ML20126H411

Annual Financial Rept 1980

ML20126H411
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Site:	Clinton
Issue date:	04/03/1981
From:	ILLINOIS POWER CO.
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l 9 The Annual Report of ILLINOIS POWER COMPANY 1980 L

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The Edison Award On June 11, 1980 lilinois Power Company was pre-sented the Edison Electric Institute's highest honor, the i Edison Award, for " distinguished service to the electric  ;

utility industry", The award was in recognition of the videotape "60 Minutes /Our Reply" which we made to I correct inaccuracies in a CBS-TV 60 Minutes program on construction of the Clinton nuclear power station.

More than 2,500 businesses, organizations and individ-uals worldwide have requested copies of our videotape.

The citation to the Company said, in part: "For fore-sight in anticipating and preparing for a potentially mis-leading television broadcast and for innovation in com-municating with the public; for leadership and courage in demonstrating that gross inaccuracies and distor-tions of fact by the electronic media can be effectively countered; and for presenting a valuable case study to the electric utility industry, the media, and the nation at large on the vital importance to the public interest of responsible journalism",

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IP lilinois Power Company ANNUAL REPORT 1980 Contents Page Highlights of 1980 .. . . . .. . 2 Letter to Stockholders . 3 Earnings, Revenues, and Sales , , .. 4 Financing . . 5 Request for Rate increase .. . . 5 Construction Program .. .. . .. 6 Clinton Nuclear Unit Progress . 7 Electric and Gas Services 8 Systems Reliability .. . . 8 Fuel Supply . . . 9 Environmental Protection . . . . 9 Research and Development . ,, 9 Customer Services 11 Report of Management . . 11 Board of Directors . . 12 Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Financial Statements 17 Two Year Dividends and Stock Prices by Quarters 29 Selected Financial Data 29 Supplementary Information to Disclose the Effects of Changing Prices . . 30 Operating Statistics . . 32 The Board and Officers . . . 36

!Ilinois Power Company is a public utahty engaged pnmarily in the generation, transtnission, distribution and sale of electric energy and the ,

distribution and sale of natural gas in the State of Ilhnois. i 1

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Highlights of 1980 1979 1980 Increase 14.226 14,486 1.8 . . . . Electric sales-kilowatt-hours (millions) 5479,052 $567,356 18.4 . . . ,

Electric revenues (thousands) 1.052 986 (6.3) . . .

Gas sales-thermo (millions)

$272,770 $316,014 15.9 . . . . . . Gas revenues (thousands)

$751,822 $883,370 17.5 . . Total operating revenues (thousands)

$ 91.335 $113,562 24.3 . . .. . . Net income (thousands)

$ 75.636 $ 94,493 24.9 . , , . . . . Earnings available for common stock (thousands) 27,980 32,906 17.6 . . Average number of shares outstanding (thousands) '

$2.70 $2.87 6.3 . . Earnings per share of common stock -

What We Received and What We Paid Out or Set Aside 1979 1980 1980 % We Received From-(Thousands of Dollars)

$479,052 $567,356 64.2 . Sales of electricity 272.770 316,014 35.8 . . . . Sales of gas

$751.822 $883,370 100.0 We Paid or Set Aside For-

$ 66,487 $ 73,382 8.3 Payrolls and benefits to employees engaged in operations ,

191,296 218,998 24.8 . . . Gas purchased for resale 6.171 6,527 .7 Power purchased for resale (58,498) (40,452) (4.6) . . Power interchanged-net 225,621 240,601 27.2 Fuel for electric plants 43.766 50,278 5.7 . Materials and other expenses

• 55,967 57,835 6.6 . . Recovery of cost of property due to wear and obsolescence 82,693 113,786 12.9 . .

Taxes-federal, state and local 21.958 23,071 2.6 . . . , , Investment tax credit deferred-net ,

Use of funds invested in our business-(38,731) (51,220) (5.8) . Allowance for funds used during construction 63,757 77,002 8.7 . Interest-including short-term loans 15,699 19,419 2.2 . . Preferred stock dividends 64.615 79,636 9.0 . . . Common stock dividends 11.021 14,507 1.7 . . Future use in our business

$751,822 $883,370 100.0 2 I

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Wendell J. Kelley with Charles W. Wells and William C. Gerstner, executive vice presidents, left to right.

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Earnings per share in 1980 were plants to meet anticipated some time beyond 1990.

$2.87. This exceeds 1979 demands of present and future We are hopeful that during the earnings by 6.3 percent-but customers, these new f acilities time between the completion of this should be put into a larger were cheaper and more efficient the Clinton ilnit, and the need to perspective. Earnings per share than the older f acilities that were start another, the Company will peaked in 1970 at $2.89. It has either being replaced or put to have a period of relatively low taken ten years for us to get back decreased use.Thus the customer construction expenditures. During to near that level. Our experience benefited by lower cost energy this period, our stockholders in these last ten years illustrates and the shareholder benefited by should fare some better, an underlying problem in our increased earnings because of In the meantime, we are doing

, industry. more efficient operating things to slow the growth in our The utility industry is in many equipment, customers' usage, such as ways like other industry, it also is This situation does not exist promoting conservation. We are different in many ways. today. The interests of consumers studying alternate methods of One difference is that our and shareholders are no longer providing energy, such as industry, as a regulated as compatible. cogeneration. We are also monopoly, has an obligation to Because of inflation and investigating feasible methods of serve a4 consumers in our overwhelming regulations, new providing less than all of our franchised areas. Simply stated, facilities now cost about ten times customers' requirements during we must provide electric and gas more than they did in 1970. To periods of peak use. At the same service to any customer at any finance and build them, we must time, continuing efforts are being time and at any location. This charge higher rates. But political made at the national and state means we have the obligation to and social restraints impair our level to inform our customers and anticipate consumer requirements ability to secure adequate higher our regulators of our situation.

and build facilities in advance to rates. So the stockholder is hurt Our message is that unless serve them, when a utility fulfills its obligation adequate financial resources are At the same time, we have the to serve by building new facilities. made possible, the consumer traditional responsibility to you- This is the bind we are in, will ultimately suffer, our stockholders-to provide an During the last decade, we have adequate return on your completed three new electric investment by providing generating units and are currently Sincerely, l

increasing earnings. constructing one-the Clinton l For many years, those two Nuclear linit. This is the only unit j responsibilities-our obligation to we nave under construction and customers and to stockholders- the only one planned. At the were complimentary. When we present time, we do not see the Wendell J. Kelley built new facilities such as new need for further expansion until Chairman and President 3

Earnings, Revenues, and increase, recovery of increased utilities to take service as Sales fuel costs and increased kilowatt- wholesale customers rather than hour sales. Gas revenues of $316 purchase power under million for 1980 represent a 15.9 interchange agreements, percent increase over 1979. This Net interchange sales of electric increase resulted principally from energy to other electric utilities Earnings per share of our the recovery of increased costs of decreased $18 million from 1979, common stock were $2.87 for natural gas and the rate increase, the year of highest interchange 1980. This is an increase of 6.3 partially offset by reduced therm sales in the Company's history.

percent over the $2.70 per share sales. Therm gas sales for 1980 earned in 1979. The rate increase Kilowatt-hour sales of electricity decreased 6.3 percent from authorized by the lilinois increased 1.8 percent in 1980 1979. Sales to our industrial Commerce Commission in late compared to a 4.8 percent customers increased 0.5 percent November,1979 was a major increase in 1979. Sales to our and reflect both the increased factor in the 1980 earnings residential customers were supplies of gas made available improvement. However, earnings affected by the hot summer and to these customers and the were adversely affected by a increased 7.1 percent. Sales impact of the economic decline, decrease in net interchange to our commercial customers Sales to our residential and sales, as well as the higher increased 3.5 percent, while commercial customers decreased-l operating costs and capital costs sales to our industrial customers 9.9 and 9.1 percent, respectively, l for our construction program. decreased 3.4 percent, reflecting and reflect both the warmer Total revenues for the Company the downturn in the economy. weather conditions in 1980, were $883.4 million, an increase of Sales to rural cooperatives, particularly during the first 'I 17.5 percent over 1979. Electric municipal utilities, and other quarter, and decreased usage due revenues were $567.4 million for electric utilities increased 12.5 to customers installing additional 1980, an increase of 18.4 percent percent and reflect the decision insulation and lowering over 1979 reflecting the rate of several municipal electric thermostat settings.

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Fin:ncing Stock Ownership Plan and Trust Request For Rate increase provided approximately $37.1 NN"NNNN"" million during 1980. These plans ENEM"mmmmese have now provided $72.3 million of We issued common and preferred new capital through the issuance On August 8,1980 we filed stock and two series of first of 3,617,851 shares since they with the Illinois Commerce mortgage bonds in 1980. These were begun. Approximately 12,600 Commission a request to issues, plus funds generated security holders are now increase our electric rates. lf internally, provided the financing participating in the Automatic approved, the proposed electric for our 1980 construction program Reinvestment and Stock Purchase rates would increase annual and the refunding of $10 million Plan. Security holders interested revenues by approximately $115 of first mortgage bonds which in obtaining more information million or 23 percent. No increase matured on April 1,1980, about the reinvestment plan may in natural gas rates was On March 6, three million shares obtain a copy of the prospectus sought.

cf common stock and 720,000 and other material from D. F. We requested that a total of shares of 11.66% cumulative Meek, Secretary and Treasurer, $510 million of construction work preferred stock were offered to Illinois Power Company,500 in progress be included in the the public by groups of South 27'h Street, Decatur, Illinois electric rate base. If this is underwriters. Proceeds to the 625E granted, we will discontinue Company were $45.1 million and T o meet estimated construction capitalizing an allowance for

$35.6 million, respectively, from requirements for 1981 of $365 funds used during construction the two sales. million, we anticipate approxi- on that amount.

On August 13, we offered a mately $230 million of long-term With the entire proposed retail total of $125 million of first financing in 1981 and the balance rate increase, our electric rates mortgage bonds in two separate to be provided by short-term would continue to be among the series to groups of underwriters, borrowing and internally lowest of the major utilities We sold $75 million of first generated funds. The types, operating in the State of Illinois, mortgage bonds,11%% series amounts and timing of these This filing includes some due in 1987, for proceeds of $74.2 financings have not yet been changes in the residential rates million. These bonds were determined. These estimates with the addition of a demand-reoffered to the public to yield assume that our current rate metered rate with time-of-day 11.45%. Fif ty million dollars of request will be granted in full. energy charges for our larger first mortgage bonds,12% % in January,1981 a 50 percent residential customers, series uue 2010, were sold for owned affiliate, Illinois Power The ICC is permitted 11 months proceeds of $49.3 mi!! ion and Fuel Company, was formed to to issue a decision. Accordingly, reoffered to the public to yield finance a part of the nuclear fuel we expect an order by early 12.7 % for the Clinton power station.The July,1981.

We entered into an additional fuel company purchased the Upon comp'etion of our last credit agreement in May with four approximately $40 million electric and gas retail rate case Chicago banks which provides for investment Illinois Power in November,1979, we and a revolving loan commitment of Company has to date in nuclear several intervenor organizations

$60 million through May 1,1983 f uel, and will finance the petitioned for reconsideration of with a provision for conversion to remaining stages of processing- the ICC decision. When these a three-year term loan. No This fuel company affiliate will be were denied, the parties appealed borrowings were made under this able to meet !!c financing needs to the Circuit Court in Champaign agreement in 1980. almost exclusively with debt County, Illinois. Oral arguments The 2,020,208 shares of new instruments, with the initial $40 were presented to the court In common stock issued under the million being financed with December,1980. We questioned Automatic Reinvestment and commercial paper. When Clinton the failure of the ICC to base its Stock Purchase Plan, the Unit 1 becomes operational, we order on a fair value rate base, Employees Stock Ownership will lease the fuel from the as required by an October,1980 Plan, and the Tax Reduction Act affiliate. Illinois Supreme Court decision.

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Opponents of this rate increase  ;

. , , p y y vw.S w w a challenged the amount granted r$ $  % G/Wgpg and the inclusion of $97.1 million of construction work in progress

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Commission approved an electric .- v1 rate increase of 7.4 percent to ,-

the nine electric cooperative customers effective September 1, .

1980. This will increase our re/enues by approximately $2

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The ICC has proposed a new ##

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in Illinois under ICC jurisdiction.

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The proposed clause will include Larry D. Haab-Rate and Financial Matters i the cost of fuel consumed in our generating plants, including nuclear, and the cost of power purchased for our customers from other utilities through purchased power and interchange agreements. We proposed to include the uniform fuel James O. McHood-Construction Activities adjustment clause as a part of our n,,y pending rate request. g

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Our construction expenditures for J~ ^ fg y . 7 M 1980 were $315.6 million, of which *s

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Unit 1. By the end of the year, accumulated expenditures for

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Clinton Unit 1 were $859.4 million.

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" ear for electric f acilities were .

70.2 million; expenditures for

,Js f acilities were $18.4 million.

Our estimated 1981 constiuction expenditures will be $365 million

-$342 million for electric 6

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f acilities and $23 million for gas Clinton costs are rising because NRC staff as a result of the f acilities. Our estimatet, of mismanagement. The factors nuclear accident at Three Mile construction expenditures for the which caused our estimates to Island.

five-year period from 1981 through increase also affected other in accordance with their normal 1985 aro projected to be $1.2 nuclear construction projects, and practice, the NRC has established billion. These estimates assume changes in the Clinton project an Atomic Safety and Licensing the inclusion of $510 million compare f avorably to other Board for the Chnton station construction work in progress in single-unit boiling water reactors docket. This board will preside the c!ectric rate base as under construction in the country. over the proceeding if a public foquested in our current rate There are seven such projects hearing on the operating license i proceeding. Without the additional and four have cost estimates per is ordered. An early action of the l CWIP the construction expendi- kilowatt higher than Clinton and Board is to rule on petitions to l tures for the five-year period Clinton has experienced the least intervene which have been filed.

would be increased by about $75 percentage increase in cost During 1980, many significant million. estimate and delay in completion scheduled milestones were met Based on our current electrical schedule. in the construction of this unit.

load projections, no additional The Nuclear Regulatory Among them are:

generating capacity will be Commission did not docket -Installation of the control rod needed beyond Clinton Unit 1 our application for an operating drive penetrations for the reactor; before the early 1990's. It will not license for Clinton Unit 1 -Installation of the overhead be necessary to make a decision until September 8,1980. We maintenance and refueling crane I and completion of the steelliner f~ several years regarding the submitted the application on mo and location of such December 1,1979 but were told in the containment building; additional capacity None of the the NRC was unable to perform -The start of main steam alternative generating plans being its acceptance review of the piping in the containment and considered would increase the application sooner because of the turbine buildings; estimated construction heevy work load imposed on the -Inserting the condenser expenditures for the five-year period by more than $200 million.

The five-year estimate includes no expenditure that might be necessary due to future M " ""EMM regulatory requirements. [gW - '

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cost estimate for the Clinton .. 'E . i Ss Unit 1 nuclear station.We now expect to load fuel in January, j'. l;f. .i

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1983, nine months later than our -

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previous estimate. The current '; j # .

. -- [- .iy cost estimate for the unit is $1.733 lQ -

billion. This includes 20 percent Y p . z.'J. .

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Ever-changing regulations which affect ongoing construction ,

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nuclear plants, and future  ?, 2 . ;,, - . ,, G,, g uaf -

requirements might alter the new Leonato J. Koch-Nuclear Operations estimates. In our last two rate requests, critics have charged that 7

tubing and start of turbine Electric and Gas Services applicants for gas service as of installation in the turbine ~

January 21,1981 have been building, and offered service. in a!!, we gained

-The completion of the While construction of new approximately 4,200 new natural manuf acture, staging, testing and residential units in our territory gas customers during 1980, shipment of the Power Generation dropped by approximately 35 Work continues on our new Control Complex panels for the percent in 1980, electric space electric and gas dispatch center .

control room. heating was installed in more than that will be completed in 1983.

At the end of 1980, with all 60 percent of the new units.

structures in the power block Approximately 65 percent of the Systems Reliability ,

closed in and weatherized for commercial expansion was  ;

year-round construction, we heated electrically.

estimated that Clinton Unit 1 was The unusually hot and dry -

72 percent completed. summer weather and the grain We plan, design, and operate our -

The construction of the 345 embargo made 1980 a difficult electric and gas systems to kilovolt (kV) switchyard,345/138 year for our farm customers and provide safe, economical, and -

kV transmission substation and resulted in a slower rate of growth highly reliable service to our about 35 miles ol 345 kV in electric grain drying loads and customers.This quality of se vice transmission line was completed automated animal confinement is further insured by coordinated for Clinton.These facilities and an buildings. The abnormally dry f all planning with neighboring additional ?2 iniles of 345 kV weather and early harvest did not utilities. ,

transmission line, completed require as much grain drying as We work closely within the  !

earlier, were energized during normal and fewer therms of gas Illinois Missouri Pool, the Mid- L 1980. They reinforce the bulk and kilowatt-hours were used. America Interpool Network, and supply transmission serving our - Increasingly, our residential the National Electric Reliability Decatur service area and will and commercial customers are Council to insure that the -

ultimately provide outlets for the converting from highly-priced oil interconnected electric system power generated at the Clinton and LP gas to either electric or can reliably deliver bulk power ,

power station. natural gas heating. to large regional areas.  !

In 1980, the ICC began formal On July 15,1980 we We have been able to make hearings to investigate possible experienced a peak electric extensive use of our Inter-incentives for control of demand of 3,150,450 kilowatts- connections to import, export, construction costs at Clinton 4.3 percent higher than the 1979 and transfer power to maintain Unit 1. We presented evidence firm peak demand. Extremely hot reliability and economy in our  ;

that existing work force weather that day tended to offset service area.These interchanges ,

management improvement a gene,ral decline in peak load also have helped in the national  !

programs and natural financial domand f rom industrial customers efforts, encouraged by the l market pressures adequately due to unfavorable economic Department of Energy,to conserve oilin other parts of the control costs and that art!ficial conditions, incentive schemes are neither Gas supplies continued to United States. Electricity sold ,

appropriate nor necessary. Improve during the year but less from nuclear and coal-fired plants Staffing for plant operation - severe winter weather and the in the United States and Canada, continues on schedule. Twenty- economic recession caused 1980 including Illinois Power Company, one people have successfully gas sales to be lower than those to other utilities replaced nearly completed a rigorous two-year of 1979. Four of our gas pipeline 116 million barrels of oil in 1980.

training program, including a suppliers have lifted curtallments. Our net inte rchange sales totaled nine-week course at the Black They are supplying full contract over 1.2 bil.lon kilowatt-hours for Fox Simulator near Tulsa, volumes during the five winter the year.

Oklahoma. Successful completion months and are able to fully The reliability of our electric

• of this training program qualifies supply system requirements on system was t storms four imes t,ested by major in 1980. Rain, employees to take the NRC- a year-to-year basis, administered examination to We are able to make gas high winds and tornado-like become licensed reactor available at the time of request weather disrupted service  ;

operators for the Clinton power for new residential and throughout our territory in the I station, commercial customers for the summer and fall. Service was first time since 1970 when restored to all customers with restrictions were adopted minimum delay. ,

because of limited supplies of ,

naturri gas. Allindustrial 8

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t Fu:1 Supply pollution control operating . later create undue h' ardships en permits for our facilities. power generating facility

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The illinois Pollution Contr al opemtion and unnecessary

- Coal accounted for 97.3 percent Board approved a sulfur diox de expenso to the Company were of the fuelwe used during 1980 emission limit for the Baldwir appea!ad. We appealed three in the generation of electricity, power station in 1979 which still permits to the Pollution Coatrol .

Oil accounted for 1.3 percent; is under review by the U.S. Goard where one is pendirig. One <

and other fuels,1.4 percent. Environmental Protection Agency. has been appealed to the Illinois  ;

in response to the Department Based on data gathered in 1S79 Appeilate Court and one to the of Energy's request and in the and 1980, we submiW.d to the Illinois Circuit Court.

public interest, we continued to Stato EPA a demonstration that use natural gas for three of the the Illinois Pollution Control generating units at the Wood Board-approved emission limit River power Matior; and two will not result in violation of Research and Development ,

combustion turbine peaking standards.

plants to reduce demand for . The Baldwin power station was No. 2 distillate fuel oil. among 15 plants, in five states, Future needs for existing identified as targets of possible Research and development ,

coal-fired units are estimated suits by the State of New York for expenditures for 1980 totaled <

to be 162 million tons. alleged violations of federal Clean about $4.5 million. included Contracts in effect as of Air Act standards. We received a were funds for research in nuclear December 31,1980, including notice in December of New York power, air and water standards, extension options, provide for State's intent to file suit, coal gasification, cogeneration, .

delivery of approximately 159 in July, the U.S. EPA adopted solar, waste heat utilization and million tons. a new set of regulations which other technologies to meet j Uranium needed through 1995 reclassified the 2,000-acre cooling future energy needs in an -

for the Clinton nuclear station pond at the Baldwin power station environmentally and economically will be supplied by Kerr-McGee and will make it necessary to acceptable manner. Our 1981 Nuclear Corporation under the install pollution control equipment expenditures are estimated to be terms of two contracts. They on the waste water entering this $4 million.

provide for the purchase and

. pond. It will cost about $10

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Our largest single 1980 conversion of approximately 5.4 million to meet these new expenditure, $1.6 million, was million pounds of uranium to be standards by July,1984, as made through the Electric Power delivered to the Department of required. Meeting some aspects Research Institute (EPRI), an Energy, with whom we have of these regulations at our other organization formed to coordinate 30-year contracts for our fuel- plants could cost another $16 the electric utility research of enrichment requirements. million. Regulations being more than 580 public, private and A contract with General Electric developed under other federal cooperative utilities. Total Company provides approximately environmental laws can have payments to EPRI by all members 15 years of fuel fabrication, the further economic impact on our during 1981 are expected to final step of preparing uranium operations. reach $265 million.

for reactor fuel. We filed a petition with the This was our fifth year of Illinois Pollution Control Board support for the Allis-Chalmers Environmental Protection to obtain a higher thermal kilngas coal gasification process.

discharge limit for one-unit l Full demonstration-project operation at the Clinton power funding was achieved during Operating expenses for station.This would eliminate the 1980. Formal groundbreaking environmental related activities need for installation of a took place in October,1980 to in 1980 exceeded $52 million. supplemental cooling systerr' begin the construction phase of This equals approximately 9.3 for discha rge water to the the demonstration plant at our percent of our revenue from the 5,000-acre coling take until a Wood River power station. During sale of electricity in 1980. Our second generat.M unit is 1980 we invested $1.1 million of a accumulated capital expenditures installed. A hearing has been total five-year commitment of for environmental protection held on this petition and a $5.5 million for the construction programs since 1969 have decision is expected during 1981. and demonstration phases reached $149 million. As National Pollutant of this process.The total We have obtained or applied Discharge Elimination System cost of the program is for all necessary air pollution permits were renewed, po_rtions estimated at $135 million, j operating permits and water of new permits that could Allis-Chalmers, the State of -

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' lilinois, Gilbert Associates, End a ,. .

consortium of 12 electric utilities i are sharing the cost. The objectives of the program include demonstrating the feasibility of power generation with environmentally acceptable low . .. -

l Btu gas derived from Illinois coal.

Several research projects concerning improvements in ,.

nuclear maintenance and -

operations will be continued in i

l 1981. Work also will continue this ' 1 s' l year on a project begun in 1979 /

involving the use of stored g '

underground compressed air to economically drive peaking -

generating units. Continued I

interest by industrial customers in cogeneration requires continuing .

research into new ways of solving economic, technical, and institutional problems.

A residential electric water heater load control experiment initiated in 1980 will be continued . k'

# O in 1981. The experiment seeks to -.

determine the feasibility and Porter J. Womeldorff-Technical Activities benefit of controlling the service to electric water heaters as a means of reducing system load during peak periods. .

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development of a program to use . ' ' %,

power station waste heat for I wi ~~

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greenhouse heating. It is currently '

being demonstrated at our 'F ,,iTJ Baldwin power station in .

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cooperation with the University [ g pig pd j/y.g;fD+^ ygg;*n of Illinois. A successful , . g,. 9 3 34,_,

demonstration may offer a means , '

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of profitably recovering this 4,4 1

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research activities include thermal i '

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William E. Warren-Operations and Industrial Relations .

l 10

I Customer Services about 20 communities, including Commission issued an order six in 1980. making permanent last year's trial x.-

In 1980,34 new industrial restrictions on disconnection of plants,1.2 million square feet of service. Under this order utilities Wn have consolidated all of our new f acility space, and 720 new have more stringent requirements customer-related conservation jobs were added to our territory's to notify customers before winter programs in a new energy economy. Forty existing terminations for non-payment, programs department to promote customers constructed an resulting in substantial increases energy conservation measures additional 1.3 million square feet in collection costs and in and the more efficient use of of space and added 507 new jobs. uncollectible accounts.

energy. During 1980 we made a major in 1979, we initiated project By the end of 1980 we had commitment to help offset the HELP through which we asked I conducted energy audits of loss of manuf acturing jobs and i customers who expect winter approximately 77,000 residential the eroding tax base within the J structures and a total of 1,934 Illinois portion of the St. Low,s commercial establishments. metropolitan area. We have Y completed initial development of governmental agencies m.

We brought many large commercial and industrial 435 acres of Company-owned arranging payment assistance customers together at our fourth property at Granite City, Illinois to our customers.

Energy Efficient Equipment into Northgate industrial Park.

conference last spring and at an The property is being fully Report of Management industrial Energy Symposium for developed for commercial and - , -

our largest industrial customers. industrial usage and phase one is Energy topics of mutualinterest expected to be totally occupied The financial statements and all were discussed. by the end of the decade with information in this annual report We have been active in the more than 1,000 new permanent are the responsibility of organization of the state plan for jobs created for area residents. management. The financial lilinois to comply with the National On May 9, groundbreaking statements have been prepared in Energy Conservation Policy Act, ceremonies were held for the first conformity with generally which requires that regulated tenant, the Precoat Metals accepted accounting principles utilities encourage the installation Division of Chromalloy American consistently applied and, in the of energy conservation measures, Corporation. opinion of management, fairly including renewable resource The Illinois Commerce reflect the Company's financial measures, in existing homes of residential customers. While no ,

government mandates require l such energy conservation ( ,

y L promotions for industrial ',

customers, we will continue E s efforts to benefit both our l T customers and the Company. C<

To encourage economic ~n '

development in our territory, our .

staff provides professional so) vices to industries and h"" , g communities. We analyze a F company's requirements and the y" economic, geographic and demographic factors and recommend suitable locations to y ,

companies planning expansion or . , '

~$p J moves into our territory. We offer 1

-d NQ to communities a training s program des,gned to povide a '

i trained and skired development .

_s e *M team able to present a 9' '

"^ "-

community's advantages to industrial prospects it was started David F. Meek-Secretary and Treasurer in 1974 and has been used by 11

position, results of cperations and Board of Directors reviews the scope of the audit, the sources of funds provided for results of auditors' examinations, gross property additions.

and the activities of the The Company maintains Company's internal auditors. The accounting and internal control Miss Eva Jane Milligan was members are: Vernon K.

systems which it believes are elected to the Scard of Directors Zimmerman, chairman, Robert J.

adequate to provide reasonable on March 27,1980. Eleven other Burow, George E. Hatmaker, John assurance that assets are directors were re-elected.

safeguarded against loss from H. Leslie, Eva Jane Milligan and Miss Milligan, of Chicago, unauthorized use or disposition Illinois,is Senior Vice President, Richard P. Stone.

and that the financial records are General Personnel Manager of reliable for preparing financial Marshall Field & Company.

statements. Members of the Board serve on Compensation and The financial statements have committees established to Organizat. ion Committee been audited by our independent address various issues of -

accountants, Price Waterhouse & management. Recommendations Co., in accordance with generally of the committees are presented accepted auditing standards to the full Board for discussion This committee reviews and i which include a study and and final determination. Current recommends compensation of ,

evaluation of internal control for committees and their member- elected Company officers, reviews the purposes of establishing a ships are: benefit plans and recommends basis for reliance thereon relative nominees to fill vacancies on the to the scope of their examination Board of Directors.The members of the financial statements. In Finance Committee are: Keith R. Potter, chairman, addition to the use of independent Robert J. Eurow, Wendell J.

sccantants, the Company #

~

Kelley, John H. Leslie, Eva Jane meri ntains a professional staff of Milligan, Boyd F. Schenk and internal auditors who conduct The Finance Committee meets to Gordon R. Worley.

financial, procedural and special review the Company's financial audits. The selection and training forecast, financing plans, and of qualified personnel, the pension fund investments and establishment and communication makes recommendations to the of accounting and administrative Board concern:ng such matters.

policies and procedures, as well Members of the committee are:

as the program of internal audits, George E. Hatmaker, chairman, are important elements of the William C. Gerstner, Wendell J.

internal control system. Kelley, Keith R. Potter, Boyd F.

The Audit Committee of the Schenk, Richard P. Stone, Board of Directors, consisting Charles W. Wells, Gordon R.

solely of non-management Worley and Vernon K.

directors, meets periodically with Zimmerman.

management, the internal auditors, and the independent accountants to discuss audit and Audit Committee financial reporting matters. Both Price Waterhouse & Co. and the - ' ' ' '

internal auditors have direct access to the Audit Committee to The Audit Committee assure their independence, recommends the appointment of the Company's independent accountants, confers with the independent accountants, and i

12

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Management's Discussion and Analysis of Financial Condition and Results of Operations Reference is made to the Financial Statements and At December 31,1980, based upon the most restric-Electric and Gas Operating Statistics for information tive eamings test contained in the Company's Mortgage concerning financial condition and results of opera- and DMd of Trust, approximately $108 million o' addi-tions. The factors having significant impact upon finan- tional first mortgago bonds could be issued at an cial condition, changes in financial condition and re- assumed interest rate of 14%.

sults of operations since January 1,1978 are as follows: To obtain the capital necessary for our ongoing con-struction program will require the Company to maintain Liquidity and Capital Resources the financial standards necessary for flexible access to During the years 1978 through 1980, the capital re- financial markets. Our bonds and preferred stock are quirements for construction were approximately $312.4 currently rated double A and our common stock is million, $291.6 million, and $315.6 million, respectively, rated single A . To preserve these financial ratings, and for bond refunding were $15 milhon, $15 million, which result in lower financing costs and thereby bene-and $10 million, respectively. The major item of con- fit both our customers and shareholders, we filed a re-struction is the Clinton nuclear power station which quest for an electric rate increase with the Illinois Com-accounted for approximately 64.4% of the construction merce Commission on August 8,1980. If granted, this expenditures in this three-year period. In June,1978, increase would provide about $115 million in additional construction of a 450 megawatt coal-fired unit at the annual revenue commencing in July,1981. A substantial Havana power station was completed and the unit was amount of this increase was requested to cover a por-placed into commercial service at a total cost of ap- tion of the financing costs attributable to the Clinton proximately $189.3 million. Our 80% ownership in- nuclear power station While we capitalize an allow-terest in the Clinton nunlear power station Unit 1 is ance for funds used during construction, this non-cash estimated to cost $1.382 billion and will require addi- credit to income does not provide immediate cash to tional caoital expenditures of approximately $514.9 pay these financing costs. Further, in an effort to re-million or about 42.2% of our projected capital require- duce projected capital requirements, the Company has ments for the five-year period 1981-1985. These esti- arranged to lease most of its nuclear fuel from a fuel mates of expenditures for the Clinton plar,: assume the company affiliate formed in January,1981.

inclusion of $510 million of construction work in prog- Without additional rate relief, it is foreseeable that we ress (CWIP) in the electric rate base as requested in will be unable to maintain the interest coverage ratio the Company's current rate proceeding. Without the required by the Mortgage and Deed of Trust for additional CWIP the construction expenditures would the issuance of additional first mortgage bonds. To be increased by about $75 million. meet the projected capital requirements associated Cash flow from operations has provided sufficient with the ongoing construction program and other work-liquidity to meet ongoing operating requirements and ing capital needs, this interest coverage deficiency to provide additional funds for the construction pro- would necessitate the use of alternative and potentially gram. The capital requirements during the three-year higher cost financing methods.

period have been provided in approximately the follow-Results of Operations ing proportions: 40.2% through the issuance of long- Electric Operations-Electric revenues increased term debt,33.3% through the sale of common and pre- during the years 1978 through 1980 as a result of rate ferred stock, and 26.5% through funds provided from increases, increased fuel costs passed on in billings operations.

to our customers and increases in kilowatt-hour sales During this three-year period, we used short-term as shown below:

borrowings to meet interim cash requirements. These Twelve Months Ended December 31, short-term obligations were repaid from long-term 1980 1979 1978 financings, and, at December 31, 1980 there were no Revenue increase outstanding short-term borrowings. (thousands of dollars) $08,304 $26 845 $68 640 Lines of credit with commercial banks are maintained cornponents of revenue to meet interim cash requirements. At December 31, g,C' te ,ncrease . . 53 % 12 % 23 %

1980 we had unused lines of credit in the amount of Kilowatt-hour sales . 20 45 17

$169.1 million, including a new credit agreement of $60 Recovery of increased million negotiated in 1980, against which no borrowings fuel costs . .. . 27 43 60 have been made. 100 % 100 % 100 %

14

ILLINols power COMPANY / ANNUAL REPORT 1980 Revenue growth from rate changes reflects general Twelve Months Ended rate increases of 11.3% effective June,1977 and December 31, 10.9% effective November,1979, as granted by the 1980 1979 1978 Illinois Commerce Commission. Revenue increase (thousands of dollars) , . . $43 244 $52.963 $35.987 The changes in economic and weather conditions com " "!

nc ease fk)v ""

during this three-year period, as well as our customers' Recovery of increased conservation efforts, were the major factors affecting gas costs . .m. . .. 100 % 82 % 42 %

kilowatt-hour sales which increased 4.8% in both 1978 es . . ' ' [ ' N Th ( 6) 1 and 1979, but only 1.8% in 1980. 100 % 100 % 100 %

The cost of fuel for electric plants increased $58.5 During this three-year period, improvements in avail-million in 1978,518.5 million in 1979, and $15 million in ability of gas from our pipeline suppliers, conservation 1980. Factors which impact fuel costs include kilowatt- efforts of our customers and the election of limited firm hour generation, fuel price increaser and the avail- customers to change to interruptible service have en-ability of all generating units. Kilowatt-hour generation abled significant volumes of gas to be available to meet increased 8.2% in 1978 and 6.9% in "?79, and de- a backlog of customer requests for additional gas serv-creased 3.1% in 1980. Coal, which is our primary fuel, ice. We believe that for the next few years growth in constituted about 92.3%,95.9% and 97.3% of our fuel therm sales will be affected by market demand rather used for generation in 1978,1979 and 1980, respec. than gas supply.

tively. Correspondingly, the weighted avvage cost per The increase in gas supply, changes in economic ton of coal burned increased about 33.7% in 1978 and and weather conditions, and customer conservation 5.9% and 13.4% in 1979 and 1980, respectively. In efforts were the major factors affecting therm sales dur-1979 the fuel cost increase was partially offset by ing this period, which increasea 10.4% and 1.6% in '

the greater use of lower cost generating units. Further, 1978 and 1979, respectively, and decreased 6.3% in the commercial operation of Havana power station unit 1980.

6, beginning in June,1978, increased the Company's The cost of gas purchased for resale increased $27,7 coal-fired generating capacity which is lower in cost million, $45.8 million and $27.7 million in 1978,1979 as compared to either gas or oil. and 1980, respectively. In each year, the cost increases were primarily attributable to higher prices paid for Sales of interchange power fluctuate as a d.irect gas. The average cost per therm increased 11.7%,

result of market demand based upon the needs of 29.6% and 20.2% in 1978,1979 and 1980, respectively.

Other utilities and the availability of our generating capacity to serve those needs. The credit for power Other Expenses and Taxes--Since 1977 the Com-interchanged-net increased about $16.2 million and pany has experienced increases in other operating

$11.4 million in 1978 and 1979, respectively, and de. expenses, maintenance and general taxes as follows:

creased $18 million in 1980. During this period, there 1980 1979 1978 existed a favorable market for these " opportunity sales" (Thousands of Dollars) of interchange power and our generating capacity was other operating expenses $12,097 $3,068 $10.636 available when needed. Maintenance .. 2,419 3,809 5,035 Depreciation . . .. .. . 1,868 4,398 4,381 General taxes 17,164 900 7,351 Gas Operations-Gas revenues increased in each of .

the years 1978,1979 and 1980, principally reflecting During the above three-year period, both other recovery of the increased cost of natural gas passed operating expenses and maintenance have been on in bilhngs to our customers. Other factors affecting affected by the impact of inflation which, as rneasured gas revenues were the 7.9% rate increase granted by by the average Consumer Price Index, increased about the Illinois Commerce Commission in November.1979, 7.7%,11.3% and 13.5% in 1978,1979 and 1980, respectively.

and changes in therm sales. The components of the annual revenue increases were approximately as in addition to stringent controls over expenses, we follows; have, through both the timing and scope of our rate 15

. .- ._, - - ~. .

Management's Discussion and Analysis of Financial' Condition and Results of Operations (Continued) .

requests, attempted to minimize the financial impact a detailed analysis of income tax components, see Note of inflation. In the request for an electric and gas re- 'S of the " Notes to Financial Statements".

tail rate increase filed with the Illinois Commerce Com-mission (ICC) in January,1979 (rate order subse- Other /ncome-Total allowance for funds used dur-quently received in November,1979), we requested ing construction (AFDC) increased approximately $8.7 '

and received an adjustment to other operating and million, $9.8 million and $12.5 mill '

through 1980, respectively, increases mlonto duri AFDC relate maintenance expenses to provide for partial recovery of such expenses at an inflationary level projected the amount of construction work in progress (CWIP),

through 1980. Similarly, in the electric retail rate in- dr, continuance of the capitalization of AFDC on ap-crease request filed with the ICC in August,1980, we proximately $79.9 million'of CWIP included in our rate again requested an adjustment for the projected cost base between June,1977 and June,1978 for Havana ,

Unit 6, and about $97.1 mi!!!cn of CWIP included in rate increases, due to inflation, during the first year the new rates would be in effect. base beginning in November,1979 for the Clinton nuclear power station Unit 1. The 1980 increase in The increases in other operating and maintenance AFDC also reflects an increase in the AFDC effective expenses reflect increased wages and employee bene- after-tax rate from 7.0% to 7%%, beginning May 1, fits as well as the continuing effect of the inflationary 1980, to reflect the increased cost of financing cur on-trends on all costs and expenses. Other operating going construction program.

expenses for 1978 also reflect the expenses incurred in the testing of Havana power station Unit 6 prior e hease h heHaneousinet reflects increased to commercial operation on June 22, 1978, and for income tax reductions applicable to non-operating activities, principally construction projects.

1980 reflects the increase in uncollectible accounts. In addition, the 1978 maintenance expenses reflect the Interest Charges-Interest charges have increased costs associated with ice storms which occurred in $9.9 million, $9.9 million and $13.2 million during 1978 March and December. through 1980, respectively. These increases primarily reflect the $325 million of long-term debt issued during Depreciation expense during 1978 and 1979 in- the period at a weighted average interest rate of 10.3%.

creased primarily as a result of the completion of During this period we retired $40 million of long-term Havana power station Unit 6.

debt with a weighted average interest rate of about General taxes have increased each year as a result 2.9%.

of higher state and municipal public utility taxes asso- Earnings per Common Share-The changes in net ciated with the growth of operating revenues. In addi- income applicable to common stock in 1978 through tion, real estate taxes have escalated annually, reflect- 1980 resulted from the interaction of all the factors ing both increased assessed property valuations and discussed herein, including the issuance of additional higher tax rates. In both 1979 and 1980, general taxes preferred stock. Changes in earnings per common reflected the implementation of the Illinois Corporate share also reflect the increased number of common Personal Property Replacement Tax Law, This new law shares outstanding in each year. (See Notes 9,10 eliminated both personal property and capital stock and 11 in the " Notes to Financial Statements"). r taxes as of January 1,1979. Effective July 1,1979 these taxes were replaced with a tax on invested capital in/lation-The high rate of inflation which has been and an additional tax on income, experienced in recent years has an impact on our re-ported earnings, shareholders equity and other financial The Company's effective combined federal and state information that is not measured by traditional account- ,

income tax rate has been 36.8%, 35.1% and 36.2% ing methods. For supplementary information to disclose for the years 1978,1979 and 1980, respectively. For the effects of changing prices, see pages 30 and 31.

16- '

f h

ILLINOIS POWER COMPANY / ANNUAL REPORT 1980 [

December 31, 1980 1979 BALANCE SHEETS II" "***d' ' I S

Utility Plant, at original cost Electric (includes construction work in progress of $920,167,000 and $703,229.000,

. $2,481,189 $2.212,046 respectively) . . . . . . . . . . . . . . ... .. . . . . . . . . .... ...

Gas (includes construction work in progress of $6,949,000 and $8,196.000, 313,195 respectively) . . . . .... . .... ..... . .. . .......... . . . . .. .. ... . 327.991 2,809,180 2,525,241 807,017 556.f.,84 Less--Accumulated depreciation . ......... .. .. . . .. ... . ... ... .

2,202,163 1.968,657 39,429 18,262 Nuclear fuel in process . . . . .. ... .. ... . .... .. ....., . ..

Acquisition adjustment (less amortization of $1,680,000 and $1,434,000, respectively) . . . .

2,253 2.499 l 2,243,845 1,989,418 I 8,596 8,663 investments and Other Assets . .... .. .. .. . . . . .. . ... . ... .. . .

i

. Curr:nt Assets

....... ... .. . ... .. 10,441 10,535 l Cash ...... .. .. ............ .. ........... ....

Temporary cash investments, at cost, which approximates market . . . .. 6,000 2.500 1 Accounts receivable (less allowance for doubtful accounts of $3,000.000 and 63,866 68,194

$2,000,000, respectively) . . . . . .. . ..... . . .. .. ., . .. .

Materials and supplies, at average cost

. ... . . . ..... .. .. 67,744 62,939 Fuel ............... ............... ..

17,388 26,646 Gas in underground storage . . . .. . .. ., ... .... .

22,743 19.997 Operating materials . .. . . ... . . . . . ....... ..

21,494 22,047 Prepayments and miscellaneous accounts receivable . .. .

209,676 212.858 D:fIrred Charges 3,855 2,638 Unamortized debt expense . .. . ..... . . . . . . ..... .. . .

1,219 1.075 Other . . . . . . . .......... .... ... ... .. . . . .. .... . .. ,,.

5 674 3.713 -

$2,467,i91 $2.214,652 CAPITAL AND LIABILITIES Cipitalization Common stock-No par value. 40.000,000 shares authorized; 34.507,851 and 29,487,643 shares $ 490,539 outstanding, respectively, stated at .. . . ... .. . . .. ,, $ 572,685 Retained earnings ... . . . . . . . ...... .. .... 183,060 168.553 4,640 3.795 Less-Capital stock expense . . . .... . .. . .. ... .. . . . ... .

Total common stock equity . . . . . ... .

751,105 655,297 Preferred and preference stock . .

215,171 215.171 Redeemable preferred stock . . , , .. ... .. 36,000 -

991,402 866,747 Long-term debt . . . . . . . . ... . ... ...... . . . . .. .. .

Total capitalization . . . .. . . . . . .. .. . . ~79'5f678 1 1.737.215 Current Liabilities Accounts payable .. . ... .. . .. . . .. . . .. . ... . .

65,014 87.813

- 34,145 Notes payable .. . .. . . .... . . . . . .

- 10,000 Long-term debt maturing within one year . . . . . . . .

Dividends payable . . . . . . .. . . .

25,648 20.823 9,681 2,132 income taxes accrued . .... .. . . . , .. . .

25,039 20,440 General taxes accrued .... . . ... . . . . .. ...

28,716 21,514 Interest accrued .. ... . ... . ,, .. . . . ... . .

12,866 17,010 Other . . . . . . . . . . . . . . .. .. ... .. . .. . . .

__ 166,964 213.877 Other 173,221 153,299 Accumulated deferred income taxes . . .. ..

133,328 110.261 Accumulated deferred investment tax credit . . ..

306,549 263,560 Commitments (Note 7) $2.467,191 $2.214,652 See notes to Isnancial statements which we an integral part of these sucments.

17

. .~. .-- . ., . . .. .

STATEMENTS OF INCOME .

For the Yeers Ended December 31, 1980 1979 1978 Operating Revenues * . .

E!e c t r ic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $567,356 $479,052 $452,207 Gas................................................ ...... 316,014 272,770 219.807 Total.............................................. 883,370 751,822 672,014 Operating Expenses and Taxes .

Fuel for electric pla nts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,601 225,621 207,082 l Power purchased for resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,527 6.171 .5,505 Powe r interchanged-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,452) (58,498) (47.078) ,

Gas purchased for :esale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 218,7?8 191,296 145,486 ,

Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,628 73,531 70,463 M ain te na n c e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,182 37.763 33,954  ;

De p recia tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,835- 55,967 51.569 G en e ra l taxe s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,389 55,225 54,325 State income taxes-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,983 4,820 2,697 deferred ( net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,169 2,090 1.846-Federal income taxes---cun ent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,210 14.231 6,812 ,

defe rred ( net) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,683 15.329 18,638 ,

investment tax credit-deferred (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,071 21,958 22.793 Total............................................. ~ 758,824 645,504 574,092 '

Operating income . .. . . .... .. ... . . . . , 124,546 100,318 97.922 Other income ,

Allowance for funds used during construction-All funds-prior to January 1,1977 . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -

Other funds-after December 31, 1976 . . . . . . . . . . . . . . . . . . . . . . . . 36,567 27,520 21,321 1 Miscellaneous-net .. . .. ......., ... . ........ .. .. ... 14,798 10.043 9,402 ,

Total............................................. 51,365 37,563 30,723 income before interest charges . .... ... .. 175.911 143.85T 128,645 Interest Charges interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.952 62,005 52,453 I Other interest charges ......s..................... .... . .... 4S50 1.752 1,439 Allowance for borrowed funds used during construction-after December 31, 1 916 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14.653) (11,211) (7,608) ;

Total............................................ 62,349 52,546 46,284 Net income . . . . . . . .. . ... . . . . .. 113,562 91,335 82,361 Preferred dividend requirements . .. .. ..... .. .. ..... . 19,069 15,699 15,699 ,

Net income applicable to common stock .. .. . . .. . $ 94.493 $ 75.636 5 66,662 Weighted average number of common shares outstanding during the period . . ... , , .. .., ,. ..... , . ... .. 32,906.017 27,979,606 24,302,139 Earnings per common share .. ...... . . . $2.87 $2.70 $2.74 Cash dividends declared per common share . . . . . $2.355 $2.28 $2.28

• Includes revenue related taxes added to customer billings in each of the years 1971 through 1980. In 1980.1979 and 1978 these revenue related taxes were $20.643,000, $17,526,000 and $15,449.000. respectively.

RETAINED EARNINGS  ;

For the Years Ended December 31, 1980 1979 1978 (Thousands of ooltars) ,

Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $168,553 $157,532 $147.122 Net income . . . . . . . . . .. .. .......................... ....... 113,562 91,335 82.361 282,115 248.867 229,483 <

Less-Cash dividends-Preferred stock ................. ................... .... 19,419 15.699 15,699 ,

Common stock . .. .. ..................................... 79,636 64,615 56,252 '

99,055 80,314 71,951 :

Balance at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $183.060 $168.553 $157.532 1 See notes to financial statements which are an integral part of these statements.

18

- - . ,- - .~. .. , , . . . . . -- . .~ 1 . - - . . - - - - . + ~ ~

ILUNOIS POWER COMPANY / ANNUAL REPORT 1980 1977 1976 1975 1974 1973 1972 1971 (Thousands of Dollars)

$383,567 $303,066 $275,809 $221,126 $199,489 $177,209 $159,175 183,820- 158,595 133,142 108,789 94,953 95,4*5 ' 86,221 567,387 461,661 408,951 329,915 294,442 272,654 245,396' 148,553 123,782 88,725 63,013 41,408 34,470 31,692 8,664 7,092 5,591 4,727 4,179 3,671 3,156 (30,855) (51,484) (29,522) (18,321) (10,547) 266 - (9,806) -

117,812 91,476- 71,288 56,539 47,728 46,469 40,722 59,827 53,295 49,631 '41,083. 37,649 32,302 29,737 28,919 25,726 19,506 17,584 16,131 15,500 13,583 47,188 45,556 42,911 39,282 ' 36,103 32,178 30,230 46,974 40,368 37,036 31,210 28,833 26,282 23,719 3,188 2,444 2,381 1,717 1,732' 1,479 1,868 980 1,199 1,166 817 813 714 _ 702 15,760 16,001 11,575 15,831 14,099 15,265 20,711 -

9,053 11,433 11,681 7,367 i 7,199 6,838 4,342 19.573 10.994 15,034 1,706 5,118 1,567 395 475,636 377,882 327,003 262,555 230,445 217,001 191,251 91,751 83,779 81,948 67,360 63,997 55,653 54,145

- 10,503 7,459 7,960 7,189 7,339 4,018- +

15,137 - - - - - -

5,709 3,174 1,967 2,231 2,143 2,101 1,174

- 20.846 13,677 9,426 10,191 9,332 9,440 5,192 112,597 97.456 91,374 ' 77,551 73,329 65,093 - 59,337 -

42,091 35,927 33,144 28,779 25,237 22,810 - 20,615 1,888 1,744 1,508 4,122 891 1,079 1,511 (5 046) ~ - -

38,933 37,671 34,652 32,901 26,128 23,889 22,126 73,664 59,785 56,722 44,650 47,201 41,204 37,211 13,257 10,606 7,229 7,229 7,229 5,729 3.078

$ 60,407 $ 49,179 $ 49,493 $ 37,421 $ 39,972 $ 35,475 S, 34,133 -

22,521,013 20,369,958 18,277,397 16,544,110 15,940,000 14,887,945 13,946,849 l

i $2.68 $2.41 $2.71 $2.26 $2.51 $2.38 $2.45

$2.22 $2.20 $2.20 $2.20 $2.20 $2.20 $2.20 l

C1",l1,o terhouse &Co, - --

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 31,1980 and 1979, and the results of its operations and the sources of funds provided for gross property additions for each of the three years in the period ended Decem-REPORT OF ber 31,1980, in conformity with generally accepted accounting principles consistently applied. Also, in INDEPENDENT our opinion, the statements of income and of sources of funds provided for gross property additions for each of the seven years in the period ended December 31,1977, which have been prepared from the ACCOUNTANTS applicable statements covered by our reports on each of those years, present fairly the financiat informa-tion 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.

"" Y '

E 4) . A , /, . . . . . . tM ,

19 ,

STATEMENTS OF SOURCES OF FUNDS PROVIDED FOR GROSS PROPERTY ADDITIONS For the Years Ended December 31, 1980 1979 1978 Funds Provided from Operations Net income . . . . . . . . ..................................... $113,562 $ 91,335 $ 82,361 Items not requiring working capital-Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,967 57,653 53,003 Deferred income taxes-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ". 'J,922 18.635 20,275 ,

investment tax credit-deferred (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 23,071 21.958 22,793 Allowance for funds used durirg construction . . . . . . . . ........ (51,220) (38.731) (28,929)

. Total funds provided from operations . . . . . . . . . . . . . . . . . _ 165,302 150.850 149,503 r Dividends on-Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,419) (15,699) (15.699)

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,636) (64.615) (56.252)

Net funds provided from operations .................. 66,247 70.536 77,552 Funds Obtained from External Sources Proceeds from sales of-Common stock . . . .................. 82,146 85,451 67,870 Preferred stock . . . . . . . .......... .... 36,000 - -

Capital stock expense . ..................................... (845) (368) (379)i Proceeds from sales of bonds . . . . . . . ... ..... ..... ....... 125,000 100,000 100,000 Pollution control construction funds held by trustee . . . . . . . . . . . . . . . . - - 2,999 Proceeds from sale of ownership interests in the Clinton power station - - 33,926 1 Net increase (decrease) in notes payable . . . . . . . . . . . . . . . . . . . . . . . . (34,145) 24,145 10,000 Retirement of bonds . . . . . . ............. .......... ....... (10,000) (15,000) (15,000) >

Total funds obtained from external sources . . . . . . . . . . . . . 198,156 194.228 199,416 <

Other Funds Provided (Used)

Net decrease (increase) in working capital * . . . . . . . . . . . . . . . . . . . . . 414 (11.048) 7,345 Miscellaneous-net ...... . ..............................., . (474) (835) (814){

Total other funds provided (used) . . . . . . ..........., (60) (11.883) 6.531 Total funds from above sources . . .. .. ... ....... ... . 264,343 252.881 283.499 Allowance for funds used during construction . . . . . . . . . . . . . . . . . . . . . 51,220 38.731 28,929 Gross property edditicos ...................................... $315,563 $291,612 $312.428 Decrease (Increast.) in Components of Working Capital

• Cash and temporary investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,406) $ (5,146) $ 22.231 Accounts receivable . . . . . . .... .. . . .... .... ....... 4,328 (11,673) (10,466);

Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,707 (19,228) (14,253):

Acco u n ts pa ya bl e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,799) 27,781 10,884 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . ............... 4,825 2,365 1,650 Accrued taxes ,, . .......... ........................... 12,148 (3,455) 178 Inte rest a cc ru ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,202 3,286 3,711 Other-net . ................................................ (3,591) (4,978) (6.590) .

$ 414 $(11.048) $ 7,345

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

GROSS PROPERTY ADDITIONS AND RETIREMENTS For the Years Ended December 31, 1980 1979 1978 Additions -Electric .. .. . . .. .. $297,157 $270,806 $296.597 Gas . ... .... .. . . ................ 18,406

~

20.806 15.831 53T5,565 $291,612 $312,428 Retirements-Electric . .. .. ....... ............... $ 5,607 $ 5,748 $ 6,247 Gas . . . . .. ... .. .. .. .. .... ........ 2,943 2,218 2.280 Other . .... . ..... . . .......... ....... -

$ 8, $ 7,966 $ 8,527 l m. _ 5_50..

l l

Seo notes to Innancial s'atements which are en integral put of these statements.

20

ILLINOIS POWER COMPANY / ANNUAL REPORT 1980 f

I l

I 1977 1976 1975 1974 1973 1972 1971 (Thousands of Dollars)

$ 73,664 $ 59,785 $ 56,722 $ 44,650 $ 47,201 $ 41,204 $ 37,215 49,761 49,845 44,810 41,216 37,532 33,351 31,460 14,099 12,632 12,847 8,184 8,012 7,552 5,044 19,573 10,994 15,034 1,706 5,118 1,567 395 j (20,183) (10,503) (7,459) (7,960) (7,189) (7,339) (4,018) 136.914 122,753 121,954 87,796 90,674 76,335 70,092 (13,590) (10,979) (7,229) (7,229) (7.229) (5,950) (3,284)

, (50,051) (45.226) (41,338) (36,993) (35,068) (33,418) (30,778) 73,273 66,548 73,387 43,574 48,377 36,967 36,030 3,788 63,712 47,256 27,894 --

43,306 20,400 50,450 50,100 - - -

35,177 30,129 (275) (525) (186) (139) -

(242) (193) 118,700 100,000 - 58,500 60,000 - 35,000 (2,999) - - - - - -

42,855 21,199 - - - - -

(10,000) (12,000) 19,000 (6,000) 8,000 (14,000)

(45,000) - - - - -

212.519 185,486 35,070 105,255 54,000 86,241 71,336 (23,480) (13,177) 7,378 (27,781) 4,546 (160) 788 ,

1,371 965 (407) (1,238) (1,743) 5,523 (1,399)

(22,109) (12,212) 6,9 71 (29,019) 2,803 5,363 (611) 263,683 239,822 115,428 119,810 105,180 128,571 106,755 20,183 10,503 7,459 7,960 7,189 7,339 4,018

$283.866 {5g $122,887 $127,770 $112,369 $135.910 $110,773

$ (534) $(17,997) $ 1,996 $ (3,873) $ 1,985 $ (2,278) $ (1,520)

(3,632) (8.313) 12,749 (25,792) 1,842 (4,077) 26 (24,868) (11,149) (9,134) (11,944) (1,348) (3,685) (2,367) 9.832 6,429 6,983 3,186 (2,896) 8,321 421 1,528 2,533 1,210 962 -

1,487 948 (4,466) 5,529 (6,330) 5,101 4,094 (1,023) 2,540 l 692 6,520 (402) 2,827 379 (2) 660 l (2,032) 3,271 306 1,752 490 1,097 80 g23.480) $(13.177) $ 7.378 $(27,781) $ 4,546 $ (160) $ 788 l

1977 1976 1975 1974 1973 1972 1971 (Thousands of Dollars)

$272,462 $239,936 $112,234 $116,637 $ 98,646 $119,893 $ 94,524 11,404 10.389 10,653 11,133 13,723 16,017 16.249

$283.866 $250,325 $122,887 $127,770 $112,369 $135.910 $110,773

$ 5,040 $ 8,010 $ 7,420 $ 6,264 $ 5.742 $ 6,532 $ 4,645 j 1,746 2,034 1,695 2,014 2,126 2,369 1,358 514

$ 6,786 $ 10,044 $ 9,115 $ /,868 $ 8.901 $ 6,517

$_8.278_

21 1

NOTES TO FINANCIAL STATEMENTS ]

Note 1-Summary of Accounting Policies: ber,1979. Since the level of rates approved by the The Company is subject to regulations of the lilinois Commission included the normalization expense, there Commerce Commission and the Federal Energy Regu- was no eMed on net income latory Commission. Because of the. rate-making proc- Certain overhead and dismantling costs which are ess, certain differences arise in the application of capitalized for book purposes but claimed currently as generally accepted accounting principles as between deductions for income tax purposes are normalized.

regulated and non-regulated businesses. Such differ-ences concern mainly the time at which various items Investment tax credits which reduce federal income enter into the determination of net income in order to taxes have been deferred and are being amortized to follow the principle of matching costs and revenues. income over the life of the property which gave rise to The Company's principal accounting policies, including the investment tax credits.

those based on this concept, are described below. For purposes of computing income taxes, not depre-Utility Plant-The cost of additions to utility plant and ciable utility plant does not include the allowance for replacements for retired properly units is capitalized. funds used during construction which is capitah, zed Cost includes labor, material and an allocation of for Mancial statement purposes. The tax effect remt- >

ing from th,is difference and certain other differences general and administrative costs plus an allowance for fur:ds used during construction as described later in jn the depreciation bases is reflected currently in net incoma this note. Maintenance and repairs, including replace.

ment of minor items of property, are charged to mainte- Federal and state income taxes are allocated be-nance expense as incurred. When units of depreciable tween operating and non-operating income and ex-property are retired, the original cost and dismanthn9 penses. The tax effects relating to non-operating activi-charges, less salvage, are charged to accumulated ties are included in Other income Miscellaneous-net, depreciation. ,

Allowance for Funds Used During Construction-The Depreciation-For financial shtement purposes, depre- Federal Energy Regulatory Commission ("FERC")

ciation is provided over the estimated lives of the Uniform System of Accounts defines A"owance for vanous classes of depredable property by applying Funds Used During Construction ("AFDC") as the net composite rates on a straight-line basis. Provisions for cost for the period of construction of borrowed funds depreciation in 1980,1979 and 1978 were equivalent used for construction purposes and a reasonable rate to approximately 3.4% and 2.9% of the average de- on other funds when so used. AFDC is capitalized at preciable cost for electric and gas utility plant, re- a rate which is related to the approximate overall cost spectively, of capital redu.:ed by the income tax effect of the interest f ortion thereof. While cash is not realized cur-Income Taxes-For income tax purposes, the Company rently from such allowance, it is realized under the computes depreciation using the most liberalized lives rate-making process over the service life of the related and methods allowed by the Internal Revenue Service. property through increased revenues resulting from higher rate base and higher depreciation expense, The tax effect of additional deductions for income tax purposes, which resulted from (a) use of liberalized in May,1980 the rate used in computing AFDC by depreciation methods, (b) use of different book and the Company was changed to 7%% (the effective tax depreciable lives including Class Life (ADR) Sys' after-tax rate) compounded semi-annually. The rate tems, and (c) the amortization of certain facilities, is used in 1978,1979 and through April,1980 was 7%.

deferred and recognized in determination of net income for financial statement purposes when book provisions In accordance with the November 28, 1979 Illinois exceed deductions taken for tax purposes. The tax Commerce Commission rate order, the Company has effect which results from the use of different book and excluded $97,064,000 of electric plant construction tax depreciable lives of gas utility plant (other than work in progress ("CWIP") from the base on which ADR) was not normalized for financial statement pur- AFDC is computed for the Clinton power station unit poses prior to November,1979, but is being normalized No.1. Also in accordance with the June 16, 1977 subsequent thereto in accordance with the provisions Illinois Commerce Commission rate order, the Com-of an Illinois Comrnerce Commission order in Novem- pany excluded $79,866,000 of electric plant construc-22 L _ _ _ . .- __

ILUNols POWER COMPANY / ANNUAL REPORT 1980 g) tion work ir progress from the rate base on which the 1980. Bank borrowings under such comrdments have AFDC was computed for the Havana power station a 360-day maturity from the time of issuance and carry unit No. 6 which was placed in service on June 22, an interest rate equivalent to the prime rate in effect 1978. Since these orders authorized the inclusion of at the time of issuance, adjusted to the prime rate in such expenditures in the rate base upon which the effect on the first day of each calendar quarter there-Company realizes revenues, there was no material after.

effect on net income. The Company has unwritten agreements with banks Unb///ed Revenue-The Company records revenue as committed for $80,000,000 of the total bank commit-billed to its customers on a monthly cycle billing basis. ments to maintain average checking account balances At the end of each month, there is an undetermined equivalent to 10% of the commitments for borrowings amount of unbilled electric and gas service which has from the banks or 15% of the borrowings outstanding, been rendered from the latest date of each cycle bill- whichever is greater, ing to the month end. Revenues as determined by The Company also has a credit agreecaent which meters read but not billed at year end are subject to provides for a revolving loan coromitment of $60 million income taxes. The income tax effect of this book-tax through May 1,1983 with a provision for conversion to timing difference in the recognition of revenues is a term loan having quarterly installment payments be-normalized. ginning August 1,1983 and maturing May 1,1986. No Debt Prem/um and Discount-Debt premium, discount borrowings have been made under this agreement and related expenses are being amortized on a straight- through 1980. The agreement is on a fee basis of one-line basis over the lives of the related issues. half percent of the unused line of credit through May 1, 1983. Borrowings through 1982 are at the greater of Noto 2-investments and Other Assets: the lending banks' prime rate or the average 90-day certificate of deposit rate published by the Federal Investments and Other Assets are carried at cost' Reserve Bank of New York and 103% thereof through except for the Company's investment at December 31' 1984 and 105% thereof until maturity, 1980 and 1979 of $4,361,000 and $3,995,000, respec-tively, in IP Gas Supply Company, a wholly-owned Unused bank commitments are belo available to sup-subsidiary. The investment in IP Gas Supply is for the port t"s amount of commercial paper outstanding at purpose of exploration to increase available natural any Ume.

gas supplies through one of the Company's pipeline The maximum aggregate amount of short-term bor-suppliers. In accordance with an order from the Illinois rowings at any month end during 1980,1979 and 1978 Commerce Commission, the accounts of the subsidiary was $77,580,000, $34,145,000 and $21,465,000, re-are not consolidated with the accounts of the Company spectively. The average daily short-term borrowings but are accounted for as an investment on the equity during these periods approximated $30,100.000, accounting method. $12,000,000 and $13,100,000, respectively (calculated as an average of the daily borrowings outstanding),

Note 3-Short-Term Loans and Compensating with a weighted average interest rate of 11.8 % , 11.3 %

Balances: and 7.9%, respectively (calculated by dividing the inter-At December 31, 1980 there were no outstanding est expense during the period for such borrowings by notes payable. At December 31, 1979 notes payable the average short term borrowings indicated above).

consisted of $34,145,000 in commercial paper bearing interest at an average rate of 13 9% and maturing Note 4-Sale of Interest in Clinton Power Station:

between January 2,1980 and February 29,1980. At De- On October 16, 1970, pursuant to agreements en-cember 31,1978 notes payable consisted of $10,000,000 tered into in August,1976, the Company sold a 10.5%

in commercial paper bearing interest at an average interest to Soyland Power Cooperative, Inc. and a 9.5%

rate of 10.7% and maturing between January 29,1979 nterest to Westem Illinois Power Cooperative, Inc. in and February 13,1979. the Clinton power station currently under construction.

The Company has lines of credit extending through The sales aggregated $103,980,000, substantially all 1981 with commercial banks for short-term bank bor- of which had been previously advanced to the Com-rowings. Under these lines of credit, the Company had pany. Subsequent to the sale each party is responsible unused commitments of $109,125,000 at December 31, for its portion of construction expenditures. The Com-23 l

Notes (Continued) pany's 80% interest in the power station including dote 6-Pension Costs:

land, nuclear fuel in process and allowance for funds The Company has pension plans covering all officers used during construction applicable to the Company's interest at December 31, 1980 and 1979 was nd employees. Pension costs, which are funded as accrued, include current service costs plus unfunded ,

$941,203,000 and S701,710,000, respectively. The sales prior service costs which are being amortized over a agreements include the provisions that the Company will exercise control over construction and operation period of about 25 years. The Company's pension plans were amended during 1979 and 1978 to provide in-of the generating station, the parties will share elec.

creased benefits. During 1979, based upon recommen- )

tricity generated in proportion to their interests and the dations by the Company's independent actuary, actu- I Company will have certain obligations to provide re.

arial assumptions were revised to reflect both actual placement power to the Cooperatives when the units Plan experience and actuarial projections. These revi-are out of service. sions resulted in a decrease of approximately $9,600,000 in unfunded prior service costs. The cost of the pen-Note 5-income Taxes:

sion plans was $6,839,000, $6,391,000 and $5,670,000 Income taxes included in the Statements of Income during 1980,1979 and 1978, respectively, consist of the following components:

Year Ended Following is u comparison of accumu:oted plan December 31, benefits and plan net assets as of January 1, the most 1980 1979 1978 recent information date for which the data is available:

(Thousands of Dollars) 1980 1979 included in Operatin0 (Thousands of Dollars)

Expenses and Taxes $35.193 $19.051 5 9,509 Actuarial present value of accumulated included in Other Income- plan benefits-(4.899) Vested $69.802 $63,936 Miscellaneous-net (12.685) (9.037) 22,508 10.014 Non-vested 9.730 8.826 Total current taxes ~4.610 .

-~

$79.532 $72,762 Deferred taxes-Book tax depreciation Net assets available for benefits $95,948 $80,n27 differencec-net 14.398 14,240 15.764 Certain overhead and The assumed rate of return used in determining dismanthng costs actuarial present vatJe was 6% in 1980 and 1979.

capitalized-not 5,524 4,395 4,511 Dook-tax revenue recognition differences (1.070) (1.216)

~

209 Note 7-Commitments:

Total defened taxes ~18.852 ~T7 415 20,484 Investment tax credit- Reference should be made to " Construction Pro-deferred (net) 23.071 21,958 22,793 gram" in the forepart of this annual report for informa-Total income taxes $64.431 $49 391 $47.887 tion concerning construction expenditures.

Income taxes are less than the amount which would be computed by applying the statutory federal and stato income tax rates to pre-tax income; the principal differ-ences are as follows:

Year Ended December 31, 1980 1979 1978 (Thousands of Dollars)

Computed tax expense at statutory federal and stato inccme tax rates $88,356 $68,815 $65,228 neductions (increase) in income taxen resu!!ing from-Allowance for funds used during construction 25.425 18.940 14.487 Other-net __

(1.500) 484 2.854 Total incomo taxes {C4.431 $49.391 g83 24

- . - _ . _ _ -. - - . - .- -- -. . -~ . .-

lLUNots POWER COMPANY / ANNUAL REPORT 19S0 Note 8-Quarterly Financiallnformation (Unaudited):

First Quarter Second Quarter Third Quarter Fourth Quarter 1980 1979 1980 1979 -1980 1979 1980 1979 (Thousands of Dollars Except Earnings Per Common Share)

Operating revenues . ...... ... $264,662 $229,195 $194,718 - $164.445 $212,823 $167,929 $211,167 $190.253 ,

Operating incomo . . . . . . . ,, .. 36,181 34,256 32,497 22,430 34,497 27,560 21.371 22.072 Net incomo . . .......... .... 30,720 29.780 30.109 19.151 32,546- 24,428 20,167 17,976 Net income; applicable to common stock . ........... . 26.573 25,855 25,135 15,226 27.572 20,504 ' 15.213 14.051 Earnings per common share . . . . 87c $1.01 76c 54c 82c 71c 44c . 48c '

Ouarterly earnings per common share are based on weighted average number of shares outstanding during -

the quarter and the sum of the quarters may not equal annual earnings per common share.

Note 9-Common Stock and Retained Earnings:

At the annual meeting of the Company on March 29,1979, the stockholders voted to amend the Articles of incorporation to authorize an additional 10,000,000 shares of common stock of the Company.

The Company has an Automatic Reinvestment and Stock Purchase Plan and an Employee Stock Ownership Plan ("ESOP") for which 719,153 and 31,010 shares, respectively, of common stock were designated for issu-ance at December 31,1980.

The Company also has a Tax Reduction Act Stock Ownership Plan ("TRASOP"), permitting the Company a maximum additional investment tax credit of 1% provided . common stock of the Company equal in value to the .

additional credit is ccatributed to the Trust. The TRASOP allows an additional investment tax credit up to %%

• provided that such amount is matched by employee contributions and that common stock of the Company equal in value to the additional credit and the employee contributions is contributed to the Trust. Under this plan, 156,986 shares of common stock were designated for issuance at December 31,1980.

Changes in common stock during 1980,1979 and 1978 were as follows:

1980 1979 1978 Shares Amount

• Shares Amount

• Shares Amount

• Dalance beginning of year . . .. ..... . 29.487,643 $490,539 25,474,381 $405,088 22,599,334 $337,218 Public offerings .. . .. 3,000,000 45,075 3,000,000 64,650 2.500.000 58,875 Automatic neinvestment and stock Purchase Plan 1,676,155 30.369 771,796 15,509 194.447 4,515

! EsOP . . . . . .. 31.053 569 21.439 454 17,538 422 TnASOP ... ,, . ... .. 313.000 6,133 220,027 4,838 163.062 4,058 Balance end of year . .. ..... .. .. 34,507,851 $572,685 29,487.643 $490.539 25,474.381 $405,088

• Thousands of dollars None of the Company's retained earnings at December 31,1980, were restricted with respect to the declara-tion or payment of dividends.

25

Notes (Continued)

Note 10-Preferred ar.d Preference Stock:

The following tabulation shows preferred and preference stock, issued and outstanding at December 31, 1980,1979 and 1978. and the redemption prices (exclusive of accrued dividends) applicau,e to each series. r Serial preferred stock, cumulative, $50 oar value-Authorized and outstanding 5,000,000 shares (including 720,000 shares of redeemable preferred stock-see Note 11):

1980 1979 1978 Series Shares Redemption prices (Thousands of Dollars) 4.08 % 300,000 $ 51.50 . . . . . . . . . . . . . . . . . .................. $ 15,000 $ 15,000 $ 15,000 4.26 % 150,000 51.50....................................... 7,500 7,500 7,500 4.70 % 200,000 51.50.................................... 10,000 10,000 10,000 4.42 % 150,000 51.50 .. .............. ..................... 7,500 7,500 7.500 4.20 % 180,000 52.00....................................... 9,000 9.000 9,000

' 63.96 prior to August 1,1981 8.24 % 600.000 52.93 thereafter and prior to August 1.1986 ]. .30,000 ..... 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 35,000 51.685 thereafter j 55.55 prior to March 1,1981*

8.94 %,

54.25 thereafter and prior to March 1,1986 1 000.000 ' .

... .. 50,000 50,000 50,000 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 8.00 % 1.000'000 , .

50,000 50,000 50,000 53.29 thereafter and prior to August 1,1992 . ....

52.29 thereafter Premium on preferred stock . . . ..... .. . .. .. . ...... . ......... 1,171 1,171 1,171 Serial preferred stock, cumulative, without par value-Authorized 5,000,000 shares in 1980 and 1979; none outstanding ............ - - -

Total preferred stock .. ..... .. ....................... 215,171 215,171 215,171 Preference stock, cumulative, without par value-Authorized 5,000,000 shares in 1980 and 1979; none outstanding .. ..... ... - - -

Total prefcrred and preference stock . . , . . ... .......... .. $215,171 $215.171 $215.171

• Not redeemable through a refunding operation at a cost to the Company of less than 8.92% per anu.um prior to t.tarch 1,1981 tor the 8.94% serles atd 7.93% per annum prior to August 1,1982 tot the 8.00% settes.

At the annual meeting of the Company on March 29,1979, the stockholders voted to amend the Articles of ,

incorporation to (a) create a new class of 5,000,000 shares of serial preferred stock without par value, and (b) create a new class of 5,000,000 shares cf preference stock without par value.

The above outstanding issues of preferred stock, $50 par value, are redeemable at the option of the Company in whole or in part at any time upon not less than thirty days and not more than sixty days notice by publication.

Note 11-Redeemable Preferred Stock:

On March 13,1980 the Company issued 720.000 shares of 11.66% serial preferred stock (par value $50), sub-ject to mandatory redemption in an amount sufficient to retire on each February 1, beginning in 1988,19,800 shares and February 1,2020. 86.400 shares at $50 per share plus accrued dividends. The Company has after February 1,

( 1988 the noncumulative option to redeem up to 19,800 additional shares in each such year.

1 V

l 26

.- - . - . - . . - . ~ -

lLLINois POWER COMPANY / ANNUAL REPORT 1980 [p l

1 Note 12-Long-Term Debt Long-term _ debt was represented by, 4

December 31, 1980 1979 (Thousands of Dollars)

Rest mortgage bonds-2%% series due 1980 . . . . . . . . . . . . . . . . .... . . . . . . . . . $ ~

- $ 10.000 3W% series due 1982 . . . . . . . . . . . . . . . . . . . ..... . . . . .. 20,000 20.000 3W % series due 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000 20,000 20.000 'I 3%% series due 1986 . . . . . . . . . . . . . . . . . . . . . . . . ..

11%% series due 1987 . . .. . . . . . . . . . . . . . . . . . . .. . . . . . . . .. . . .. . 75,000 4% series due 1988 . . . . . . . . . . . . . . . , . . 25,000 ' 25.000 [

35,000 35,000 4% % series due 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.85% series due 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 40,000 25,000 25,000 .

6% % series due 1998 . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . .

6%% series due 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 45,000 35,000 35,000 8.35% series duc 1999 . . . . . . . . . . . . . . . . . . . . . . , . . .

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 j 6 60% series due 2004 (Pollution Control Series A) . . . . . . . . . . 8,500 8.500 100,000 100,000  ;

9%% series due 2004 . . . . . . . . . . . . . . . . . . . , .

^

10W% 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 8h% series due 2008 . .- . . . . . . . . . . . . . . . . . . , . . . . 100,000 100.000 12%% series due 2010 . . . . . . . , . . . . . . . . . . . . , . . . . . . . . 50,000 -

Tntal long-term debt . . . . . . . .. . . . . , . . . . . . . . . 997,200 882.200 Unamortized premium and discount on debt . . . . . . . . . . . . . . . . . . (5,798) (5.453) 991,402 876,747 Less first mortgage bonds maturing within one year . . . . . . . .. . . . . . . . . . . . - 10.000 '

$991,402 $866,747  :

Certain supplemental indentures to the Mortgage and Deed of Trust require that the Company, beginning in  ;

1985, deposit in cash as a sinking and property fund. $5,000,000 for the 9%% series due 2004 and $100.000, and '

increasing amounts in later years, for the 6.60% series due 2004 (Pollution Control Series A), which amounts are not subject to reduction. Certain other supplemental indentures require that the Company deposit in cash as a  ;

sinking and property fund amounts not to exceed $3.000,000 in 1981. $3,150,000 in 1982, $2.950.000 in 1983, l

$3,550,000 in 1984 and $4,050,000 in 1985, which amounts are subject to reduction in accordance with certain  ;

terms of the mortgage; historically these requirements have been met by pledging property additions.

The above bonds are secured by a first mortgage lien on substantially all of the fixed property, franchises and rights of the Company with certain minor exceptions expressly provided in the mortgage securing the bonds. The remaining balance of net bondable additions at December 31,'1980 was approximately $578.000.000.

i I

i 27

k i

h i

Notes (Continued) {

I

'l Note 13---Segments of Business:  ;

The Company is'a public utility engaged in the generation, transmission, distribution and ' sale of electric 2 j

energy and the distribution and sale of natural gas. .,

Year Ended December 31,1980 Year Ended December 31,1979 Year Ended December 31,1978 l -}

l Toul .

Tohl Toki Electric Gas Company Electric Gas Company Electric Gas Company ~ .

(Thousand9 of Dollars) (Thousands of Dollars) (Thousands of Dollars) . j Operating information- ~

Operating revenues $ 567,356 $316,014 3 883,370 $ 479.052 $272,770 $ 751,822 - $ 452,207. $219,807 $ 672,014  !

t Operating expenses, t excluding provision _ .

for income taxes . . 401,517 280,191 681,708 343,592 243,484 587,076 327,374 193,932 ~ 521,306

(

Pre tax operating .

I income . . , . . . . . . . 165.839 35,823 201,662 135,460' 29,286 . 164,746' 124,833- 25,875 150,708 j Allowance for funds }

used during con- [

struction (AFDC) , 51,032 188 51.220 38,525 206 38.731. 28.823 106 ,28.929 l Prel tax operating

.[

income, including .

i AFDC,....... $ 216.871 $ 36.011 252,882 $ 173 985 $ 29 492 203,477 $ 153.656 gg 179,637  !

Other (income) and I deductions ...... (14,798) (10.043) (9,402) ' i Interest charges . . . . , 77,002 63,757' 53,892 ,

Provision for income  !

taxes . . . . . . . . . . 77.116 58,428 52,786 >

Net income per  !

accompanying state-ments of income . $ 113.562 $ 91.335 $ 82.361 Other information--  !

Depreciation , , , $ 48,838 $ 8.997 $ 57.835 $ 47.377 $ 8 590 $ 55.967 $ 43 316 $ 8 253 $ 51.569 Capital expenditures . . $ 297,157 $ 18 406 $ 315 563 $ 270 806 $ 20 806 $ 291.612 $ 296 597 5 15.831 $ 312.428 '!

lovestment information-Identifiable assets * , $2.088.962 $269 619 $2,358,581 $1.836.862 $266 463 $2,103,325 $1.603.847 $245 492 $1,849,339 Nonutility plant and 1 other investments . . 8,596 8,663 7.892 }

l Assets utilized for l l

everall Company l l operations . . 100.014 102.664 81,275 j Total assets . . $2.467,191 $2.214.652 $1.938,506 L

• Utility plant, nuclear fuel in process and acquisition adjustment less accumulated depreciation and amortization, l l fuel, natural gas stored underground and materials and supplies. l l

I 1

I i

28 1

)

. . . _ . ~ . . . . _ _ . _ . . _ . _ , . _ . , - - ,_ _. ,,_,__,,__ _._. . - _ _ . _ _ _ . , , . . , _ - - . _ '

ILLINols POWER COMPANY / ANNUAL REPORT 1980 l

Two Year Dividends and Stock Prices by Quarters j

)

The common stock is listed on the New York Stock Exchange and the Midwest Stock Exchange. The prices

'j below are the prices reported on the Cr.,mposite Tape. The preferred stocks are listed on the New York Stock Exchange and the prices below are the prices on that Exchange.

^

1980 Stock Prices 1979 Stock Prices 1 2 3 4 1 2 3 4 -j DMdends* High Low High Low High Low High Low High Low High Low High Low High Low  :

[

" 21 % 18 % 20 % 16 % 23% 21Fs 23% 20 23 % 21 22 17 %

Common 19 % 15 % 22 % 16 7 4.08% Pfd. $ .51 18 15 % 19 % 14 19 % 17 17 14 % 22 % 20 % 22 % 20 % 22 % 19 20 % 16 %

4.26% Pfd. .53% 20 16 % 20 16 20 17 % 18 15 23 % 21 % 24 % 21 24 % 21 % 20 17 % -!

4.70% Pfd. .58% 22 18 % 23 % 17 22 % 18 19 % 16 25 24 25 % 23 25 % 24 24 19 % l 4.42% Pfd. .55% 19 18 21 % 17 % 19 % 19 % 18 17% 23 22 % 22 % 22 % 24 22 % 20 % 18 %

4.20% Pfd. .52 % 19% 14% 19% 14% 19% 17% 16W 15 22 20 % 22 % 20 % 23 20 % 20 19 % .

8.24% Pld. 1.03 36 27 40 % 26% 40 33 % 34 % 28 % 45 % 42 % 46 % 42 % 45 % 42 42 35 % l 7.56% Pld. .94 % 36 25 37 % 25 % 34 % 31 30 % 26 42 % 41 42 % 38 % 43 39 37 32 % ,

8.94% Pfd. 1.11 % 42 % 33 % 44 32 42 34 36 % 30 % 50 % 48 50 % 48 50 % 44 % 44 % 38 8 00% Pfd. 1.00 37 % 32 40 28 % 39 32 % 32 % 28 % 44 % 42 % 45 43 % 43 % 42 40 34 >

11.66% Pfd. 1.45 % - - 55 49 55 52 % 52 48 % - - - - - - - - t

• The amount declared in each quarter during 1979 and 1980. W911.66% Preferred was issued on March 13,1980 and dividends were declared thereafter at the indicated late.

' $.57 per common share in 1979 and first quarter 1980 and $.59% second, third and fourth quarters 1980.

There were 81,908 registered record holders of common stock at January 9,1981, i

Selected Financial Data

• 1978 1980 1979 1978 1977 Total operating revenues .. .. ... . S 883,370 $ 751,822 $ 672,014 $ 567,387 $ 461,661 ,

Net income . . . . . . . . . $ 113,562 $ 91,335 $ 82,361 $ 73,664 $ 59.785  !

Net income applicable to common stock .. S 94.493 $ 75.636 $ 66,662 $ 60,407 $ 49,179 Earnings per common share . . , ,.. $ 2.87 S 2.70 $ 2.74 $ 2.68 $ 2.41 Cash dividends declared per common share . . $ 2.355 $ 2.28 $ 2.28 $ 2.22 $ 2.20

$2.467,191 $2.214,652 $1,938,506 $1,776,662 $1,506,104 Total assets .. . , . . ..

Long-term debt . . . . .. . $ 991,402 $ 866,747 $ 776,559 $ 692.255 $ 590.199 Redeemable preferred stock . . . . . $ 36.000 - - - -

Ratio of earnings to fixed charges" . . .. 3.25 3.15 3.34 3.58 3.54

• Thousands of dollars except earnings per common share, cash dividends declared per common share and ratio of earnings to fixed charges.

' The ratio of carnings to fixed charges represents the number of times that earnings before income taxes and fixed charges cover the fixed charges. Earnings used in the calculation of the above ratios include allowance for funds used during construction and are before the deduction of income taxes and fixed charges which include interest on long-term debt, related amortization of debt discount, premium and expense, and other interest on that portion of rent expense which is estimated to be representative of the interest component,

• 29 r

- w. - - ~ , . - - , a--n-. .a,.e . . , + - +.+-.,-..w ..---..w n-,.,+w w.. .- , ny,....-- ,- g- ., ,, , - - - -r

I >

Supplernentary Information to Disclose the Effects of Changing Prices The unaudited supplementary information presented stated in terms of constant dollars or current cost that

, herein is intended to provide a perspective as to the exceeds the historical cost of utility plant is not pres-approximate effect of inflation upon our Company as a ently being recovered in the Company's rates, and is regulated utility. This information is not intended as a reflected as a reduction to net recoverable cost. i substitute for earnings reported on a historical cost During 1980, several rate orders issued by the Illi-basis. The information has been prepared as prescribed nois Commerce Commission for other utilities have by the Statement of Financial Accounting Standards No. been based upon a " fair value" rate base, and we <

33, Financial Paporting and Changing . Prices. This anticipate that " fair value" will be a consideration in statement requves adjustments to historical costs to our currently pending rate request. However, the im- '!

estimate the effects that general inflation (Constant pact, if any, that an order based on " fair value" would Dollar) and changes in specific prices (Current Cost) have on the reduction to net recoverable cost is un -

have had on the Company's renults of operations. Known at this time.  ;

Utility Plant and Depreciation Gain from the Decline in Purchasing Power of I For the following presentation, utility plant has been Net Amounts Owed '

restated on both a constant dollar and a current To properly reflect the economics of rate regulation cost basis. Constant dollar amounts mpresent hbort. in the Statement cf income Adjusted for Changing .  ;

cal costs stated in terms of dollars of equal purchasing Prices, the reduction of net utility plant to net recover-  !

power, as measured by the Consumer Price Index for able cost should be offset by the gain from the decline all Urban Consumers (CPI-U). Current cost amounts in purchasing power of net amounts owed. During a l reflect the changes in specific prices of plant from the period of inflation, holders of monetary assets (such l date the plant was acquired to the present and are an as receivables) suffer a decline in general purchasing ,

estimate of the cost of currently reproducing existing power because the amounts of cash received for these

[

plant. Constant and current dollar amounts differ to the 'tems in the future will purchase less. Conversely, extent that specific prices of utility plant have increased issuers of monetary liabilities (such as long-term debt, more or less rapidly than prices in general. preferred stock and accounts payable) experience a The current cost of utility plant, which includes land, g in because future payments will be made with dollais land rights, intangible plant, property helet for future having less purchasing power. The Company has sub- ,

use, construction work in progress and nuclear fue si ntial amounts of debt and preferred stock and, t therefore, for purposes of these calculations, has a net in process was determined by indexing surviving plant using the Handy-Whitman Index of Public Utility Con-gn m g Ha es in mess of t

m y ss h struction Costs. Accumulated depreciation was calcu-lated by applying the historical depreciation rates to the inventories and Taxes estimated current costs of depreciable properties by Fuel inventories, the cost of fuel used in generation year of addition. The current year's provision for de- and gas purchased for resale have not been restated preciation stated in constant dollars and current costs from their historical costs. Regulation limits the re-  !

was determined by applying the Company's composite covery through the operation of adjustment clauses in depreciation ratea to the indexed utility plant amounts. basic rate schedules to the actual costs of fuel and The increase in depreciation expense on utility plant purchased gas. For this reason, fuel inventories are l

restated for the effects of changing prices, represents considered monetary assets.

the excess of depreciation expense in terms of con- As prescribed in the Statement of Financial Account-stant dollars and current cost over historical deprecia- ing Standards No. 33, income taxes were not adiusted.

tion expense ($57.8 million) used for financial state- Present income tax laws ignore the effects of inflation ment purposes. in measuring taxable income. Higher depreciation ex- i pense under constant dollar and current cost account- i Reduction to Net Recoverable Cost ing is not tax deductible. Therefore, the Company's Under the rate-making procedures prescribed by the combined effective federal and state income tax rate, regulatory commissions to which the Company is sub- when adjusted for inflation, is 58.7% under constant ject only the historical cost of utility plant has been re- dollar and 68.6% under current cost, for 1980, each flected in the rate base used in recent years to deter- of which exceeds the reported effective tax rate of mine the amount of return to which the Company is 36.2% and the combined stntutory federal and state s entitled Therefore, the excess of the cost of utility plant rate of 49.6%.

30 .

l---_ , __ _ _ . , , , ~ , , , _ , _ _ , - , , - . . , , _ , ,_,~,~,,,.,-_..,_,,m,. ,,m - - . _

- - - . - -- .- . . - - -. -. . . . . . ._ ~

ILLINOIS POWER' COMPANY / ANNUAL REPORT 1980

. Statement of income Adjusted for Changing Prices For the Year Ended 6 December 31,1980 (Thousands cf Dollars)-

Constant Dollar . Current Cost - k Average . Average

'1980 Dollars 1980 Dollars i Net income, as reporud . . . . . . . . . . . . . . . . . . . . . . . . .... ... ......... ...... ... .. . .. $ 113,562 - $113,562 '

increase in deprecitalon expense on utility plant, as restated for the effects of changing prices. .. ... .. - 68,229 84.137 Not income (exchWag reduction to net recoverable cost) . . . . . . . . . . . . . . . . ... ........ .. . $ 45.333* $ 29,425 Increase in specific prices (current cost) of utility plant hem during the year" ...... . .... ... $291.127 L Less increase in cost of utikty plant adjusteo for changes in generaf. price level ................... 371,401 Excess of increase in general price levei over increase in specific prices . . . .. . . .. . . . .. .. . (80,274) ,

fleduction to net recoverable cost . . . . . . . . . . . . . .................. .. . ........ ..... . $(168,344) (72,162) l (152.436)--

Gain from decline in purchasing power of not amounts owed .. .. ,, ... ,. ..... ......... -143.970 143.970 Net paa level adjustment . . . . . . . . . . ... ..... ... . ...... . .......... .. .. ......... $ (24,374) $ (8.466)

^

• locluding the reduction to nel recoverable cost, the net loss on a constant dollar basis would have been approximately $123 million for 1980.

' At December 31,1980, current cost of utility plant, net of accumulated depreciation, was approximately $3.4 billion, while net historical '

cost recoverable through depreciation was approximately $2.2 billion. ,

Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices

• For the Years Ended December 31,

'978 1980 1979 i 1977 1976 Opstxting revenues-Historical cost . .. ...... ...... ...... . .. ..... .. $883,370 $751,822 $672,014 $567.387 . $461,661 Adjusted for general inflatica . . .. . ...... ... .. . 883,370 853,494 848,787 771,521 668.258 Hist:rical cost information adjusted for general inflation income from operations (t.veludirg red.ation to net recoverable cost) 45,333 42,738 Income per common share (after preferred stock dividend requirements and excluding reduction to net recoverable cost) .. . . .. .80 .89 Net assets at year end at not recoverable cost .. ...... .. . 717.387 701.104 -!

Currsnt cost information income from operations (excluding reduction to not recoverable cost) 29.425 23.143 income per common share (after preferred stack dividend requirements and excluding reduction to net recoverable cost) . .. ..... . .31 .19 l Excess of increase in general price level over increase in specific l prices after reduction to net recoverable cost . . ... . 152.436 109.278 i Net assets at year end at net recoverable cost ... . . . .. 717,387 701,104 i G nertlinformation Gain from decline in purchasing power of net amounts owed , . 143.970 174,637 .

Cash dividends declared per common share--- I Historical cost . . . . . . .... .... . .. . ...... ... . 2.355 2.28 2.28 2.22 2.20 Adjusted for general inflation , .. .. .. . 2.355 2.59 2.88 3.02 3.18 i Market price per common share at year end-  ;

Historical cost . . . . .. . . . ... . .. .. . .... .. ..... ...... 17.88 19.13 22.75 26.50 27.50 - I Adjusted for general inflation . . . . . . . . . ... .... 17.08 20.54 27.67 35.14 38.94 l 1

Average consumer price Index . .. . .. . .. ... ... .. 246.8 217.4 195.4 181.5 170.5

]

j Year-end consumer price index . . . . . . . ..... ... .... . . 258.4 229.9 202.9 186.1 174.3 'l I

• In thousands of average 1980 dollars except per share data and indices. i 31 1

i ELECTRIC OPERATING STATISTICS 1980 1979 1978 1977 1976 R:vinues (Thousands of Dollars)

Residential ... ..... .. . ... $ 199,124 $ 160,355 $ 159,493 $ 139,458 $ 108,932 Commercial and small power ... . . 123,463 105,262 102,170 69,947 53,698 Large power and light .. ... . .. ...... 198,177 174,315 158,611 149,307 121,735 Other ... .. . . .. . ..... .......... 9,897 8,137 7,631 6.286 5.170 Revenues-ultimate concumers ..... 530,661 448,069 427,905 364,998 289,535, 9 ural cooperatives and municipal utilities . . . 33,236 27,790 21,448 15.853 10,920 Other electric utilities . ... .... ..... . 68 59 66 50 39 Miscellaneous .. ... .. . .......,. 3,391 3.134 2,788 2.666 2,572

$ 567,356 $ 479,052 $ 452,207 { 383,567' S 303,066 Customers at End of Year Residential ..... .... . .. .... ... . . 466,546 461,966 455,014 445,130 435,611 Commercial and small power ... . .. 54,546 53,804 53,051 51,384 51,019

. Large power and light . . . . .. . ... ... . 359 374 368 1,305 1,340 Other ..... .. .. . ... . . ... ... 715 714 699 692 694 522,166 516,858 509,132 498 '1 488.664 Silts in KWH (Thousands)

Residential ....... ... .. . . ... .. 4,003,563 3,737,245 3,770,703 3.632,898 3,271,719 Commercial and small power .. .. . 2,492,930 2,408,131 2,383,521 1,696,894 1,405 389 Large power and light .. . . ........ 6,507,468 6,738,321 6,271,872 6,541,429 6,412,648 Other .. ... ..... ..... ....... . .. 290,851 282,848 271,853 260,263 247.298 Sales-ultimate consumers . ,.. .. ... 13,294,812 13,166,545 12,697,949 12,131,484 .11,337,054 Rural cooperatives and municipal utilities . 1,189,702 1,057,113 874,452 817,334 736,834 Other electric utilities . . . . . . . . . .. .. . 1,961 1,874 2,004 2.035 1,836 14,486,475 14,225,532 13,574.405 12,950,853 12.075,724 l

l Gintrated and Purchased in KWH (Thousands)

Generated-Steam . .. . , , . . 16,306,993 16,840,214 15,770,060 14,530,570 15,688,384 Hydro and intemal combustion . .. . 61,914 55,241 38,039 74.117 55,8;4 Total generated . . . .. 16,368,907 16.895,455 15,808,099 14,604,687 15,744,228 Purchased and interchanged-net . (838,615) (1,666,889) (1,256.163) (666.844) (2,/07,988)

Total output .. . . . 15,530,292 15,228,566 14,551,936 13,937,843 13,036,24rj Less-used and unaccounted for 1,043,817 1,003.034 977.531 986.990 960,516 14,486,475 14,225,532 13,574,405 12,950,853 12,075.724 Puk Demand (native load) in KW (Thousands) 3,150 3.019 2,825 2,846 2,570 Ntt Generating Capability in KW (Thousands) 3,815 3,815 3,815 3,412 3,412 Due to a change in the Company's rate structure in 1977, there was a reclassification of customers between the commercial and small power category and the large power and light category for the years 1980,1979 and 1978. As a result of this re-classification, only customers having a demand of 500 Kw or groater are classified in the large power and light calogory.

32

ILLINOIS POWER COMPANY / ANNUAL REPORT 1980 -

GAS OPERATING STATISTICS 1

l I

1980 1979 1978 1977 1976 R:vinues (Thousands of Dollare)

Residential-without space heating ....... . $ 2,201 $ 2,056 $ 1,758 $ 1,819 $ 1,801 with space heat!ng . . . . . . . . . . . . 142,050 124,354 105,484 91,798 74,521 1 Commercial-without space heating . . . . . . . . . 2,265 2,858 1,722 1,469 2,005 with space heating . . . . . . . . . . 52,976 46,010 37,536 31,098 24,905 Industrial -non-interruptible .. ... . .... 76,743 43,714 30,910 25,641 20,325 interruptible ......... ... . . 31,951 51,354 40.906 33,376 35,083 Revenues-ultimate consumers . . . . . . . . . . . 308,186 270,346 218,316 185,201 158,640 Interdepartmental revenues-interruptible . .. 1,825 2,365 1,058 75 60 Miscellaneous ....... . ........ ...... . 6,003 59 433 (1,456) (105)

$, 316,014 $ 272,770 $ 219,807 $ 183,820 - $ 158,595 Cust:mers at End of Year Residential-without space heating . .. .. 16,040 18,251 19,834 21,377 23,204 with space heating . . . . . .... 332,695 326,816 319,968 313,900 308,578 Commercial-without space heating ....... 1,891 2,048 2,112 2,192 2,465 with space heating . . . . . . . . . 30,725 30,032 29,522 29,116 28,771 Industrial -non-interruptible ..... ........ 474 480 470 457 457 Interruptible . ............ 24 58 80 102 103

- 381,849 377,685 371,986 367,144 363,578 i

S:l:s in Therms (Thousands)

Residential-without space heating . . . . . . . . 5,165 0,231 6,172 6,840 8,321 with space heating . . . ., . . ... 414,405 459,329 469,906 436,838 433,993 Commercial-without space heating . . . . . . . 6,749 10,586 7,986 7,554 12,820 with space heating . . ... 168,563 182.212 181,960 166.455 171,562 Industrial -non-interruptible .. .. . . . 280,471 194,310 181,029 172,089 178,037 interruptible ... . . . ... 101,935 186.264 180,138 147,205 181,784 Sales-ultimate consumers . . . . . . . . .. 977,288 1,038,932 1,027,191 936,981 987,117 Interdepartmental sales-interruptible - . . ... 8,853 13,141 8,034 693 720 986,141 1,052.073 1,035,225 937,674 987,837 Purchased and Produced-Therms (Thousands)

Purchased ... . ......... .. . . 980,426 1,118,246 1,087,749 1,024,805 1,012,047 Storage-net of (injected) and withdrawn .... 55,525 (30,203) (14.998) (57,182) 28.269 Purchased gas delivered . . . . ... ..... 1,035,951 1,088,043 1,072,751 967,603 1,040,316 Produced .... .. ......... ............ 99 69 24  ?.417 91 Total .. .. ...... ....... ... 1,036,050 1,088,112 1,072,775 Pi 0,040 1,040,407 Less-used and unaccounted for . . ... 49,909 36,039 37,550 _ 32,366 52,570 986,141 1,052.073 1,035,225 937,674 987,837 1

1 I

33

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Groundbreaking First ground was turned in October at Illinois Power Company's Wood River power station for construction of a low-Btu coal gasification project. Participating in the event were (left to right) Company Cha?; man and President Wondell J. KcIlcy. Illinois Gov. James R Thompson and Allis-Chalmers Corporation Chairman and President David C. Scott. The Stato and 12 utilitics are participating with Allis-Chalmers in financing the Kilngas demonstration project.

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bbMk$kN Conservation I!!inois Pcn er has compleicd energy efficiency inspections at 75,500 customer hornos over the

!ast four years The company's conservation program was a pioneer in the industry and has roccived national recogmt.on.

Board of Directors Officers Robert J. Burow Wende!! J. Kelley Consu! tant and Retired Publisher Chairman and President The Commercial-News .

Danvice, lhinois William C. Gerstner Charles W. Wells Executive Vice Executive Vice President President William C. Gerstner Executive Vice President of the Company Arthur E. Gray James O. McHood Decatur, Ithnois Vice President Vice President George E. Hatmaker Larry D. Haab William E. Warren Corporate Director Vice President Vice President Spongfield, Illinois Leonard J. Koch Porter J. Womeldorff f We es ent We Resident Wendell J. Kelley Chairman and President of the Compar'y David F. lieek John B. Burdick Decatur, Illinois Secretary and Treasurer Assistant Treasurer John H. Leslie Chairman of the Board of Signode Corporation j (manufacturer of steel and plastic

( strapping and packaging systems) i Glenview, Ilknois Transfer Agent and Registrar Eva Jane Milligan Continental Illinois National Bank and Trust Senior Vice President. General Personnel Company of Chicago Manager of Marshall Field & Company 231 South LaSalle Street, Chicago, Illinois 60693 (a retader)

Chicago, Illinois Stockholder Records and Dividend Keith R. Potter Disbuulng Office Consultant and Retired Vice Chairman Shareholder Services Section international Harvester Cornpany IIHnois Power Company (manufacturer of trucks; agncultural, construction, 500 South 27th Street and industrial equipment; and gas turbines) Decatur, Illinois 62525 Easton, Maryland (217) 424-6609 The annual stockholders' meeting will be held Boyd F. Schenk April 16,1981, at the executwe o!! ice of the President and Chief Executive Officer of Company at 10 A.M. Proxies for this meeting will Pet incorporated be requested by the Board of Directors. A proxy y (processor and marketer of food products statement will be mailed to stockholders about and other consumer goods) March 13,1981.  :#

St. Louis, Missouri .

This report and the financial statements con- a tained herein are submitted for the general in.

Richard P. Stone formation of the stockholders of the Company Grain and Seed Farm Operator as such and are not intended to induce, or to 7:-

Spongfield, linnois be used in connection with, any sale or pur- .

chase of secunt:es. o. ,

Charles W. Wells Executive Vice President of the Company Decatur, liknois " -

Gordon R. Worley Executive Vice President-Finance of Montgomery Ward & Co., incorporated -i (a reta<ler) ,V, Chicago, Illinois . , ,

Vernon K. Zimmerman ILLINOIS POWER COMPANY Dean. College of Commerce and Business Administration Principal Office Wntcen , Mn is 61856

$Vana llifnoi Note: The principal occupation of each director Executive Office and off,cer of ilhnois Power Company is 500 South 27th Street. Decatur. Ilknois E2526 that hsted following his name. Phone (217) 424-6600 36

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NATURAL GAS

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