Illinois General Assembly

Previous General Assemblies

Full Text of HB1422  97th General Assembly




State of Illinois
2011 and 2012


Introduced , by Rep. Elaine Nekritz


220 ILCS 5/16-111.5

    Amends the Public Utilities Act. Provides that certain electric utilities in Illinois shall procure energy efficiency products (in addition to power and energy) for its eligible retail customers in accordance with the applicable provisions of the Act and the Illinois Power Agency Act. Provides that for non-eligible retail customers the utility shall procure any supply requirements, including energy efficiency products, in the applicable markets as needed to serve those customers. Provides that a proposed procurement plan shall include the proposed energy efficiency products for which contracts will be executed during the next year. Further provides that cost effective energy efficiency measures shall be procured whenever the cost is lower than procuring comparable capacity products, supply products, or both, provided that certain conditions are met by the energy efficiency products. Provides that the Illinois Power Agency's procurement plan shall identify energy efficiency products to be procured. Provides that an electric utility shall recover its costs incurred in procuring energy efficiency products. Makes other changes.

LRB097 08915 ASK 49047 b





HB1422LRB097 08915 ASK 49047 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 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, energy
10efficiency products, and energy for its eligible retail
11customers in accordance with the applicable provisions set
12forth in Section 1-75 of the Illinois Power Agency Act and this
13Section. "Eligible retail customers" for the purposes of this
14Section means those retail customers that purchase power and
15energy from the electric utility under fixed-price bundled
16service tariffs, other than those retail customers whose
17service is declared or deemed competitive under Section 16-113
18and those other customer groups specified in this Section,
19including self-generating customers, customers electing hourly
20pricing, or those customers who are otherwise ineligible for
21fixed-price bundled tariff service. Those customers that are
22excluded from the definition of "eligible retail customers"
23shall not be included in the procurement plan load



HB1422- 2 -LRB097 08915 ASK 49047 b

1requirements, and the utility shall procure any supply
2requirements, including capacity, ancillary services, energy
3efficiency products, and hourly priced energy, in the
4applicable markets as needed to serve those customers, provided
5that the utility may include in its procurement plan load
6requirements for the load that is associated with those retail
7customers whose service has been declared or deemed competitive
8pursuant to Section 16-113 of this Act to the extent that those
9customers are purchasing power and energy during one of the
10transition periods identified in subsection (b) of Section
1116-113 of this Act.
12    (b) A procurement plan shall be prepared for each electric
13utility consistent with the applicable requirements of the
14Illinois Power Agency Act and this Section. For purposes of
15this Section, Illinois electric utilities that are affiliated
16by virtue of a common parent company are considered to be a
17single electric utility. Each procurement plan shall analyze
18the projected balance of supply and demand for eligible retail
19customers over a 5-year period with the first planning year
20beginning on June 1 of the year following the year in which the
21plan is filed. The plan shall specifically identify the
22wholesale products to be procured following plan approval, and
23shall follow all the requirements set forth in the Public
24Utilities Act and all applicable State and federal laws,
25statutes, rules, or regulations, as well as Commission orders.
26Nothing in this Section precludes consideration of contracts



HB1422- 3 -LRB097 08915 ASK 49047 b

1longer than 5 years and related forecast data. Unless specified
2otherwise in this Section, in the procurement plan or in the
3implementing tariff, any procurement occurring in accordance
4with this plan shall be competitively bid through a request for
5proposals process. Approval and implementation of the
6procurement plan shall be subject to review and approval by the
7Commission according to the provisions set forth in this
8Section. A procurement plan shall include each of the following
10        (1) Hourly load analysis. This analysis shall include:
11            (i) multi-year historical analysis of hourly
12        loads;
13            (ii) switching trends and competitive retail
14        market analysis;
15            (iii) known or projected changes to future loads;
16        and
17            (iv) growth forecasts by customer class.
18        (2) Analysis of the impact of any demand side and
19    renewable energy initiatives. This analysis shall include:
20            (i) the impact of demand response programs, both
21        current and projected;
22            (ii) supply side needs that are projected to be
23        offset by purchases of renewable energy resources, if
24        any; and
25            (iii) the impact of energy efficiency programs,
26        both current and projected.



HB1422- 4 -LRB097 08915 ASK 49047 b

1        (3) A plan for meeting the expected load requirements
2    that will not be met through preexisting contracts. This
3    plan shall include:
4            (i) definitions of the different retail customer
5        classes for which supply is being purchased;
6            (ii) the proposed mix of demand-response products
7        for which contracts will be executed during the next
8        year. The cost-effective demand-response measures
9        shall be procured whenever the cost is lower than
10        procuring comparable capacity products, provided that
11        such products shall:
12                (A) be procured by a demand-response provider
13            from eligible retail customers;
14                (B) at least satisfy the demand-response
15            requirements of the regional transmission
16            organization market in which the utility's service
17            territory is located, including, but not limited
18            to, any applicable capacity or dispatch
19            requirements;
20                (C) provide for customers' participation in
21            the stream of benefits produced by the
22            demand-response products;
23                (D) provide for reimbursement by the
24            demand-response provider of the utility for any
25            costs incurred as a result of the failure of the
26            supplier of such products to perform its



HB1422- 5 -LRB097 08915 ASK 49047 b

1            obligations thereunder; and
2                (E) meet the same credit requirements as apply
3            to suppliers of capacity, in the applicable
4            regional transmission organization market;
5            (iii) the proposed energy efficiency products for
6        which contracts will be executed during the next year.
7        The cost effective energy efficiency measures shall be
8        procured whenever the cost is lower than procuring
9        comparable capacity products, supply products, or
10        both, provided that the energy efficiency products
11        shall:
12                (A) be procured by a energy efficiency
13            provider from eligible retail customers;
14                (B) at least satisfy evaluation, measurement,
15            and verification standards established pursuant to
16            Section 8-103 of this Act;
17                (C) provide for reimbursement by the energy
18            efficiency provider of the utility for any costs
19            incurred as a result of the failure of the supplier
20            of such products to perform its obligations
21            thereunder; and
22                (D) meet the same credit requirements as apply
23            to suppliers of capacity, in the applicable
24            regional transmission organization market;
25            (iv) (iii) monthly forecasted system supply
26        requirements, including expected minimum, maximum, and



HB1422- 6 -LRB097 08915 ASK 49047 b

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



HB1422- 7 -LRB097 08915 ASK 49047 b

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



HB1422- 8 -LRB097 08915 ASK 49047 b

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



HB1422- 9 -LRB097 08915 ASK 49047 b

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



HB1422- 10 -LRB097 08915 ASK 49047 b

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



HB1422- 11 -LRB097 08915 ASK 49047 b

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



HB1422- 12 -LRB097 08915 ASK 49047 b

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



HB1422- 13 -LRB097 08915 ASK 49047 b

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



HB1422- 14 -LRB097 08915 ASK 49047 b

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



HB1422- 15 -LRB097 08915 ASK 49047 b

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



HB1422- 16 -LRB097 08915 ASK 49047 b

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



HB1422- 17 -LRB097 08915 ASK 49047 b

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



HB1422- 18 -LRB097 08915 ASK 49047 b

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



HB1422- 19 -LRB097 08915 ASK 49047 b

1associated with the procurement and computed in accordance with
2the tariffs filed pursuant to subsection (l) of this Section
3and approved by the Commission.
4    (j) Within 60 days following the effective date of this
5amendatory Act, each electric utility that on December 31, 2005
6provided electric service to at least 100,000 customers in
7Illinois shall prepare and file with the Commission an initial
8procurement plan, which shall conform in all material respects
9to the requirements of the procurement plan set forth in
10subsection (b); provided, however, that the Illinois Power
11Agency Act shall not apply to the initial procurement plan
12prepared pursuant to this subsection. The initial procurement
13plan shall identify the portfolio of power and energy products
14to be procured and delivered for the period June 2008 through
15May 2009, and shall identify the proposed procurement
16administrator, who shall have the same experience and expertise
17as is required of a procurement administrator hired pursuant to
18Section 1-75 of the Illinois Power Agency Act. Copies of the
19procurement plan shall be posted and made publicly available on
20the Commission's website. The initial procurement plan may
21include contracts for renewable resources that extend beyond
22May 2009.
23        (i) Within 14 days following filing of the initial
24    procurement plan, any person may file a detailed objection
25    with the Commission contesting the procurement plan
26    submitted by the electric utility. All objections to the



HB1422- 20 -LRB097 08915 ASK 49047 b

1    electric utility's plan shall be specific, supported by
2    data or other detailed analyses. The electric utility may
3    file a response to any objections to its procurement plan
4    within 7 days after the date objections are due to be
5    filed. Within 7 days after the date the utility's response
6    is due, the Commission shall determine whether a hearing is
7    necessary. If it determines that a hearing is necessary, it
8    shall require the hearing to be completed and issue an
9    order on the procurement plan within 60 days after the
10    filing of the procurement plan by the electric utility.
11        (ii) The order shall approve or modify the procurement
12    plan, approve an independent procurement administrator,
13    and approve or modify the electric utility's tariffs that
14    are proposed with the initial procurement plan. The
15    Commission shall approve the procurement plan if the
16    Commission determines that it will ensure adequate,
17    reliable, affordable, efficient, and environmentally
18    sustainable electric service at the lowest total cost over
19    time, taking into account any benefits of price stability.
20    (k) In order to promote price stability for residential and
21small commercial customers during the transition to
22competition in Illinois, and notwithstanding any other
23provision of this Act, each electric utility subject to this
24Section shall enter into one or more multi-year financial swap
25contracts that become effective on the effective date of this
26amendatory Act. These contracts may be executed with generators



HB1422- 21 -LRB097 08915 ASK 49047 b

1and power marketers, including affiliated interests of the
2electric utility. These contracts shall be for a term of no
3more than 5 years and shall, for each respective utility or for
4any Illinois electric utilities that are affiliated by virtue
5of a common parent company and that are thereby considered a
6single electric utility for purposes of this subsection (k),
7not exceed in the aggregate 3,000 megawatts for any hour of the
8year. The contracts shall be financial contracts and not energy
9sales contracts. The contracts shall be executed as
10transactions under a negotiated master agreement based on the
11form of master agreement for financial swap contracts sponsored
12by the International Swaps and Derivatives Association, Inc.
13and shall be considered pre-existing contracts in the
14utilities' procurement plans for residential and small
15commercial customers. Costs incurred pursuant to a contract
16authorized by this subsection (k) shall be deemed prudently
17incurred and reasonable in amount and the electric utility
18shall be entitled to full cost recovery pursuant to the tariffs
19filed with the Commission.
20    (l) An electric utility shall recover its costs incurred
21under this Section, including, but not limited to, the costs of
22procuring power, energy efficiency products, and energy
23demand-response resources under this Section. The utility
24shall file with the initial procurement plan its proposed
25tariffs through which its costs of procuring power that are
26incurred pursuant to a Commission-approved procurement plan



HB1422- 22 -LRB097 08915 ASK 49047 b

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



HB1422- 23 -LRB097 08915 ASK 49047 b

1subject to review under, or in any way limited by, Section
216-111(i) of this Act.
3    (m) The Commission has the authority to adopt rules to
4carry out the provisions of this Section. For the public
5interest, safety, and welfare, the Commission also has
6authority to adopt rules to carry out the provisions of this
7Section on an emergency basis immediately following the
8effective date of this amendatory Act.
9    (n) Notwithstanding any other provision of this Act, any
10affiliated electric utilities that submit a single procurement
11plan covering their combined needs may procure for those
12combined needs in conjunction with that plan, and may enter
13jointly into power supply contracts, purchases, and other
14procurement arrangements, and allocate capacity, energy
15efficiency products, and energy and cost responsibility
16therefor among themselves in proportion to their requirements.
17    (o) On or before June 1 of each year, the Commission shall
18hold an informal hearing for the purpose of receiving comments
19on the prior year's procurement process and any recommendations
20for change.
21    (p) An electric utility subject to this Section may propose
22to invest, lease, own, or operate an electric generation
23facility as part of its procurement plan, provided the utility
24demonstrates that such facility is the least-cost option to
25provide electric service to eligible retail customers. If the
26facility is shown to be the least-cost option and is included



HB1422- 24 -LRB097 08915 ASK 49047 b

1in a procurement plan prepared in accordance with Section 1-75
2of the Illinois Power Agency Act and this Section, then the
3electric utility shall make a filing pursuant to Section 8-406
4of the Act, and may request of the Commission any statutory
5relief required thereunder. If the Commission grants all of the
6necessary approvals for the proposed facility, such supply
7shall thereafter be considered as a pre-existing contract under
8subsection (b) of this Section. The Commission shall in any
9order approving a proposal under this subsection specify how
10the utility will recover the prudently incurred costs of
11investing in, leasing, owning, or operating such generation
12facility through just and reasonable rates charged to eligible
13retail customers. Cost recovery for facilities included in the
14utility's procurement plan pursuant to this subsection shall
15not be subject to review under or in any way limited by the
16provisions of Section 16-111(i) of this Act. Nothing in this
17Section is intended to prohibit a utility from filing for a
18fuel adjustment clause as is otherwise permitted under Section
199-220 of this Act.
20(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)