HB1865 EngrossedLRB097 09633 ASK 49770 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Power Agency Act is amended by
5changing Sections 1-5, 1-20, and 1-75 as follows:
 
6    (20 ILCS 3855/1-5)
7    Sec. 1-5. Legislative declarations and findings. The
8General Assembly finds and declares:
9        (1) The health, welfare, and prosperity of all Illinois
10    citizens require the provision of adequate, reliable,
11    affordable, efficient, and environmentally sustainable
12    electric service at the lowest total cost over time, taking
13    into account any benefits of price stability.
14        (2) The transition to retail competition is not
15    complete. Some customers, especially residential and small
16    commercial customers, have failed to benefit from lower
17    electricity costs from retail and wholesale competition.
18        (3) Escalating prices for electricity in Illinois pose
19    a serious threat to the economic well-being, health, and
20    safety of the residents of and the commerce and industry of
21    the State.
22        (4) To protect against this threat to economic
23    well-being, health, and safety it is necessary to improve

 

 

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1    the process of procuring electricity to serve Illinois
2    residents, to promote investment in energy efficiency and
3    demand-response measures, and to support development of
4    clean coal technologies and renewable resources.
5        (5) Procuring a diverse electricity supply portfolio
6    will ensure the lowest total cost over time for adequate,
7    reliable, efficient, and environmentally sustainable
8    electric service.
9        (6) Including cost-effective renewable resources in
10    that portfolio will reduce long-term direct and indirect
11    costs to consumers by decreasing environmental impacts and
12    by avoiding or delaying the need for new generation,
13    transmission, and distribution infrastructure.
14        (7) Energy efficiency, demand-response measures, and
15    renewable energy are resources currently underused in
16    Illinois.
17        (8) The State should encourage the use of advanced
18    clean coal technologies that capture and sequester carbon
19    dioxide emissions to advance environmental protection
20    goals and to demonstrate the viability of coal and
21    coal-derived fuels in a carbon-constrained economy.
22    The General Assembly therefore finds that it is necessary
23to create the Illinois Power Agency and that the goals and
24objectives of that Agency are to accomplish each of the
25following:
26        (A) Develop electricity procurement plans to ensure

 

 

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1    adequate, reliable, affordable, efficient, and
2    environmentally sustainable electric service at the lowest
3    total cost over time, taking into account any benefits of
4    price stability, for electric utilities that on December
5    31, 2005 provided electric service to at least 100,000
6    customers in Illinois and for small multi-jurisdictional
7    electric utilities that (i) on December 31, 2005 served
8    less than 100,000 customers in Illinois and (ii) request a
9    procurement plan for their Illinois jurisdictional load.
10    The procurement plan shall be updated on an annual basis
11    and shall include renewable energy resources sufficient to
12    achieve the standards specified in this Act.
13        (B) Conduct competitive procurement processes to
14    procure the supply resources identified in the procurement
15    plan.
16        (C) Develop electric generation and co-generation
17    facilities that use indigenous coal or renewable
18    resources, or both, financed with bonds issued by the
19    Illinois Finance Authority.
20        (D) Supply electricity from the Agency's facilities at
21    cost to one or more of the following: municipal electric
22    systems, governmental aggregators, or rural electric
23    cooperatives in Illinois.
24(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)
 
25    (20 ILCS 3855/1-20)

 

 

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1    Sec. 1-20. General powers of the Agency.
2    (a) The Agency is authorized to do each of the following:
3        (1) Develop electricity procurement plans to ensure
4    adequate, reliable, affordable, efficient, and
5    environmentally sustainable electric service at the lowest
6    total cost over time, taking into account any benefits of
7    price stability, for electric utilities that on December
8    31, 2005 provided electric service to at least 100,000
9    customers in Illinois and for small multi-jurisdictional
10    electric utilities that (A) on December 31, 2005 served
11    less than 100,000 customers in Illinois and (B) request a
12    procurement plan for their Illinois jurisdictional load.
13    The procurement plans shall be updated on an annual basis
14    and shall include electricity generated from renewable
15    resources sufficient to achieve the standards specified in
16    this Act.
17        (2) Conduct competitive procurement processes to
18    procure the supply resources identified in the procurement
19    plan, pursuant to Section 16-111.5 of the Public Utilities
20    Act.
21        (3) Develop electric generation and co-generation
22    facilities that use indigenous coal or renewable
23    resources, or both, financed with bonds issued by the
24    Illinois Finance Authority.
25        (4) Supply electricity from the Agency's facilities at
26    cost to one or more of the following: municipal electric

 

 

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1    systems, governmental aggregators, or rural electric
2    cooperatives in Illinois.
3    (b) Except as otherwise limited by this Act, the Agency has
4all of the powers necessary or convenient to carry out the
5purposes and provisions of this Act, including without
6limitation, each of the following:
7        (1) To have a corporate seal, and to alter that seal at
8    pleasure, and to use it by causing it or a facsimile to be
9    affixed or impressed or reproduced in any other manner.
10        (2) To use the services of the Illinois Finance
11    Authority necessary to carry out the Agency's purposes.
12        (3) To negotiate and enter into loan agreements and
13    other agreements with the Illinois Finance Authority.
14        (4) To obtain and employ personnel and hire consultants
15    that are necessary to fulfill the Agency's purposes, and to
16    make expenditures for that purpose within the
17    appropriations for that purpose.
18        (5) To purchase, receive, take by grant, gift, devise,
19    bequest, or otherwise, lease, or otherwise acquire, own,
20    hold, improve, employ, use, and otherwise deal in and with,
21    real or personal property whether tangible or intangible,
22    or any interest therein, within the State.
23        (6) To acquire real or personal property, whether
24    tangible or intangible, including without limitation
25    property rights, interests in property, franchises,
26    obligations, contracts, and debt and equity securities,

 

 

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1    and to do so by the exercise of the power of eminent domain
2    in accordance with Section 1-21; except that any real
3    property acquired by the exercise of the power of eminent
4    domain must be located within the State.
5        (7) To sell, convey, lease, exchange, transfer,
6    abandon, or otherwise dispose of, or mortgage, pledge, or
7    create a security interest in, any of its assets,
8    properties, or any interest therein, wherever situated.
9        (8) To purchase, take, receive, subscribe for, or
10    otherwise acquire, hold, make a tender offer for, vote,
11    employ, sell, lend, lease, exchange, transfer, or
12    otherwise dispose of, mortgage, pledge, or grant a security
13    interest in, use, and otherwise deal in and with, bonds and
14    other obligations, shares, or other securities (or
15    interests therein) issued by others, whether engaged in a
16    similar or different business or activity.
17        (9) To make and execute agreements, contracts, and
18    other instruments necessary or convenient in the exercise
19    of the powers and functions of the Agency under this Act,
20    including contracts with any person, local government,
21    State agency, or other entity; and all State agencies and
22    all local governments are authorized to enter into and do
23    all things necessary to perform any such agreement,
24    contract, or other instrument with the Agency. No such
25    agreement, contract, or other instrument shall exceed 40
26    years.

 

 

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1        (10) To lend money, invest and reinvest its funds in
2    accordance with the Public Funds Investment Act, and take
3    and hold real and personal property as security for the
4    payment of funds loaned or invested.
5        (11) To borrow money at such rate or rates of interest
6    as the Agency may determine, issue its notes, bonds, or
7    other obligations to evidence that indebtedness, and
8    secure any of its obligations by mortgage or pledge of its
9    real or personal property, machinery, equipment,
10    structures, fixtures, inventories, revenues, grants, and
11    other funds as provided or any interest therein, wherever
12    situated.
13        (12) To enter into agreements with the Illinois Finance
14    Authority to issue bonds whether or not the income
15    therefrom is exempt from federal taxation.
16        (13) To procure insurance against any loss in
17    connection with its properties or operations in such amount
18    or amounts and from such insurers, including the federal
19    government, as it may deem necessary or desirable, and to
20    pay any premiums therefor.
21        (14) To negotiate and enter into agreements with
22    trustees or receivers appointed by United States
23    bankruptcy courts or federal district courts or in other
24    proceedings involving adjustment of debts and authorize
25    proceedings involving adjustment of debts and authorize
26    legal counsel for the Agency to appear in any such

 

 

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1    proceedings.
2        (15) To file a petition under Chapter 9 of Title 11 of
3    the United States Bankruptcy Code or take other similar
4    action for the adjustment of its debts.
5        (16) To enter into management agreements for the
6    operation of any of the property or facilities owned by the
7    Agency.
8        (17) To enter into an agreement to transfer and to
9    transfer any land, facilities, fixtures, or equipment of
10    the Agency to one or more municipal electric systems,
11    governmental aggregators, or rural electric agencies or
12    cooperatives, for such consideration and upon such terms as
13    the Agency may determine to be in the best interest of the
14    citizens of Illinois.
15        (18) To enter upon any lands and within any building
16    whenever in its judgment it may be necessary for the
17    purpose of making surveys and examinations to accomplish
18    any purpose authorized by this Act.
19        (19) To maintain an office or offices at such place or
20    places in the State as it may determine.
21        (20) To request information, and to make any inquiry,
22    investigation, survey, or study that the Agency may deem
23    necessary to enable it effectively to carry out the
24    provisions of this Act.
25        (21) To accept and expend appropriations.
26        (22) To engage in any activity or operation that is

 

 

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1    incidental to and in furtherance of efficient operation to
2    accomplish the Agency's purposes.
3        (23) To adopt, revise, amend, and repeal rules with
4    respect to its operations, properties, and facilities as
5    may be necessary or convenient to carry out the purposes of
6    this Act, subject to the provisions of the Illinois
7    Administrative Procedure Act and Sections 1-22 and 1-35 of
8    this Act.
9        (24) To establish and collect charges and fees as
10    described in this Act.
11        (25) To manage procurement of substitute natural gas
12    from a facility that meets the criteria specified in
13    subsection (a) of Section 1-58 of this Act, on terms and
14    conditions that may be approved by the Agency pursuant to
15    subsection (d) of Section 1-58 of this Act, to support the
16    operations of State agencies and local governments that
17    agree to such terms and conditions. This procurement
18    process is not subject to the Procurement Code.
19(Source: P.A. 95-481, eff. 8-28-07; 96-784, eff. 8-28-09;
2096-1000, eff. 7-2-10.)
 
21    (20 ILCS 3855/1-75)
22    Sec. 1-75. Planning and Procurement Bureau. The Planning
23and Procurement Bureau has the following duties and
24responsibilities:
25        (a) The Planning and Procurement Bureau shall each

 

 

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1    year, beginning in 2008, develop procurement plans and
2    conduct competitive procurement processes in accordance
3    with the requirements of Section 16-111.5 of the Public
4    Utilities Act for the eligible retail customers of electric
5    utilities that on December 31, 2005 provided electric
6    service to at least 100,000 customers in Illinois. The
7    Planning and Procurement Bureau shall also develop
8    procurement plans and conduct competitive procurement
9    processes in accordance with the requirements of Section
10    16-111.5 of the Public Utilities Act for the eligible
11    retail customers of small multi-jurisdictional electric
12    utilities that (i) on December 31, 2005 served less than
13    100,000 customers in Illinois and (ii) request a
14    procurement plan for their Illinois jurisdictional load.
15    This Section shall not apply to a small
16    multi-jurisdictional utility until such time as a small
17    multi-jurisdictional utility requests the Agency to
18    prepare a procurement plan for their Illinois
19    jurisdictional load. For the purposes of this Section, the
20    term "eligible retail customers" has the same definition as
21    found in Section 16-111.5(a) of the Public Utilities Act.
22            (1) The Agency shall each year, beginning in 2008,
23        as needed, issue a request for qualifications for
24        experts or expert consulting firms to develop the
25        procurement plans in accordance with Section 16-111.5
26        of the Public Utilities Act. In order to qualify an

 

 

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1        expert or expert consulting firm must have:
2                (A) direct previous experience assembling
3            large-scale power supply plans or portfolios for
4            end-use customers;
5                (B) an advanced degree in economics,
6            mathematics, engineering, risk management, or a
7            related area of study;
8                (C) 10 years of experience in the electricity
9            sector, including managing supply risk;
10                (D) expertise in wholesale electricity market
11            rules, including those established by the Federal
12            Energy Regulatory Commission and regional
13            transmission organizations;
14                (E) expertise in credit protocols and
15            familiarity with contract protocols;
16                (F) adequate resources to perform and fulfill
17            the required functions and responsibilities; and
18                (G) the absence of a conflict of interest and
19            inappropriate bias for or against potential
20            bidders or the affected electric utilities.
21            (2) The Agency shall each year, as needed, issue a
22        request for qualifications for a procurement
23        administrator to conduct the competitive procurement
24        processes in accordance with Section 16-111.5 of the
25        Public Utilities Act. In order to qualify an expert or
26        expert consulting firm must have:

 

 

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1                (A) direct previous experience administering a
2            large-scale competitive procurement process;
3                (B) an advanced degree in economics,
4            mathematics, engineering, or a related area of
5            study;
6                (C) 10 years of experience in the electricity
7            sector, including risk management experience;
8                (D) expertise in wholesale electricity market
9            rules, including those established by the Federal
10            Energy Regulatory Commission and regional
11            transmission organizations;
12                (E) expertise in credit and contract
13            protocols;
14                (F) adequate resources to perform and fulfill
15            the required functions and responsibilities; and
16                (G) the absence of a conflict of interest and
17            inappropriate bias for or against potential
18            bidders or the affected electric utilities.
19            (3) The Agency shall provide affected utilities
20        and other interested parties with the lists of
21        qualified experts or expert consulting firms
22        identified through the request for qualifications
23        processes that are under consideration to develop the
24        procurement plans and to serve as the procurement
25        administrator. The Agency shall also provide each
26        qualified expert's or expert consulting firm's

 

 

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1        response to the request for qualifications. All
2        information provided under this subparagraph shall
3        also be provided to the Commission. The Agency may
4        provide by rule for fees associated with supplying the
5        information to utilities and other interested parties.
6        These parties shall, within 5 business days, notify the
7        Agency in writing if they object to any experts or
8        expert consulting firms on the lists. Objections shall
9        be based on:
10                (A) failure to satisfy qualification criteria;
11                (B) identification of a conflict of interest;
12            or
13                (C) evidence of inappropriate bias for or
14            against potential bidders or the affected
15            utilities.
16            The Agency shall remove experts or expert
17        consulting firms from the lists within 10 days if there
18        is a reasonable basis for an objection and provide the
19        updated lists to the affected utilities and other
20        interested parties. If the Agency fails to remove an
21        expert or expert consulting firm from a list, an
22        objecting party may seek review by the Commission
23        within 5 days thereafter by filing a petition, and the
24        Commission shall render a ruling on the petition within
25        10 days. There is no right of appeal of the
26        Commission's ruling.

 

 

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1            (4) The Agency shall issue requests for proposals
2        to the qualified experts or expert consulting firms to
3        develop a procurement plan for the affected utilities
4        and to serve as procurement administrator.
5            (5) The Agency shall select an expert or expert
6        consulting firm to develop procurement plans based on
7        the proposals submitted and shall award one-year
8        contracts to those selected with an option for the
9        Agency for a one-year renewal.
10            (6) The Agency shall select an expert or expert
11        consulting firm, with approval of the Commission, to
12        serve as procurement administrator based on the
13        proposals submitted. If the Commission rejects, within
14        5 days, the Agency's selection, the Agency shall submit
15        another recommendation within 3 days based on the
16        proposals submitted. The Agency shall award a one-year
17        contract to the expert or expert consulting firm so
18        selected with Commission approval with an option for
19        the Agency for a one-year renewal.
20        (b) The experts or expert consulting firms retained by
21    the Agency shall, as appropriate, prepare procurement
22    plans, and conduct a competitive procurement process as
23    prescribed in Section 16-111.5 of the Public Utilities Act,
24    to ensure adequate, reliable, affordable, efficient, and
25    environmentally sustainable electric service at the lowest
26    total cost over time, taking into account any benefits of

 

 

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1    price stability, for eligible retail customers of electric
2    utilities that on December 31, 2005 provided electric
3    service to at least 100,000 customers in the State of
4    Illinois, and for eligible Illinois retail customers of
5    small multi-jurisdictional electric utilities that (i) on
6    December 31, 2005 served less than 100,000 customers in
7    Illinois and (ii) request a procurement plan for their
8    Illinois jurisdictional load.
9        (c) Renewable portfolio standard.
10            (1) The procurement plans shall include
11        cost-effective renewable energy resources. A minimum
12        percentage of each utility's total supply to serve the
13        load of eligible retail customers, as defined in
14        Section 16-111.5(a) of the Public Utilities Act,
15        procured for each of the following years shall be
16        generated from cost-effective renewable energy
17        resources: at least 2% by June 1, 2008; at least 4% by
18        June 1, 2009; at least 5% by June 1, 2010; at least 6%
19        by June 1, 2011; at least 7% by June 1, 2012; at least
20        8% by June 1, 2013; at least 9% by June 1, 2014; at
21        least 10% by June 1, 2015; and increasing by at least
22        1.5% each year thereafter to at least 25% by June 1,
23        2025. To the extent that it is available, at least 75%
24        of the renewable energy resources used to meet these
25        standards shall come from wind generation and,
26        beginning on June 1, 2011, at least the following

 

 

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1        percentages of the renewable energy resources used to
2        meet these standards shall come from photovoltaics on
3        the following schedule: 0.5% by June 1, 2012, 1.5% by
4        June 1, 2013; 3% by June 1, 2014; and 6% by June 1,
5        2015 and thereafter. For purposes of this subsection
6        (c), "cost-effective" means that the costs of
7        procuring renewable energy resources do not cause the
8        limit stated in paragraph (2) of this subsection (c) to
9        be exceeded and do not exceed benchmarks based on
10        market prices for renewable energy resources in the
11        region, which shall be developed by the procurement
12        administrator, in consultation with the Commission
13        staff, Agency staff, and the procurement monitor and
14        shall be subject to Commission review and approval.
15            (2) For purposes of this subsection (c), the
16        required procurement of cost-effective renewable
17        energy resources for a particular year shall be
18        measured as a percentage of the actual amount of
19        electricity (megawatt-hours) supplied by the electric
20        utility to eligible retail customers in the planning
21        year ending immediately prior to the procurement. For
22        purposes of this subsection (c), the amount paid per
23        kilowatthour means the total amount paid for electric
24        service expressed on a per kilowatthour basis. For
25        purposes of this subsection (c), the total amount paid
26        for electric service includes without limitation

 

 

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1        amounts paid for supply, transmission, distribution,
2        surcharges, and add-on taxes.
3            Notwithstanding the requirements of this
4        subsection (c), the total of renewable energy
5        resources procured pursuant to the procurement plan
6        for any single year shall be reduced by an amount
7        necessary to limit the annual estimated average net
8        increase due to the costs of these resources included
9        in the amounts paid by eligible retail customers in
10        connection with electric service to:
11                (A) in 2008, no more than 0.5% of the amount
12            paid per kilowatthour by those customers during
13            the year ending May 31, 2007;
14                (B) in 2009, the greater of an additional 0.5%
15            of the amount paid per kilowatthour by those
16            customers during the year ending May 31, 2008 or 1%
17            of the amount paid per kilowatthour by those
18            customers during the year ending May 31, 2007;
19                (C) in 2010, the greater of an additional 0.5%
20            of the amount paid per kilowatthour by those
21            customers during the year ending May 31, 2009 or
22            1.5% of the amount paid per kilowatthour by those
23            customers during the year ending May 31, 2007;
24                (D) in 2011, the greater of an additional 0.5%
25            of the amount paid per kilowatthour by those
26            customers during the year ending May 31, 2010 or 2%

 

 

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1            of the amount paid per kilowatthour by those
2            customers during the year ending May 31, 2007; and
3                (E) thereafter, the amount of renewable energy
4            resources procured pursuant to the procurement
5            plan for any single year shall be reduced by an
6            amount necessary to limit the estimated average
7            net increase due to the cost of these resources
8            included in the amounts paid by eligible retail
9            customers in connection with electric service to
10            no more than the greater of 2.015% of the amount
11            paid per kilowatthour by those customers during
12            the year ending May 31, 2007 or the incremental
13            amount per kilowatthour paid for these resources
14            in 2011.
15            No later than June 30, 2011, the Commission shall
16        review the limitation on the amount of renewable energy
17        resources procured pursuant to this subsection (c) and
18        report to the General Assembly its findings as to
19        whether that limitation unduly constrains the
20        procurement of cost-effective renewable energy
21        resources.
22            (3) Through June 1, 2011, renewable energy
23        resources shall be counted for the purpose of meeting
24        the renewable energy standards set forth in paragraph
25        (1) of this subsection (c) only if they are generated
26        from facilities located in the State, provided that

 

 

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1        cost-effective renewable energy resources are
2        available from those facilities. If those
3        cost-effective resources are not available in
4        Illinois, they shall be procured in states that adjoin
5        Illinois and may be counted towards compliance. If
6        those cost-effective resources are not available in
7        Illinois or in states that adjoin Illinois, they shall
8        be purchased elsewhere and shall be counted towards
9        compliance. After June 1, 2011, cost-effective
10        renewable energy resources located in Illinois and in
11        states that adjoin Illinois may be counted towards
12        compliance with the standards set forth in paragraph
13        (1) of this subsection (c). If those cost-effective
14        resources are not available in Illinois or in states
15        that adjoin Illinois, they shall be purchased
16        elsewhere and shall be counted towards compliance.
17            (4) The electric utility shall retire all
18        renewable energy credits used to comply with the
19        standard.
20            (5) Beginning with the year commencing June 1,
21        2010, an electric utility subject to this subsection
22        (c) shall apply the lesser of the maximum alternative
23        compliance payment rate or the most recent estimated
24        alternative compliance payment rate for its service
25        territory for the corresponding compliance period,
26        established pursuant to subsection (d) of Section

 

 

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1        16-115D of the Public Utilities Act to its retail
2        customers that take service pursuant to the electric
3        utility's hourly pricing tariff or tariffs. The
4        electric utility shall retain all amounts collected as
5        a result of the application of the alternative
6        compliance payment rate or rates to such customers,
7        and, beginning in 2011, the utility shall include in
8        the information provided under item (1) of subsection
9        (d) of Section 16-111.5 of the Public Utilities Act the
10        amounts collected under the alternative compliance
11        payment rate or rates for the prior year ending May 31.
12        Notwithstanding any limitation on the procurement of
13        renewable energy resources imposed by item (2) of this
14        subsection (c), the Agency shall increase its spending
15        on the purchase of renewable energy resources to be
16        procured by the electric utility for the next plan year
17        by an amount equal to the amounts collected by the
18        utility under the alternative compliance payment rate
19        or rates in the prior year ending May 31.
20    (d) Clean coal portfolio standard.
21        (1) The procurement plans shall include electricity
22    generated using clean coal. Each utility shall enter into
23    one or more sourcing agreements with the initial clean coal
24    facility, as provided in paragraph (3) of this subsection
25    (d), covering electricity generated by the initial clean
26    coal facility representing at least 5% of each utility's

 

 

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1    total supply to serve the load of eligible retail customers
2    in 2015 and each year thereafter, as described in paragraph
3    (3) of this subsection (d), subject to the limits specified
4    in paragraph (2) of this subsection (d). It is the goal of
5    the State that by January 1, 2025, 25% of the electricity
6    used in the State shall be generated by cost-effective
7    clean coal facilities. For purposes of this subsection (d),
8    "cost-effective" means that the expenditures pursuant to
9    such sourcing agreements do not cause the limit stated in
10    paragraph (2) of this subsection (d) to be exceeded and do
11    not exceed cost-based benchmarks, which shall be developed
12    to assess all expenditures pursuant to such sourcing
13    agreements covering electricity generated by clean coal
14    facilities, other than the initial clean coal facility, by
15    the procurement administrator, in consultation with the
16    Commission staff, Agency staff, and the procurement
17    monitor and shall be subject to Commission review and
18    approval.
19            (A) A utility party to a sourcing agreement shall
20        immediately retire any emission credits that it
21        receives in connection with the electricity covered by
22        such agreement.
23            (B) Utilities shall maintain adequate records
24        documenting the purchases under the sourcing agreement
25        to comply with this subsection (d) and shall file an
26        accounting with the load forecast that must be filed

 

 

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1        with the Agency by July 15 of each year, in accordance
2        with subsection (d) of Section 16-111.5 of the Public
3        Utilities Act.
4            (C) A utility shall be deemed to have complied with
5        the clean coal portfolio standard specified in this
6        subsection (d) if the utility enters into a sourcing
7        agreement as required by this subsection (d).
8        (2) For purposes of this subsection (d), the required
9    execution of sourcing agreements with the initial clean
10    coal facility for a particular year shall be measured as a
11    percentage of the actual amount of electricity
12    (megawatt-hours) supplied by the electric utility to
13    eligible retail customers in the planning year ending
14    immediately prior to the agreement's execution. For
15    purposes of this subsection (d), the amount paid per
16    kilowatthour means the total amount paid for electric
17    service expressed on a per kilowatthour basis. For purposes
18    of this subsection (d), the total amount paid for electric
19    service includes without limitation amounts paid for
20    supply, transmission, distribution, surcharges and add-on
21    taxes.
22        Notwithstanding the requirements of this subsection
23    (d), the total amount paid under sourcing agreements with
24    clean coal facilities pursuant to the procurement plan for
25    any given year shall be reduced by an amount necessary to
26    limit the annual estimated average net increase due to the

 

 

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1    costs of these resources included in the amounts paid by
2    eligible retail customers in connection with electric
3    service to:
4                (A) in 2010, no more than 0.5% of the amount
5            paid per kilowatthour by those customers during
6            the year ending May 31, 2009;
7                (B) in 2011, the greater of an additional 0.5%
8            of the amount paid per kilowatthour by those
9            customers during the year ending May 31, 2010 or 1%
10            of the amount paid per kilowatthour by those
11            customers during the year ending May 31, 2009;
12                (C) in 2012, the greater of an additional 0.5%
13            of the amount paid per kilowatthour by those
14            customers during the year ending May 31, 2011 or
15            1.5% of the amount paid per kilowatthour by those
16            customers during the year ending May 31, 2009;
17                (D) in 2013, the greater of an additional 0.5%
18            of the amount paid per kilowatthour by those
19            customers during the year ending May 31, 2012 or 2%
20            of the amount paid per kilowatthour by those
21            customers during the year ending May 31, 2009; and
22                (E) thereafter, the total amount paid under
23            sourcing agreements with clean coal facilities
24            pursuant to the procurement plan for any single
25            year shall be reduced by an amount necessary to
26            limit the estimated average net increase due to the

 

 

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1            cost of these resources included in the amounts
2            paid by eligible retail customers in connection
3            with electric service to no more than the greater
4            of (i) 2.015% of the amount paid per kilowatthour
5            by those customers during the year ending May 31,
6            2009 or (ii) the incremental amount per
7            kilowatthour paid for these resources in 2013.
8            These requirements may be altered only as provided
9            by statute. No later than June 30, 2015, the
10            Commission shall review the limitation on the
11            total amount paid under sourcing agreements, if
12            any, with clean coal facilities pursuant to this
13            subsection (d) and report to the General Assembly
14            its findings as to whether that limitation unduly
15            constrains the amount of electricity generated by
16            cost-effective clean coal facilities that is
17            covered by sourcing agreements.
18        (3) Initial clean coal facility. In order to promote
19    development of clean coal facilities in Illinois, each
20    electric utility subject to this Section shall execute a
21    sourcing agreement to source electricity from a proposed
22    clean coal facility in Illinois (the "initial clean coal
23    facility") that will have a nameplate capacity of at least
24    500 MW when commercial operation commences, that has a
25    final Clean Air Act permit on the effective date of this
26    amendatory Act of the 95th General Assembly, and that will

 

 

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1    meet the definition of clean coal facility in Section 1-10
2    of this Act when commercial operation commences. The
3    sourcing agreements with this initial clean coal facility
4    shall be subject to both approval of the initial clean coal
5    facility by the General Assembly and satisfaction of the
6    requirements of paragraph (4) of this subsection (d) and
7    shall be executed within 90 days after any such approval by
8    the General Assembly. The Agency and the Commission shall
9    have authority to inspect all books and records associated
10    with the initial clean coal facility during the term of
11    such a sourcing agreement. A utility's sourcing agreement
12    for electricity produced by the initial clean coal facility
13    shall include:
14            (A) a formula contractual price (the "contract
15        price") approved pursuant to paragraph (4) of this
16        subsection (d), which shall:
17                (i) be determined using a cost of service
18            methodology employing either a level or deferred
19            capital recovery component, based on a capital
20            structure consisting of 45% equity and 55% debt,
21            and a return on equity as may be approved by the
22            Federal Energy Regulatory Commission, which in any
23            case may not exceed the lower of 11.5% or the rate
24            of return approved by the General Assembly
25            pursuant to paragraph (4) of this subsection (d);
26            and

 

 

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1                (ii) provide that all miscellaneous net
2            revenue, including but not limited to net revenue
3            from the sale of emission allowances, if any,
4            substitute natural gas, if any, grants or other
5            support provided by the State of Illinois or the
6            United States Government, firm transmission
7            rights, if any, by-products produced by the
8            facility, energy or capacity derived from the
9            facility and not covered by a sourcing agreement
10            pursuant to paragraph (3) of this subsection (d) or
11            item (5) of subsection (d) of Section 16-115 of the
12            Public Utilities Act, whether generated from the
13            synthesis gas derived from coal, from SNG, or from
14            natural gas, shall be credited against the revenue
15            requirement for this initial clean coal facility;
16            (B) power purchase provisions, which shall:
17                (i) provide that the utility party to such
18            sourcing agreement shall pay the contract price
19            for electricity delivered under such sourcing
20            agreement;
21                (ii) require delivery of electricity to the
22            regional transmission organization market of the
23            utility that is party to such sourcing agreement;
24                (iii) require the utility party to such
25            sourcing agreement to buy from the initial clean
26            coal facility in each hour an amount of energy

 

 

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1            equal to all clean coal energy made available from
2            the initial clean coal facility during such hour
3            times a fraction, the numerator of which is such
4            utility's retail market sales of electricity
5            (expressed in kilowatthours sold) in the State
6            during the prior calendar month and the
7            denominator of which is the total retail market
8            sales of electricity (expressed in kilowatthours
9            sold) in the State by utilities during such prior
10            month and the sales of electricity (expressed in
11            kilowatthours sold) in the State by alternative
12            retail electric suppliers during such prior month
13            that are subject to the requirements of this
14            subsection (d) and paragraph (5) of subsection (d)
15            of Section 16-115 of the Public Utilities Act,
16            provided that the amount purchased by the utility
17            in any year will be limited by paragraph (2) of
18            this subsection (d); and
19                (iv) be considered pre-existing contracts in
20            such utility's procurement plans for eligible
21            retail customers;
22            (C) contract for differences provisions, which
23        shall:
24                (i) require the utility party to such sourcing
25            agreement to contract with the initial clean coal
26            facility in each hour with respect to an amount of

 

 

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1            energy equal to all clean coal energy made
2            available from the initial clean coal facility
3            during such hour times a fraction, the numerator of
4            which is such utility's retail market sales of
5            electricity (expressed in kilowatthours sold) in
6            the utility's service territory in the State
7            during the prior calendar month and the
8            denominator of which is the total retail market
9            sales of electricity (expressed in kilowatthours
10            sold) in the State by utilities during such prior
11            month and the sales of electricity (expressed in
12            kilowatthours sold) in the State by alternative
13            retail electric suppliers during such prior month
14            that are subject to the requirements of this
15            subsection (d) and paragraph (5) of subsection (d)
16            of Section 16-115 of the Public Utilities Act,
17            provided that the amount paid by the utility in any
18            year will be limited by paragraph (2) of this
19            subsection (d);
20                (ii) provide that the utility's payment
21            obligation in respect of the quantity of
22            electricity determined pursuant to the preceding
23            clause (i) shall be limited to an amount equal to
24            (1) the difference between the contract price
25            determined pursuant to subparagraph (A) of
26            paragraph (3) of this subsection (d) and the

 

 

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1            day-ahead price for electricity delivered to the
2            regional transmission organization market of the
3            utility that is party to such sourcing agreement
4            (or any successor delivery point at which such
5            utility's supply obligations are financially
6            settled on an hourly basis) (the "reference
7            price") on the day preceding the day on which the
8            electricity is delivered to the initial clean coal
9            facility busbar, multiplied by (2) the quantity of
10            electricity determined pursuant to the preceding
11            clause (i); and
12                (iii) not require the utility to take physical
13            delivery of the electricity produced by the
14            facility;
15            (D) general provisions, which shall:
16                (i) specify a term of no more than 30 years,
17            commencing on the commercial operation date of the
18            facility;
19                (ii) provide that utilities shall maintain
20            adequate records documenting purchases under the
21            sourcing agreements entered into to comply with
22            this subsection (d) and shall file an accounting
23            with the load forecast that must be filed with the
24            Agency by July 15 of each year, in accordance with
25            subsection (d) of Section 16-111.5 of the Public
26            Utilities Act.

 

 

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1                (iii) provide that all costs associated with
2            the initial clean coal facility will be
3            periodically reported to the Federal Energy
4            Regulatory Commission and to purchasers in
5            accordance with applicable laws governing
6            cost-based wholesale power contracts;
7                (iv) permit the Illinois Power Agency to
8            assume ownership of the initial clean coal
9            facility, without monetary consideration and
10            otherwise on reasonable terms acceptable to the
11            Agency, if the Agency so requests no less than 3
12            years prior to the end of the stated contract term;
13                (v) require the owner of the initial clean coal
14            facility to provide documentation to the
15            Commission each year, starting in the facility's
16            first year of commercial operation, accurately
17            reporting the quantity of carbon emissions from
18            the facility that have been captured and
19            sequestered and report any quantities of carbon
20            released from the site or sites at which carbon
21            emissions were sequestered in prior years, based
22            on continuous monitoring of such sites. If, in any
23            year after the first year of commercial operation,
24            the owner of the facility fails to demonstrate that
25            the initial clean coal facility captured and
26            sequestered at least 50% of the total carbon

 

 

HB1865 Engrossed- 31 -LRB097 09633 ASK 49770 b

1            emissions that the facility would otherwise emit
2            or that sequestration of emissions from prior
3            years has failed, resulting in the release of
4            carbon dioxide into the atmosphere, the owner of
5            the facility must offset excess emissions. Any
6            such carbon offsets must be permanent, additional,
7            verifiable, real, located within the State of
8            Illinois, and legally and practicably enforceable.
9            The cost of such offsets for the facility that are
10            not recoverable shall not exceed $15 million in any
11            given year. No costs of any such purchases of
12            carbon offsets may be recovered from a utility or
13            its customers. All carbon offsets purchased for
14            this purpose and any carbon emission credits
15            associated with sequestration of carbon from the
16            facility must be permanently retired. The initial
17            clean coal facility shall not forfeit its
18            designation as a clean coal facility if the
19            facility fails to fully comply with the applicable
20            carbon sequestration requirements in any given
21            year, provided the requisite offsets are
22            purchased. However, the Attorney General, on
23            behalf of the People of the State of Illinois, may
24            specifically enforce the facility's sequestration
25            requirement and the other terms of this contract
26            provision. Compliance with the sequestration

 

 

HB1865 Engrossed- 32 -LRB097 09633 ASK 49770 b

1            requirements and offset purchase requirements
2            specified in paragraph (3) of this subsection (d)
3            shall be reviewed annually by an independent
4            expert retained by the owner of the initial clean
5            coal facility, with the advance written approval
6            of the Attorney General. The Commission may, in the
7            course of the review specified in item (vii),
8            reduce the allowable return on equity for the
9            facility if the facility wilfully fails to comply
10            with the carbon capture and sequestration
11            requirements set forth in this item (v);
12                (vi) include limits on, and accordingly
13            provide for modification of, the amount the
14            utility is required to source under the sourcing
15            agreement consistent with paragraph (2) of this
16            subsection (d);
17                (vii) require Commission review: (1) to
18            determine the justness, reasonableness, and
19            prudence of the inputs to the formula referenced in
20            subparagraphs (A)(i) through (A)(iii) of paragraph
21            (3) of this subsection (d), prior to an adjustment
22            in those inputs including, without limitation, the
23            capital structure and return on equity, fuel
24            costs, and other operations and maintenance costs
25            and (2) to approve the costs to be passed through
26            to customers under the sourcing agreement by which

 

 

HB1865 Engrossed- 33 -LRB097 09633 ASK 49770 b

1            the utility satisfies its statutory obligations.
2            Commission review shall occur no less than every 3
3            years, regardless of whether any adjustments have
4            been proposed, and shall be completed within 9
5            months;
6                (viii) limit the utility's obligation to such
7            amount as the utility is allowed to recover through
8            tariffs filed with the Commission, provided that
9            neither the clean coal facility nor the utility
10            waives any right to assert federal pre-emption or
11            any other argument in response to a purported
12            disallowance of recovery costs;
13                (ix) limit the utility's or alternative retail
14            electric supplier's obligation to incur any
15            liability until such time as the facility is in
16            commercial operation and generating power and
17            energy and such power and energy is being delivered
18            to the facility busbar;
19                (x) provide that the owner or owners of the
20            initial clean coal facility, which is the
21            counterparty to such sourcing agreement, shall
22            have the right from time to time to elect whether
23            the obligations of the utility party thereto shall
24            be governed by the power purchase provisions or the
25            contract for differences provisions;
26                (xi) append documentation showing that the

 

 

HB1865 Engrossed- 34 -LRB097 09633 ASK 49770 b

1            formula rate and contract, insofar as they relate
2            to the power purchase provisions, have been
3            approved by the Federal Energy Regulatory
4            Commission pursuant to Section 205 of the Federal
5            Power Act;
6                (xii) provide that any changes to the terms of
7            the contract, insofar as such changes relate to the
8            power purchase provisions, are subject to review
9            under the public interest standard applied by the
10            Federal Energy Regulatory Commission pursuant to
11            Sections 205 and 206 of the Federal Power Act; and
12                (xiii) conform with customary lender
13            requirements in power purchase agreements used as
14            the basis for financing non-utility generators.
15        (4) Effective date of sourcing agreements with the
16    initial clean coal facility. Any proposed sourcing
17    agreement with the initial clean coal facility shall not
18    become effective unless the following reports are prepared
19    and submitted and authorizations and approvals obtained:
20                (i) Facility cost report. The owner of the
21            initial clean coal facility shall submit to the
22            Commission, the Agency, and the General Assembly a
23            front-end engineering and design study, a facility
24            cost report, method of financing (including but
25            not limited to structure and associated costs),
26            and an operating and maintenance cost quote for the

 

 

HB1865 Engrossed- 35 -LRB097 09633 ASK 49770 b

1            facility (collectively "facility cost report"),
2            which shall be prepared in accordance with the
3            requirements of this paragraph (4) of subsection
4            (d) of this Section, and shall provide the
5            Commission and the Agency access to the work
6            papers, relied upon documents, and any other
7            backup documentation related to the facility cost
8            report.
9                (ii) Commission report. Within 6 months
10            following receipt of the facility cost report, the
11            Commission, in consultation with the Agency, shall
12            submit a report to the General Assembly setting
13            forth its analysis of the facility cost report.
14            Such report shall include, but not be limited to, a
15            comparison of the costs associated with
16            electricity generated by the initial clean coal
17            facility to the costs associated with electricity
18            generated by other types of generation facilities,
19            an analysis of the rate impacts on residential and
20            small business customers over the life of the
21            sourcing agreements, and an analysis of the
22            likelihood that the initial clean coal facility
23            will commence commercial operation by and be
24            delivering power to the facility's busbar by 2016.
25            To assist in the preparation of its report, the
26            Commission, in consultation with the Agency, may

 

 

HB1865 Engrossed- 36 -LRB097 09633 ASK 49770 b

1            hire one or more experts or consultants, the costs
2            of which shall be paid for by the owner of the
3            initial clean coal facility. The Commission and
4            Agency may begin the process of selecting such
5            experts or consultants prior to receipt of the
6            facility cost report.
7                (iii) General Assembly approval. The proposed
8            sourcing agreements shall not take effect unless,
9            based on the facility cost report and the
10            Commission's report, the General Assembly enacts
11            authorizing legislation approving (A) the
12            projected price, stated in cents per kilowatthour,
13            to be charged for electricity generated by the
14            initial clean coal facility, (B) the projected
15            impact on residential and small business
16            customers' bills over the life of the sourcing
17            agreements, and (C) the maximum allowable return
18            on equity for the project; and
19                (iv) Commission review. If the General
20            Assembly enacts authorizing legislation pursuant
21            to subparagraph (iii) approving a sourcing
22            agreement, the Commission shall, within 90 days of
23            such enactment, complete a review of such sourcing
24            agreement. During such time period, the Commission
25            shall implement any directive of the General
26            Assembly, resolve any disputes between the parties

 

 

HB1865 Engrossed- 37 -LRB097 09633 ASK 49770 b

1            to the sourcing agreement concerning the terms of
2            such agreement, approve the form of such
3            agreement, and issue an order finding that the
4            sourcing agreement is prudent and reasonable.
5    The facility cost report shall be prepared as follows:
6            (A) The facility cost report shall be prepared by
7        duly licensed engineering and construction firms
8        detailing the estimated capital costs payable to one or
9        more contractors or suppliers for the engineering,
10        procurement and construction of the components
11        comprising the initial clean coal facility and the
12        estimated costs of operation and maintenance of the
13        facility. The facility cost report shall include:
14                (i) an estimate of the capital cost of the core
15            plant based on one or more front end engineering
16            and design studies for the gasification island and
17            related facilities. The core plant shall include
18            all civil, structural, mechanical, electrical,
19            control, and safety systems.
20                (ii) an estimate of the capital cost of the
21            balance of the plant, including any capital costs
22            associated with sequestration of carbon dioxide
23            emissions and all interconnects and interfaces
24            required to operate the facility, such as
25            transmission of electricity, construction or
26            backfeed power supply, pipelines to transport

 

 

HB1865 Engrossed- 38 -LRB097 09633 ASK 49770 b

1            substitute natural gas or carbon dioxide, potable
2            water supply, natural gas supply, water supply,
3            water discharge, landfill, access roads, and coal
4            delivery.
5            The quoted construction costs shall be expressed
6        in nominal dollars as of the date that the quote is
7        prepared and shall include (1) capitalized financing
8        costs during construction, (2) taxes, insurance, and
9        other owner's costs, and (3) an assumed escalation in
10        materials and labor beyond the date as of which the
11        construction cost quote is expressed.
12            (B) The front end engineering and design study for
13        the gasification island and the cost study for the
14        balance of plant shall include sufficient design work
15        to permit quantification of major categories of
16        materials, commodities and labor hours, and receipt of
17        quotes from vendors of major equipment required to
18        construct and operate the clean coal facility.
19            (C) The facility cost report shall also include an
20        operating and maintenance cost quote that will provide
21        the estimated cost of delivered fuel, personnel,
22        maintenance contracts, chemicals, catalysts,
23        consumables, spares, and other fixed and variable
24        operations and maintenance costs.
25                (a) The delivered fuel cost estimate will be
26            provided by a recognized third party expert or

 

 

HB1865 Engrossed- 39 -LRB097 09633 ASK 49770 b

1            experts in the fuel and transportation industries.
2                (b) The balance of the operating and
3            maintenance cost quote, excluding delivered fuel
4            costs will be developed based on the inputs
5            provided by duly licensed engineering and
6            construction firms performing the construction
7            cost quote, potential vendors under long-term
8            service agreements and plant operating agreements,
9            or recognized third party plant operator or
10            operators.
11                The operating and maintenance cost quote
12            (including the cost of the front end engineering
13            and design study) shall be expressed in nominal
14            dollars as of the date that the quote is prepared
15            and shall include (1) taxes, insurance, and other
16            owner's costs, and (2) an assumed escalation in
17            materials and labor beyond the date as of which the
18            operating and maintenance cost quote is expressed.
19            (D) The facility cost report shall also include (i)
20        an analysis of the initial clean coal facility's
21        ability to deliver power and energy into the applicable
22        regional transmission organization markets and (ii) an
23        analysis of the expected capacity factor for the
24        initial clean coal facility.
25            (E) Amounts paid to third parties unrelated to the
26        owner or owners of the initial clean coal facility to

 

 

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1        prepare the core plant construction cost quote,
2        including the front end engineering and design study,
3        and the operating and maintenance cost quote will be
4        reimbursed through Coal Development Bonds.
5        (5) Re-powering and retrofitting coal-fired power
6    plants previously owned by Illinois utilities to qualify as
7    clean coal facilities. During the 2009 procurement
8    planning process and thereafter, the Agency and the
9    Commission shall consider sourcing agreements covering
10    electricity generated by power plants that were previously
11    owned by Illinois utilities and that have been or will be
12    converted into clean coal facilities, as defined by Section
13    1-10 of this Act. Pursuant to such procurement planning
14    process, the owners of such facilities may propose to the
15    Agency sourcing agreements with utilities and alternative
16    retail electric suppliers required to comply with
17    subsection (d) of this Section and item (5) of subsection
18    (d) of Section 16-115 of the Public Utilities Act, covering
19    electricity generated by such facilities. In the case of
20    sourcing agreements that are power purchase agreements,
21    the contract price for electricity sales shall be
22    established on a cost of service basis. In the case of
23    sourcing agreements that are contracts for differences,
24    the contract price from which the reference price is
25    subtracted shall be established on a cost of service basis.
26    The Agency and the Commission may approve any such utility

 

 

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1    sourcing agreements that do not exceed cost-based
2    benchmarks developed by the procurement administrator, in
3    consultation with the Commission staff, Agency staff and
4    the procurement monitor, subject to Commission review and
5    approval. The Commission shall have authority to inspect
6    all books and records associated with these clean coal
7    facilities during the term of any such contract.
8        (6) Costs incurred under this subsection (d) or
9    pursuant to a contract entered into under this subsection
10    (d) shall be deemed prudently incurred and reasonable in
11    amount and the electric utility shall be entitled to full
12    cost recovery pursuant to the tariffs filed with the
13    Commission.
14        (e) The draft procurement plans are subject to public
15    comment, as required by Section 16-111.5 of the Public
16    Utilities Act.
17        (f) The Agency shall submit the final procurement plan
18    to the Commission. The Agency shall revise a procurement
19    plan if the Commission determines that it does not meet the
20    standards set forth in Section 16-111.5 of the Public
21    Utilities Act.
22        (g) The Agency shall assess fees to each affected
23    utility to recover the costs incurred in preparation of the
24    annual procurement plan for the utility.
25        (h) The Agency shall assess fees to each bidder to
26    recover the costs incurred in connection with a competitive

 

 

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1    procurement process.
2(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
396-159, eff. 8-10-09; 96-1437, eff. 8-17-10.)
 
4    Section 10. The Public Utilities Act is amended by changing
5Section 16-111.5 as follows:
 
6    (220 ILCS 5/16-111.5)
7    Sec. 16-111.5. Provisions relating to procurement.
8    (a) An electric utility that on December 31, 2005 served at
9least 100,000 customers in Illinois shall procure power and
10energy for its eligible retail customers in accordance with the
11applicable provisions set forth in Section 1-75 of the Illinois
12Power Agency Act and this Section. A small multi-jurisdictional
13electric utility that on December 31, 2005 served less than
14100,000 customers in Illinois may elect to procure power and
15energy for all or a portion of its eligible Illinois retail
16customers in accordance with the applicable provisions set
17forth in this Section and Section 1-75 of the Illinois Power
18Agency Act. This Section shall not apply to a small
19multi-jurisdictional utility until such time as a small
20multi-jurisdictional utility requests the Illinois Power
21Agency to prepare a procurement plan for its eligible retail
22customers. "Eligible retail customers" for the purposes of this
23Section means those retail customers that purchase power and
24energy from the electric utility under fixed-price bundled

 

 

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1service tariffs, other than those retail customers whose
2service is declared or deemed competitive under Section 16-113
3and those other customer groups specified in this Section,
4including self-generating customers, customers electing hourly
5pricing, or those customers who are otherwise ineligible for
6fixed-price bundled tariff service. Those customers that are
7excluded from the definition of "eligible retail customers"
8shall not be included in the procurement plan load
9requirements, and the utility shall procure any supply
10requirements, including capacity, ancillary services, and
11hourly priced energy, in the applicable markets as needed to
12serve those customers, provided that the utility may include in
13its procurement plan load requirements for the load that is
14associated with those retail customers whose service has been
15declared or deemed competitive pursuant to Section 16-113 of
16this Act to the extent that those customers are purchasing
17power and energy during one of the transition periods
18identified in subsection (b) of Section 16-113 of this Act.
19    (b) A procurement plan shall be prepared for each electric
20utility consistent with the applicable requirements of the
21Illinois Power Agency Act and this Section. For purposes of
22this Section, Illinois electric utilities that are affiliated
23by virtue of a common parent company are considered to be a
24single electric utility. Small multi-jurisdictional utilities
25may request a procurement plan for a portion of or all of its
26Illinois load. Each procurement plan shall analyze the

 

 

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1projected balance of supply and demand for eligible retail
2customers over a 5-year period with the first planning year
3beginning on June 1 of the year following the year in which the
4plan is filed. The plan shall specifically identify the
5wholesale products to be procured following plan approval, and
6shall follow all the requirements set forth in the Public
7Utilities Act and all applicable State and federal laws,
8statutes, rules, or regulations, as well as Commission orders.
9Nothing in this Section precludes consideration of contracts
10longer than 5 years and related forecast data. Unless specified
11otherwise in this Section, in the procurement plan or in the
12implementing tariff, any procurement occurring in accordance
13with this plan shall be competitively bid through a request for
14proposals process. Approval and implementation of the
15procurement plan shall be subject to review and approval by the
16Commission according to the provisions set forth in this
17Section. A procurement plan shall include each of the following
18components:
19        (1) Hourly load analysis. This analysis shall include:
20            (i) multi-year historical analysis of hourly
21        loads;
22            (ii) switching trends and competitive retail
23        market analysis;
24            (iii) known or projected changes to future loads;
25        and
26            (iv) growth forecasts by customer class.

 

 

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1        (2) Analysis of the impact of any demand side and
2    renewable energy initiatives. This analysis shall include:
3            (i) the impact of demand response programs and
4        energy efficiency programs, both current and
5        projected; for small multi-jurisdictional utilities,
6        the impact of demand response and energy efficiency
7        programs approved pursuant to Section 8-408 of this
8        Act, both current and projected; and
9            (ii) supply side needs that are projected to be
10        offset by purchases of renewable energy resources, if
11        any. ; and
12            (iii) the impact of energy efficiency programs,
13        both current and projected.
14        (3) A plan for meeting the expected load requirements
15    that will not be met through preexisting contracts. This
16    plan shall include:
17            (i) definitions of the different Illinois retail
18        customer classes for which supply is being purchased;
19            (ii) the proposed mix of demand-response products
20        for which contracts will be executed during the next
21        year. For small multi-jurisdictional electric
22        utilities that on December 31, 2005 served fewer than
23        100,000 customers in Illinois, these shall be defined
24        as demand-response products offered in an energy
25        efficiency plan approved pursuant to Section 8-408 of
26        this Act. The cost-effective demand-response measures

 

 

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1        shall be procured whenever the cost is lower than
2        procuring comparable capacity products, provided that
3        such products shall:
4                (A) be procured by a demand-response provider
5            from eligible retail customers;
6                (B) at least satisfy the demand-response
7            requirements of the regional transmission
8            organization market in which the utility's service
9            territory is located, including, but not limited
10            to, any applicable capacity or dispatch
11            requirements;
12                (C) provide for customers' participation in
13            the stream of benefits produced by the
14            demand-response products;
15                (D) provide for reimbursement by the
16            demand-response provider of the utility for any
17            costs incurred as a result of the failure of the
18            supplier of such products to perform its
19            obligations thereunder; and
20                (E) meet the same credit requirements as apply
21            to suppliers of capacity, in the applicable
22            regional transmission organization market;
23            (iii) monthly forecasted system supply
24        requirements, including expected minimum, maximum, and
25        average values for the planning period;
26            (iv) the proposed mix and selection of standard

 

 

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1        wholesale products for which contracts will be
2        executed during the next year, separately or in
3        combination, to meet that portion of its load
4        requirements not met through pre-existing contracts,
5        including but not limited to monthly 5 x 16 peak period
6        block energy, monthly off-peak wrap energy, monthly 7 x
7        24 energy, annual 5 x 16 energy, annual off-peak wrap
8        energy, annual 7 x 24 energy, monthly capacity, annual
9        capacity, peak load capacity obligations, capacity
10        purchase plan, and ancillary services;
11            (v) proposed term structures for each wholesale
12        product type included in the proposed procurement plan
13        portfolio of products; and
14            (vi) an assessment of the price risk, load
15        uncertainty, and other factors that are associated
16        with the proposed procurement plan; this assessment,
17        to the extent possible, shall include an analysis of
18        the following factors: contract terms, time frames for
19        securing products or services, fuel costs, weather
20        patterns, transmission costs, market conditions, and
21        the governmental regulatory environment; the proposed
22        procurement plan shall also identify alternatives for
23        those portfolio measures that are identified as having
24        significant price risk.
25        (4) Proposed procedures for balancing loads. The
26    procurement plan shall include, for load requirements

 

 

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1    included in the procurement plan, the process for (i)
2    hourly balancing of supply and demand and (ii) the criteria
3    for portfolio re-balancing in the event of significant
4    shifts in load.
5    (c) The procurement process set forth in Section 1-75 of
6the Illinois Power Agency Act and subsection (e) of this
7Section shall be administered by a procurement administrator
8and monitored by a procurement monitor.
9        (1) The procurement administrator shall:
10            (i) design the final procurement process in
11        accordance with Section 1-75 of the Illinois Power
12        Agency Act and subsection (e) of this Section following
13        Commission approval of the procurement plan;
14            (ii) develop benchmarks in accordance with
15        subsection (e)(3) to be used to evaluate bids; these
16        benchmarks shall be submitted to the Commission for
17        review and approval on a confidential basis prior to
18        the procurement event;
19            (iii) serve as the interface between the electric
20        utility and suppliers;
21            (iv) manage the bidder pre-qualification and
22        registration process;
23            (v) obtain the electric utilities' agreement to
24        the final form of all supply contracts and credit
25        collateral agreements;
26            (vi) administer the request for proposals process;

 

 

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1            (vii) have the discretion to negotiate to
2        determine whether bidders are willing to lower the
3        price of bids that meet the benchmarks approved by the
4        Commission; any post-bid negotiations with bidders
5        shall be limited to price only and shall be completed
6        within 24 hours after opening the sealed bids and shall
7        be conducted in a fair and unbiased manner; in
8        conducting the negotiations, there shall be no
9        disclosure of any information derived from proposals
10        submitted by competing bidders; if information is
11        disclosed to any bidder, it shall be provided to all
12        competing bidders;
13            (viii) maintain confidentiality of supplier and
14        bidding information in a manner consistent with all
15        applicable laws, rules, regulations, and tariffs;
16            (ix) submit a confidential report to the
17        Commission recommending acceptance or rejection of
18        bids;
19            (x) notify the utility of contract counterparties
20        and contract specifics; and
21            (xi) administer related contingency procurement
22        events.
23        (2) The procurement monitor, who shall be retained by
24    the Commission, shall:
25            (i) monitor interactions among the procurement
26        administrator, suppliers, and utility;

 

 

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1            (ii) monitor and report to the Commission on the
2        progress of the procurement process;
3            (iii) provide an independent confidential report
4        to the Commission regarding the results of the
5        procurement event;
6            (iv) assess compliance with the procurement plans
7        approved by the Commission for each utility that on
8        December 31, 2005 provided electric service to a least
9        100,000 customers in Illinois and for each small
10        multi-jurisdictional utility that on December 31, 2005
11        served less than 100,000 customers in Illinois;
12            (v) preserve the confidentiality of supplier and
13        bidding information in a manner consistent with all
14        applicable laws, rules, regulations, and tariffs;
15            (vi) provide expert advice to the Commission and
16        consult with the procurement administrator regarding
17        issues related to procurement process design, rules,
18        protocols, and policy-related matters; and
19            (vii) consult with the procurement administrator
20        regarding the development and use of benchmark
21        criteria, standard form contracts, credit policies,
22        and bid documents.
23    (d) Except as provided in subsection (j), the planning
24process shall be conducted as follows:
25        (1) Beginning in 2008, each Illinois utility procuring
26    power pursuant to this Section shall annually provide a

 

 

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1    range of load forecasts to the Illinois Power Agency by
2    July 15 of each year, or such other date as may be required
3    by the Commission or Agency. The load forecasts shall cover
4    the 5-year procurement planning period for the next
5    procurement plan and shall include hourly data
6    representing a high-load, low-load and expected-load
7    scenario for the load of the eligible retail customers. The
8    utility shall provide supporting data and assumptions for
9    each of the scenarios.
10        (2) Beginning in 2008, the Illinois Power Agency shall
11    prepare a procurement plan by August 15th of each year, or
12    such other date as may be required by the Commission. The
13    procurement plan shall identify the portfolio of
14    demand-response and power and energy products to be
15    procured. Cost-effective demand-response measures shall be
16    procured as set forth in item (iii) of subsection (b) of
17    this Section. Copies of the procurement plan shall be
18    posted and made publicly available on the Agency's and
19    Commission's websites, and copies shall also be provided to
20    each affected electric utility. An affected utility shall
21    have 30 days following the date of posting to provide
22    comment to the Agency on the procurement plan. Other
23    interested entities also may comment on the procurement
24    plan. All comments submitted to the Agency shall be
25    specific, supported by data or other detailed analyses,
26    and, if objecting to all or a portion of the procurement

 

 

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1    plan, accompanied by specific alternative wording or
2    proposals. All comments shall be posted on the Agency's and
3    Commission's websites. During this 30-day comment period,
4    the Agency shall hold at least one public hearing within
5    each utility's service area for the purpose of receiving
6    public comment on the procurement plan. Within 14 days
7    following the end of the 30-day review period, the Agency
8    shall revise the procurement plan as necessary based on the
9    comments received and file the procurement plan with the
10    Commission and post the procurement plan on the websites.
11        (3) Within 5 days after the filing of the procurement
12    plan, any person objecting to the procurement plan shall
13    file an objection with the Commission. Within 10 days after
14    the filing, the Commission shall determine whether a
15    hearing is necessary. The Commission shall enter its order
16    confirming or modifying the procurement plan within 90 days
17    after the filing of the procurement plan by the Illinois
18    Power Agency.
19        (4) The Commission shall approve the procurement plan,
20    including expressly the forecast used in the procurement
21    plan, if the Commission determines that it will ensure
22    adequate, reliable, affordable, efficient, and
23    environmentally sustainable electric service at the lowest
24    total cost over time, taking into account any benefits of
25    price stability.
26    (e) The procurement process shall include each of the

 

 

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1following components:
2        (1) Solicitation, pre-qualification, and registration
3    of bidders. The procurement administrator shall
4    disseminate information to potential bidders to promote a
5    procurement event, notify potential bidders that the
6    procurement administrator may enter into a post-bid price
7    negotiation with bidders that meet the applicable
8    benchmarks, provide supply requirements, and otherwise
9    explain the competitive procurement process. In addition
10    to such other publication as the procurement administrator
11    determines is appropriate, this information shall be
12    posted on the Illinois Power Agency's and the Commission's
13    websites. The procurement administrator shall also
14    administer the prequalification process, including
15    evaluation of credit worthiness, compliance with
16    procurement rules, and agreement to the standard form
17    contract developed pursuant to paragraph (2) of this
18    subsection (e). The procurement administrator shall then
19    identify and register bidders to participate in the
20    procurement event.
21        (2) Standard contract forms and credit terms and
22    instruments. The procurement administrator, in
23    consultation with the utilities, the Commission, and other
24    interested parties and subject to Commission oversight,
25    shall develop and provide standard contract forms for the
26    supplier contracts that meet generally accepted industry

 

 

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1    practices. Standard credit terms and instruments that meet
2    generally accepted industry practices shall be similarly
3    developed. The procurement administrator shall make
4    available to the Commission all written comments it
5    receives on the contract forms, credit terms, or
6    instruments. If the procurement administrator cannot reach
7    agreement with the applicable electric utility as to the
8    contract terms and conditions, the procurement
9    administrator must notify the Commission of any disputed
10    terms and the Commission shall resolve the dispute. The
11    terms of the contracts shall not be subject to negotiation
12    by winning bidders, and the bidders must agree to the terms
13    of the contract in advance so that winning bids are
14    selected solely on the basis of price.
15        (3) Establishment of a market-based price benchmark.
16    As part of the development of the procurement process, the
17    procurement administrator, in consultation with the
18    Commission staff, Agency staff, and the procurement
19    monitor, shall establish benchmarks for evaluating the
20    final prices in the contracts for each of the products that
21    will be procured through the procurement process. The
22    benchmarks shall be based on price data for similar
23    products for the same delivery period and same delivery
24    hub, or other delivery hubs after adjusting for that
25    difference. The price benchmarks may also be adjusted to
26    take into account differences between the information

 

 

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1    reflected in the underlying data sources and the specific
2    products and procurement process being used to procure
3    power for the Illinois utilities. The benchmarks shall be
4    confidential but shall be provided to, and will be subject
5    to Commission review and approval, prior to a procurement
6    event.
7        (4) Request for proposals competitive procurement
8    process. The procurement administrator shall design and
9    issue a request for proposals to supply electricity in
10    accordance with each utility's procurement plan, as
11    approved by the Commission. The request for proposals shall
12    set forth a procedure for sealed, binding commitment
13    bidding with pay-as-bid settlement, and provision for
14    selection of bids on the basis of price.
15        (5) A plan for implementing contingencies in the event
16    of supplier default or failure of the procurement process
17    to fully meet the expected load requirement due to
18    insufficient supplier participation, Commission rejection
19    of results, or any other cause.
20            (i) Event of supplier default: In the event of
21        supplier default, the utility shall review the
22        contract of the defaulting supplier to determine if the
23        amount of supply is 200 megawatts or greater, and if
24        there are more than 60 days remaining of the contract
25        term. If both of these conditions are met, and the
26        default results in termination of the contract, the

 

 

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1        utility shall immediately notify the Illinois Power
2        Agency that a request for proposals must be issued to
3        procure replacement power, and the procurement
4        administrator shall run an additional procurement
5        event. If the contracted supply of the defaulting
6        supplier is less than 200 megawatts or there are less
7        than 60 days remaining of the contract term, the
8        utility shall procure power and energy from the
9        applicable regional transmission organization market,
10        including ancillary services, capacity, and day-ahead
11        or real time energy, or both, for the duration of the
12        contract term to replace the contracted supply;
13        provided, however, that if a needed product is not
14        available through the regional transmission
15        organization market it shall be purchased from the
16        wholesale market.
17            (ii) Failure of the procurement process to fully
18        meet the expected load requirement: If the procurement
19        process fails to fully meet the expected load
20        requirement due to insufficient supplier participation
21        or due to a Commission rejection of the procurement
22        results, the procurement administrator, the
23        procurement monitor, and the Commission staff shall
24        meet within 10 days to analyze potential causes of low
25        supplier interest or causes for the Commission
26        decision. If changes are identified that would likely

 

 

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1        result in increased supplier participation, or that
2        would address concerns causing the Commission to
3        reject the results of the prior procurement event, the
4        procurement administrator may implement those changes
5        and rerun the request for proposals process according
6        to a schedule determined by those parties and
7        consistent with Section 1-75 of the Illinois Power
8        Agency Act and this subsection. In any event, a new
9        request for proposals process shall be implemented by
10        the procurement administrator within 90 days after the
11        determination that the procurement process has failed
12        to fully meet the expected load requirement.
13            (iii) In all cases where there is insufficient
14        supply provided under contracts awarded through the
15        procurement process to fully meet the electric
16        utility's load requirement, the utility shall meet the
17        load requirement by procuring power and energy from the
18        applicable regional transmission organization market,
19        including ancillary services, capacity, and day-ahead
20        or real time energy or both; provided, however, that if
21        a needed product is not available through the regional
22        transmission organization market it shall be purchased
23        from the wholesale market.
24        (6) The procurement process described in this
25    subsection is exempt from the requirements of the Illinois
26    Procurement Code, pursuant to Section 20-10 of that Code.

 

 

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1    (f) Within 2 business days after opening the sealed bids,
2the procurement administrator shall submit a confidential
3report to the Commission. The report shall contain the results
4of the bidding for each of the products along with the
5procurement administrator's recommendation for the acceptance
6and rejection of bids based on the price benchmark criteria and
7other factors observed in the process. The procurement monitor
8also shall submit a confidential report to the Commission
9within 2 business days after opening the sealed bids. The
10report shall contain the procurement monitor's assessment of
11bidder behavior in the process as well as an assessment of the
12procurement administrator's compliance with the procurement
13process and rules. The Commission shall review the confidential
14reports submitted by the procurement administrator and
15procurement monitor, and shall accept or reject the
16recommendations of the procurement administrator within 2
17business days after receipt of the reports.
18    (g) Within 3 business days after the Commission decision
19approving the results of a procurement event, the utility shall
20enter into binding contractual arrangements with the winning
21suppliers using the standard form contracts; except that the
22utility shall not be required either directly or indirectly to
23execute the contracts if a tariff that is consistent with
24subsection (l) of this Section has not been approved and placed
25into effect for that utility.
26    (h) The names of the successful bidders and the load

 

 

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1weighted average of the winning bid prices for each contract
2type and for each contract term shall be made available to the
3public at the time of Commission approval of a procurement
4event. The Commission, the procurement monitor, the
5procurement administrator, the Illinois Power Agency, and all
6participants in the procurement process shall maintain the
7confidentiality of all other supplier and bidding information
8in a manner consistent with all applicable laws, rules,
9regulations, and tariffs. Confidential information, including
10the confidential reports submitted by the procurement
11administrator and procurement monitor pursuant to subsection
12(f) of this Section, shall not be made publicly available and
13shall not be discoverable by any party in any proceeding,
14absent a compelling demonstration of need, nor shall those
15reports be admissible in any proceeding other than one for law
16enforcement purposes.
17    (i) Within 2 business days after a Commission decision
18approving the results of a procurement event or such other date
19as may be required by the Commission from time to time, the
20utility shall file for informational purposes with the
21Commission its actual or estimated retail supply charges, as
22applicable, by customer supply group reflecting the costs
23associated with the procurement and computed in accordance with
24the tariffs filed pursuant to subsection (l) of this Section
25and approved by the Commission.
26    (j) Within 60 days following the effective date of this

 

 

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1amendatory Act, each electric utility that on December 31, 2005
2provided electric service to at least 100,000 customers in
3Illinois shall prepare and file with the Commission an initial
4procurement plan, which shall conform in all material respects
5to the requirements of the procurement plan set forth in
6subsection (b); provided, however, that the Illinois Power
7Agency Act shall not apply to the initial procurement plan
8prepared pursuant to this subsection. The initial procurement
9plan shall identify the portfolio of power and energy products
10to be procured and delivered for the period June 2008 through
11May 2009, and shall identify the proposed procurement
12administrator, who shall have the same experience and expertise
13as is required of a procurement administrator hired pursuant to
14Section 1-75 of the Illinois Power Agency Act. Copies of the
15procurement plan shall be posted and made publicly available on
16the Commission's website. The initial procurement plan may
17include contracts for renewable resources that extend beyond
18May 2009.
19        (i) Within 14 days following filing of the initial
20    procurement plan, any person may file a detailed objection
21    with the Commission contesting the procurement plan
22    submitted by the electric utility. All objections to the
23    electric utility's plan shall be specific, supported by
24    data or other detailed analyses. The electric utility may
25    file a response to any objections to its procurement plan
26    within 7 days after the date objections are due to be

 

 

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1    filed. Within 7 days after the date the utility's response
2    is due, the Commission shall determine whether a hearing is
3    necessary. If it determines that a hearing is necessary, it
4    shall require the hearing to be completed and issue an
5    order on the procurement plan within 60 days after the
6    filing of the procurement plan by the electric utility.
7        (ii) The order shall approve or modify the procurement
8    plan, approve an independent procurement administrator,
9    and approve or modify the electric utility's tariffs that
10    are proposed with the initial procurement plan. The
11    Commission shall approve the procurement plan if the
12    Commission determines that it will ensure adequate,
13    reliable, affordable, efficient, and environmentally
14    sustainable electric service at the lowest total cost over
15    time, taking into account any benefits of price stability.
16    (k) In order to promote price stability for residential and
17small commercial customers during the transition to
18competition in Illinois, and notwithstanding any other
19provision of this Act, each electric utility subject to this
20Section shall enter into one or more multi-year financial swap
21contracts that become effective on the effective date of this
22amendatory Act. These contracts may be executed with generators
23and power marketers, including affiliated interests of the
24electric utility. These contracts shall be for a term of no
25more than 5 years and shall, for each respective utility or for
26any Illinois electric utilities that are affiliated by virtue

 

 

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1of a common parent company and that are thereby considered a
2single electric utility for purposes of this subsection (k),
3not exceed in the aggregate 3,000 megawatts for any hour of the
4year. The contracts shall be financial contracts and not energy
5sales contracts. The contracts shall be executed as
6transactions under a negotiated master agreement based on the
7form of master agreement for financial swap contracts sponsored
8by the International Swaps and Derivatives Association, Inc.
9and shall be considered pre-existing contracts in the
10utilities' procurement plans for residential and small
11commercial customers. Costs incurred pursuant to a contract
12authorized by this subsection (k) shall be deemed prudently
13incurred and reasonable in amount and the electric utility
14shall be entitled to full cost recovery pursuant to the tariffs
15filed with the Commission.
16    (l) An electric utility shall recover its costs incurred
17under this Section, including, but not limited to, the costs of
18procuring power and energy demand-response resources under
19this Section. The utility shall file with the initial
20procurement plan its proposed tariffs through which its costs
21of procuring power that are incurred pursuant to a
22Commission-approved procurement plan and those other costs
23identified in this subsection (l), will be recovered. The
24tariffs shall include a formula rate or charge designed to pass
25through both the costs incurred by the utility in procuring a
26supply of electric power and energy for the applicable customer

 

 

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1classes with no mark-up or return on the price paid by the
2utility for that supply, plus any just and reasonable costs
3that the utility incurs in arranging and providing for the
4supply of electric power and energy. The formula rate or charge
5shall also contain provisions that ensure that its application
6does not result in over or under recovery due to changes in
7customer usage and demand patterns, and that provide for the
8correction, on at least an annual basis, of any accounting
9errors that may occur. A utility shall recover through the
10tariff all reasonable costs incurred to implement or comply
11with any procurement plan that is developed and put into effect
12pursuant to Section 1-75 of the Illinois Power Agency Act and
13this Section, including any fees assessed by the Illinois Power
14Agency, costs associated with load balancing, and contingency
15plan costs. The electric utility shall also recover its full
16costs of procuring electric supply for which it contracted
17before the effective date of this Section in conjunction with
18the provision of full requirements service under fixed-price
19bundled service tariffs subsequent to December 31, 2006. All
20such costs shall be deemed to have been prudently incurred. The
21pass-through tariffs that are filed and approved pursuant to
22this Section shall not be subject to review under, or in any
23way limited by, Section 16-111(i) of this Act.
24    (m) The Commission has the authority to adopt rules to
25carry out the provisions of this Section. For the public
26interest, safety, and welfare, the Commission also has

 

 

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1authority to adopt rules to carry out the provisions of this
2Section on an emergency basis immediately following the
3effective date of this amendatory Act.
4    (n) Notwithstanding any other provision of this Act, any
5affiliated electric utilities that submit a single procurement
6plan covering their combined needs may procure for those
7combined needs in conjunction with that plan, and may enter
8jointly into power supply contracts, purchases, and other
9procurement arrangements, and allocate capacity and energy and
10cost responsibility therefor among themselves in proportion to
11their requirements.
12    (o) On or before June 1 of each year, the Commission shall
13hold an informal hearing for the purpose of receiving comments
14on the prior year's procurement process and any recommendations
15for change.
16    (p) An electric utility subject to this Section may propose
17to invest, lease, own, or operate an electric generation
18facility as part of its procurement plan, provided the utility
19demonstrates that such facility is the least-cost option to
20provide electric service to eligible retail customers. If the
21facility is shown to be the least-cost option and is included
22in a procurement plan prepared in accordance with Section 1-75
23of the Illinois Power Agency Act and this Section, then the
24electric utility shall make a filing pursuant to Section 8-406
25of the Act, and may request of the Commission any statutory
26relief required thereunder. If the Commission grants all of the

 

 

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1necessary approvals for the proposed facility, such supply
2shall thereafter be considered as a pre-existing contract under
3subsection (b) of this Section. The Commission shall in any
4order approving a proposal under this subsection specify how
5the utility will recover the prudently incurred costs of
6investing in, leasing, owning, or operating such generation
7facility through just and reasonable rates charged to eligible
8retail customers. Cost recovery for facilities included in the
9utility's procurement plan pursuant to this subsection shall
10not be subject to review under or in any way limited by the
11provisions of Section 16-111(i) of this Act. Nothing in this
12Section is intended to prohibit a utility from filing for a
13fuel adjustment clause as is otherwise permitted under Section
149-220 of this Act.
15(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.