978 resulted primarily from increased interest income and in-come tax credits applicable to construction projects.

Interest Charges The increases in interest on long-term debt in 1977 and 1978 reflect the issuance of additior.J1 long-term debt in July,1976, May,1977, November,1977 and August,1978.

Earnings Per Common Share The changes in net income applicable to common stock in 1977 and 1978 resulted from the interaction of all the factors discussed herein as well as the issuance of 1,000,000 shares of preferred stock in both March,1976 and August,1977. The changes in earnings per common share in 1977 and 1978 also reflect the increase in the weighted average number of common shares outstanding resulting from the issuance of 2,500,000 shares in October,1976, 2,500,000 shares in May,1978 and the shares issued under the Automatic Reinvestment and Stock Purchase Plan, the Employees Stock Ownership Plan, and the Tax Reduction Act Stock Ownership Plan and Trust which totaled 142,445 shares in 1977 and 375,047 shares in 1978.

Two Year Dividends and Stock Prices by Guarters The Common Stock is listed on the New York Stock Exchange and the Midwest Stock Exchange. The prices below are the prices reported on the Composite Tape. The Preferred Stocks are listed on the New York Stock Exchange and the prices below are the prices on that Exchange.

1977 Stock Prices 1978 Stack Prices 1 2 3 4 1 2 3 4

• Dividends High Low High Low High Low High Low High Low High Low High Low High Low Common 27% 25W 28W 25W 28% 26% 27W 25W 26% 24% 25% 23% 25W 23 25 % 21 %

4.08% Pfd. 5 .51 27 24% 26W 24% 27 24 % 25 % 24 25W 23% 23% 22% 23W 22 23 % 19 %

4 26% Pfd. .53% 27 25 27W 26 28W 27W 28W 26 26 26 25 22W 26 24 24 21 %

4.70% Pfd. .58% 30 28 29W 28% 30 28 % 23 % 28 29 27 % 28 24% 28W 24W 27 24 4.42% Pfd. .55% 29W 26W 28% 27 28W 27 28 26W 26W 26W 26% 24W 24W 23 26 21 4.20% Pfd. .52% 27% 25W 26% 25 27 26 % 27 24 % 27 24 % 25 23 24W 23 24% 21 8 24% Pfd. 1.03 52% 50 51W 48% 53 49 % 51 % 50 50 48 49% 45W 51 44W 48% 42 7.56% Pfd. .94 % 49 % 45 49 % 45 49 46W 47W 46% 46 % 45 45% 42W 46% 41% 44% 40 8.94% Pfd. 1.11 % 56 52% 55W 53W 55W 54 55 % 52 % 54 51 % 53 49 % 54 % 49 % 52 % 48 %

8 00% Pfd. 1.00 - - - - - -

50 48 % 49% 47W 48% 45W 40% 44W 47W 43W

• The amount paid in each quarter during 1977 and 1978. 7he 8 00% Preferred was issued on August 11, 1977 and divi-donds were paid thercatter at the indicated rate.

' 5.55 per common share in 1977 and 5.57 per common share in 1978.

28

Electric Cpecting Statistics 1978 1977 1976 1975 1974 RevenUCS Ohousands of Dollars)

Residential . . . .. $ 151,493 $ 139,458 $ 108,932 $ 104,609 $ 84,306 Commercal and small power . . 102,170 69,947 53,698 49,363 40,791 Large power and 'ight ... .

158,611 149,307 121,735 105,458 83,083 Other . . .. ........ ... .. . 7,631 6,286 5.170 4,441 3,642 R: venues-uttimate consumers 427,905 364,998 289,535 263,871 211,822 Rural cooperatives and municipal utilities . 21,448 15,853 10,920 9,359 7,142 Other electric utilities 66 50 39 28 23 Misctitaneous .. 2,788 2.666 2.572 2,551 2,139

$ 452,207 $ 383,567 $ 303.066 $ 275,809 $ 221.126 Customers at End of Year R:sidential . .... . . .. 455,014 445,130 435,611 426,062 419,742 Commercial and smati power ... 53,051 51,384 51,019 49,996 49,783 Large power and light .. . . 368 1,305 1,340 1,309 1.273 Oth:r . ....... ...... .. 699 692 694 689 692 509,132 498,511 488,664 478,056 471,490 Sales in KWH (Thousands)

Residential . .. . . .. 3,770,703 3,632,898 3,271,719 3,277,664 2,935,760 Commarcial and small power . . . 2,383,521 1,696,894 1,405,389 1,380,771 1,249,428 Large power and light . .. . . 6,271,872 6,541,429 6,412,648 5,759,317 5,692,809 Oth:r .. ... . . . 271,853 260,263 247,298 222,810 201,400 Sales-ultimate consumers . . 12,697,949 12,131,484 11,337,054 10,640,562 10,079,397 Rural cooperatives and municipal utilities 874,452 817,334 736,834 683,026 619,363 Other electric utilities . ... . 2,004 2,035 1,836 1.650 1,448 13,574,405 12,950,853 12,075,724 11,325,238 10,700,208 Generated and Purchased in KWH (Thousands)

G:nerated-St:am . . ........ . .. .. .. . 15,770,060 14,530,570 15,688,384 13,850,240 12,609,371 Hydro and internal combustion 38,039 74,117 55,844 45,795 48,495 Total generated . . .. . 15,808,099 14,604,687 15,744,228 13,896,035 12,657,866 Purchased and interchanged-net . (1,256,163) (666,844) (2,707,988) (1,777,640) (1,218,660)

Total output ... .. , 14,551,936 13,937,843 13,036,240 12,118,395 11,439,206 Less-used and unaccounted for .

977,531 986,990 960,516 793,157 738,998 Balance .. ... . .... . 13,574,405 12.950,853 12,075,724 11.325,238 10,700,208 2,825 2,846 2,570 2,476 2,352 Peak Demand (native load) In KW (thousands)

Net Cenerating Capability in KW (inousands) 3,815 3,412 3,412 3,388 2,813 Due to a change in the Company's rate structure in 1977, thero was a reclassification of customers betwoon the commercial and strail power category and the largo power and light category for the year 1978. As a result of this reclassification, only cus.

tomers having a demand of 500 Kw or greater are classified in the largo power and light category.

27 l

r-ILLINOIS POWER COMPANY / ANNUAL REPOR71978 [p Gas Operating Statistics 1978 1977 1976 1975 1974 l

Revenues (Thousands of Dollars)

Residential -without space heating . . . . .... $ 1,758 $ 1,819 $ 1,801 $ 1,909 $ 1.978 with space heating .. . .. 105,484 91,798 74,521 65,398 57,558 Commercial-without space heating . . . .. 1,722 1,469 2,005 1.508 1,449 with space heating . . . . . .. 37,536 31,098 24,905 21,939 18.446 Industrial -non.interruptible . . . . ..... 30,910 25.641 20,325 16.476 12.217 interruptible .. . . . 40,906 33.376 35,083 26.459 15.517 Revenues-ultimate consumers .. . . .. 218,318 185,201 158,640 133,689 107.165 Interdepartmental revenues-interruptible . . 1,058 75 60 42 79 Miscellaneous . . . . . . . . . . . . . . . .... . . 433 (1.456) (105) (589) 1,545

$ 219,807 $ 183,820 $ 158,595 $ 133,142 $ 108,789 Customers at End of Year Residential -without space heating . . . . . 19,834 21,377 23,204 24.133 25,887 with space heating .. . ..... 319,968 313,900 308,578 302.772 296,706 Commercial-without space heating . . .... . 2,112 2,192 2.465 2,507 2.778 with space heating . ... ... 29,522 29.116 28,771 28,767 28,230 Industrial -non-interruptible . ... ... 470 457 457 223 228 interruptible . . . . . ... . ... 80 102 103 101 110 371,986 367,144 363,578 358,503 353,939 Sales in Therms (Thousands)

Residential -without space heating . . . .. 6,172 6,840 8,321 10,175 11,017 with space heating . . . . . . . . . 489,906 436,838 433,993 420,819 415,240 Commercial-without space heating . . . . . . . 7,986 7.554 12,820 11,441 12,979 with space heating . ... . .. 181,960 166,455 171,562 165.192 162,413 Industrial -non-interruptible . . . . .. ... 181,029 172,089 178,637 168,290 165.548 interruptible . . . . . . . ... . 180,138 147,205 181,784 185.695 206,625 Sales-uttimate consumers . . . . . . . . . . ... 1,027,191 936,981 987,117 961,612 973,822 Interdepartmental sales-interruptible . . . . . . . 8,034 693 720 654 1.667 1,035,225 937,674 987,837 962.266 975,489 Purchased and Produced-Therms (Thousands)

Pu rc ha s e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087,749 1,024.805 1,012,047 1,009,171 1,042,850 Storage-net of (injected) and withdrawn . . . . (14,998) (57,182) 28,269 (340) (25,437)

Purchased gas delivered . . . . . . . . . . . . . . . . . 1,072,751 967,623 1,040,316 1,008,831 1,017,413 Produced . ........ .... .............. 24 2,417 91 36 21 Total . . ......... .................... 1,072,775 970,040 1,040,407 1,008,867 1,017,434 Less-used and unaccounted for ... .... .. 37,550 32,366 52,570 46,601 41,945 Balance . . ..... ...................... 1,035,225 937,674 987,837 962,266 975,489 28

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