Illinova Gears Up for Utility Competition

Decatur-based Illinova Corp. Wednesday reinforced efforts toposition itself for the deregulation of the utility industry bylaunching a subsidiary to offer energy services - Illinova EnergyPartners.

Details were given at Illinova's annual meeting. The subsidiarywill provide utility management consulting and systems services andhelp clients operate and manage their energy facilities and energyconsumption.

Officials also unveiled a marketing campaign to makeIllinova's name more recognizable."It's too early to say" if the subsidiary will launch a majorpush in the Chicago market, said Larry D. Haab, Illinova Corp.chairman, president and chief executive officer. "In the initialstages, we will be primarily led to where business opportunities are.. . . We want to gain a foothold and start building theseprograms."For now, Illinova, which through Illinois Power Co. providespower to roughly 555,000 customers in central and southern Illinois,is restricted from selling electricity in the Chicago metropolitanarea, where Commonwealth Edison is the regulated monopoly. But thereare no such restrictions on the sale of energy-related services suchas those Illinois Energy Partners will provide.Initially, the subsidiary will market services to commercialand government customers and sell energy to bulk purchasers ofelectricity and natural gas in the Midwest and West Coast, thecompany said."This is part of the evolutionary transition that's occurring inthe industry," said Dean Witter Reynolds analyst Steve Fleishman."But besides forming the subsidiary, we have to see how much they'llbe able to grow it."Fleishman gave Illinova good marks on how it's gearing up forderegulation and competition, particularly in lowering its costs. In1996, costs from operations will be $60 million a year less than theywould have been without cost savings efforts, which have includedcutting its work force 20 percent in the past three years, said Haab.Illinova Corp. also Wednesday reported first-quarter earnings of$43 million, or 57 cents per share, for the first quarter, up 33percent from the same quarter a year ago.The company linked the gain to increased natural gas sales,lower operation and maintenance expenses and lower interest charges.