Presentation to Federal Energy Regulatory Commission Kathryn L. Patton, Sr. Vice President and General Counsel June 26, 2002 Why PJM?

Operational Reasons For IP Joining PJM IP has 345 kV Interconnections with 4 Utilities: Ameren, AEP, ComEd and TVA Imports for Native Load:  50% of Imports for Illinois Power’s Native Load Came from ComEd and AEP Exports:  60% of Exports were Delivered to the ComEd and AEP Systems  19% of Exports from IP System Served Load in PJM  25% of Exports from IP system Served Load in ComEd and AEP Service Territories

IP TVA CE SIPC CWLP CILCo MECS LGEE EEI Ameren AEP Interconnections

Imports for Native Load From Source Transmission System OTHER 3.0% CINERGY 1.9% WISCONSIN ELECTRIC 3.5% CILCO 2.1% AEP 17.0% TVA 24.5% COMMONWEALTH EDISON 33.1% AMEREN 10.4% LG&E 4.5% Based on Year 2000 Actuals

Exports From Illinois Power Transmission System by Transmission Ties AEP 41.1% COMMONWEALTH EDISON 19.0% AMEREN 18.7% TVA 14.6% MIDAMERICAN 3.8% SIPC 1.6% LG&E 0.3% CILCO 0.7% CWLP 0.2% Based on Year 2000 Actuals

Exports by Load Served (Ultimate Sink Transmission System) MIDAMERICAN 5.5% AMEREN 3.0% OTHER 13.9% SOUTHERN COMPANY 1.4% WISCONSIN ELECTRIC 3.1% ENTERGY 9.6% AEP 10.6% COMMONWEALTH EDISON 14.2% TVA 19.3% PJM 19.4% Based on Year 2000 Actuals

Customer Value of PJM Membership Liquid and Competitive Market Access to Diverse Supply from Historic Supply Sources Encourages New Generation Promotes Retail Access Lower Administration Charges in Long Term Timing of Start-Up Much Sooner  Transmission Service By End of 2002  Full LMP/Market Implementation by End of 2003

Other Benefits to IP of Joining PJM Transparent and Robust Market Experienced Operator  Has Been Up and Running for a Number of Years  Already Worked through Start-Up Problems Efficient Stakeholder Process All Transmission Owners Offer Retail Choice Rate Design Doesn’t Shift Costs to Others Results in Greater Opportunity to Recover Transmission Revenue Requirement Quick Start-Up

Why Not MISO? Strands Illinois Power:  IPs Only Strong Interconnection With MISO Is Ameren, and Ameren Has No ATC Either Into or Out of IP For This Summer  Historic Supply Is Not Sourced From Ameren  Generation Exports Don’t Serve Ameren Inefficient Stakeholder Process Few Transmission Owners Offer Retail Choice Rate Design Results in Cost Shift and Traps Generation in MISO (discouraging new generation) Market Start-Up Delayed Until Late 2004/Early 2005

Why Not MISO? Inexperienced Operator  Numerous Start-up Problems –Inaccurate ATC –OASIS Frequently Down –Slow Response to Service Requests –Slow Response to Customer Inquiries  Over 55 FERC Tariff Change Filings in Last 1 ½ Years  Killed Liquidity at Cinergy Hub, which was One of the Most Liquid Trading Points in Industry  Degradation of Service from Pre-MISO

Illinois Power’s Commitment Illinois Power is Fully Committed to Joining PJM  Will Join as a Transmission Owner, or  Part of Independent Transmission Company Illinois Power Does Not Intend to Spend Any More Money Toward Start-Up of an RTO Until FERC Issues a Final and Unequivocal Order. Illinois Power Already Spent $6.5 million to Leave MISO and $7.5 million to Develop ARTO. Annual Net Income for Transmission is Only ~ $7.9 Million/Year.