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FITCH PLACES ILLINOIS POWER PREFERRED ON ALERT; NEGATIVE IMPLICATIONS -- FITCH FINANCIAL WIRE --

FITCH PLACES ILLINOIS POWER PREFERRED ON ALERT; NEGATIVE IMPLICATIONS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Aug. 6 /PRNewswire/ -- Illinois Power Co.'s (NYSE: IPC) 'BBB'-rated cumulative preferred stock is placed on FitchAlert with negative implications.
 The alert reflects yesterday's action by the Illinois Commerce Commission which could result in a significant write-off and preclude payment of preferred and common dividends.
 The commission took preliminary action in a rehearing and reconsideration of certain Clinton Power Station post-construction deferred costs that may reduce IPC's rates by $23 million per year and require a $200 million write-off. IPC's retained earnings approximate $66.5 million and future preferred and common dividend declaration and payment is uncertain given potential negative retained earnings.
 The commission proceeding resulted from a December 1991 Illinois Supreme Court decision pertaining to the regulatory treatment of Commonwealth Edison's deferred post-construction costs. The IPC hearings also considered the impact of any cost disallowance on IPC's financial viability.
 Based on comments made in the commission's open deliberation, IPC may not be able to recover any of its deferred depreciation and property tax items. Further, rate base treatment of post 1987 deferred equity returns, which totaled $102 million at March 31, 1992, may be limited to 27 percent, with 73 percent being subject to write-off. IPC expects the commission to present its formal order by tomorrow.
 Should IPC appeal an unfavorable order, the resolution of the uncertainties could be prolonged as the court is under no obligation with regards to the timing of its rulings. The delay could give IPC the opportunity to build retained earnings, but it appears it would take roughly all of this year and 1993 to replenish negative retained earnings. The company could also consider a quasi-reorganization to bring retained earnings to a zero level after which dividends could be paid from current income.
 -0- 8/6/92
 /CONTACT: John Watt of Fitch, 212-908-0523/
 (IPC) CO: Illinois Power Co. ST: Illinois IN: UTI SU: RTG


PS -- NY063 -- 7599 08/06/92 12:24 EDT
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Publication:PR Newswire
Date:Aug 6, 1992
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