AUTHORITY: Implementing Section 8-11-2 of the Illinois Municipal Code [65 ILCS 5/8-11-2], and authorized by Section 10-101 of the Public Utilities Act [220 ILCS 5/10-101].

SOURCE: Emergency rules adopted at 22 Ill. Reg. 7304, effective April 10, 1998, for a maximum of 150 days; adopted at 22 Ill. Reg. 16446, effective September 4, 1998.

SUBPART A: GENERAL

 

Section 418.10  Purpose

 

Section 8-11-2 of the Illinois Municipal Code (Code) [65 ILCS 5/8-11-2] has been amended by Public Act 90-561. The amendment takes effect August 1, 1998 and, over the period from August 1, 1998 to the end of 2000, changes the municipal tax on electric utility gross receipts to a tax on end-users imposed on the basis of kilowatt-hours of electricity used or consumed within the municipality. The purpose of this Part is to establish rules governing requests for Illinois Commerce Commission (Commission) promulgation of alternative maximum municipal electric tax rates under Section 8-11-2 of the Code, and to clarify the obligations of electric utilities with respect to the amendments to that Section of the Code. The Commission seeks to provide municipalities with a method of designing tax rates that will match the tax revenues that could have been derived from classes of customers, defined on the basis of the usage categories set forth in Section 8-11-2 of the Code, under the percentage of purchase price tax in place in 1997. Mindful of the substantial variation in the customer profiles of the municipalities that impose an electricity tax, the Commission also wishes to allow for the consideration of alternative rates that are consistent with Section 8-11-2 of the Code and that address local conditions.

 

Section 418.15  Partial Suspension of 83 Ill. Adm. Code 200

 

Given the potential for numerous requests pursuant to this Part, the need to provide tax rates for municipal use as expeditiously as possible, and the 90-day deadline for Commission action set forth in Section 8-11-2 of the Code, the Commission hereby determines that good cause exists for the suspension of its Rules of Practice (83 Ill. Adm. Code 200) for purposes of considering municipal requests filed under Section 8-11-2 of the Code, except as specifically made applicable by this Part.

 

Section 418.20  Definitions

 

            "Bill distribution" means a calculation, based on bills issued for 1997, that provides the total kilowatt-hours of electric energy distributed, supplied, furnished or sold for use or consumption within the corporate limits of a municipality, and not for resale, by an electric utility for the year of 1997.  Such total kilowatt-hours shall be set forth by the class selected, and distributed within each of the 10 categories set forth in Section 8-11-2(3) of the Code (see Public Act 90-561), as those kilowatt-hours were billed to the customers during each month or billing cycle of the year.

 

            "Bill frequency" means a calculation, based on bills issued for 1997, that provides the total kilowatt-hours of electric energy distributed, supplied, furnished or sold for use or consumption within the corporate limits of a municipality, and not for resale, by an electric utility for the year of 1997. Such total kilowatt-hours shall be set forth in terms of actual usage within each of the 10 categories set forth in Section 8-11-2(3) of the Code (see Public Act 90-561), as those kilowatt-hours were billed to the customers during each month or billing cycle of the year.

 

            "Declining block tax rate" means a set of rates for the 10 usage categories established in Section 8-11-2(3) of the Code in which the rate for the first 2,000 kilowatt-hours used or consumed within a month is the highest rate, and the rate for each other category is greater than zero but less than the rate for the category immediately preceding it.

 

            "Electric utility" means an individual, firm, trust, estate, partnership, association, joint stock company, joint venture, corporation, limited liability company, municipal corporation or political subdivision of the State of Illinois, or a receiver, trustee, guardian or other representative appointed by order of any court, that  was, during calendar 1997, engaged in the business of distributing, supplying, furnishing, or selling electricity for use or consumption within the corporate limits of the municipality, and not for resale.

 

            "Gross receipts" has the same meaning as that set forth in Section 8-11-2 of the Code immediately prior to December 16, 1997, the effective date of Public Act 90-561.

SUBPART B: PROCEDURAL REQUIREMENTS

 

Section 418.100  Requirements Applicable to All Requests for Promulgation of Rates

 

a)         All requests for the promulgation of alternate rates under Section 8-11-2 of the Code shall be submitted to: The Chief Clerk, Illinois Commerce Commission, 527 East Capitol Avenue, Springfield, Illinois 62706.  For purposes of the deadline specified in Section 8-11-2 of the Code, receipt of the request shall be deemed to have occurred when the request arrives in the Chief Clerk's Springfield office. Upon request and submission of a copy for return, along with a postage prepaid self-addressed envelope, a date-stamped copy will be returned to the requesting municipality.

 

b)         All requests shall include the following documents and information:

 

1)         A copy of the ordinance, resolution, or minutes of a meeting of the corporate authorities, reflecting a vote specifically authorizing the request;

 

2)         For calendar 1997, the municipality's tax revenues under Section 8-11-2(3) of the Code as in effect during 1997, as billed at the tax rate in effect during 1997 by the electric utility providing service within the corporate limits of the municipality (or, if the tax rate changed during 1997, calculated as though the rate in effect on December 31, 1997 had been in effect for the entire year), which amount shall not include the additional 3% charge permitted by Section 9-221 of the Public Utilities Act [220 ILCS 5/9-221];

 

3)         A statement of the method of calculation requested by the municipality, which shall be one of the methods described in Section 418.110 or 418.120, as well as the information required by the Section the municipality chooses;

 

4)         The name, address, telephone number, and facsimile telephone number of the person to be contacted under Section 418.130, both for the requesting municipality and for the relevant electric utility;

 

5)         If the municipality intends to apply tax rates that recover an amount at a percentage equivalent different from the actual percentage tax rate in effect on December 31, 1997, the desired percentage tax rate equivalent; and

 

6)         A bill frequency for the residential customer class, defined by reference to Account 440 of the Uniform System of Accounts for Electric Utilities (83 Ill. Adm. Code 415), and a bill frequency for a class consisting of all other customers.

 

c)         All requests shall be verified and all data used in the calculations required by this Part shall be supported by affidavit or other form of verification establishing that the information was derived from records the municipality received from the electric utility providing service within its corporate limits.

 

d)         A municipality, electric utility, or customer may request confidential treatment for information filed with the Commission pursuant to this Part.  The information shall be maintained on a confidential basis unless a request is challenged and the challenge is upheld by the Commission.

 

Section 418.110  Ten Consumption Block Method

 

A municipality seeking rates set under this method shall supply the following information with its filing:

 

a)         A bill frequency showing the usage or consumption of electricity within the corporate limits of the municipality within each of the 10 categories set forth in Section 8-11-2(3) of the Code billed during 1997;

 

b)         Tax revenues for 1997, either as billed or as estimated, in accordance with the following:

 

1)         The greater of total tax revenue billed for 1997 or the tax revenue that could have been billed at the tax rate in effect on December 31, 1997, allocated among each of 10 classes of purchasers established by reference to the usage categories set forth in Section 8-11-2(3) of the Code; or

 

2)         For a municipality that did not have an electric tax in effect on December 31, 1997, estimated tax revenues based upon the 1997 gross receipts billed within the municipality multiplied by the tax rate requested under Section 418.100(b)(5), not to exceed 5%, allocated among each of 10 classes of purchasers established by reference to the usage categories set forth in Section 8-11-2(3) of the Code;

 

c)         A declining block tax rate for each of the 10 categories that reflects, as closely as reasonably practical for the municipality, the distribution of the tax among the 10 classes of purchasers, based on 1997 usage or consumption, as if the tax were based on a uniform percentage of the purchase price of electricity, making adjustments as necessary to provide a rate for all kilowatt-hour categories and to maintain the declining block structure; and

 

d)         Brief documentary or narrative support for the recommended tax rates, which shall include a bill distribution for the method used if different from subsection (a).

 

Section 418.120  Other Method

 

A municipality seeking Commission promulgation of rates other than in accordance with Section 418.110 shall include with its request a bill frequency calculated on the basis of the classes of purchasers reflected in the requested rates, and all other information necessary to show the derivation of the requested tax rates, along with testimony and exhibits establishing that the requested rates reflect, as closely as reasonably practical for the municipality, the distribution of the tax among classes of purchasers as if the tax were based on a uniform percentage of the purchase price of electricity.  As required by Section 8-11-2(3) of the Code, the requested rates shall be stated on the basis of the kilowatt-hour categories set forth in that Section.  The testimony and exhibits may include a demonstration of the impacts of the rates on customer classes and individual customers within the municipality as compared to impacts of the rates calculated under different methods.

 

Section 418.130  Procedures for Promulgating Rates

 

a)         If a rate request is based on Section 418.110, the Commission staff shall review the filing to determine whether it complies with Sections 418.100 and 418.110.  Within 30 days after the Chief Clerk receives a rate request, the staff shall make a determination as follows:

 

1)         If the staff determines that the filing complies with the applicable Sections of this Part, it shall so inform the Commission in a Staff Report filed with the Chief Clerk and served upon the municipality and the electric utility from which the municipality received the information upon which the request is based.  The Hearing Examiner shall present an order for Commission action promulgating the rates requested by the municipality as soon as is practicable.

 

2)         If the staff determines that the filing does not comply with the applicable Sections of this Part, it shall provide written notification to the municipality and the electric utility from which the municipality received the information upon which the request is based of each reason for its determination and shall file a copy of the notification with the Chief Clerk. The notification shall include, if practicable, rate corrections necessary to bring the request into compliance with the applicable Sections.  The municipality shall have the option of correcting its filing, withdrawing its filing (in which case it may submit another request), or requesting a hearing on the merits of its request under subsection (b).  If a corrected filing is made, the Commission staff shall act on the corrected request within 30 days in the manner provided by this subsection.

 

b)         If the request is based upon Section 418.120, or if the municipality so requests under subsection (a)(2), the Hearing Examiner shall set the matter for a prehearing conference pursuant to the Commission's Rules of Practice (83 Ill. Adm. Code 200).  Once notice of the prehearing conference is issued, the Rules of Practice shall apply to the proceeding.

 

c)         At any time during the pendency of the request, on motion of any party or on the Commission's own motion, the Commission may enter an interim order that promulgates rates on an interim basis and reserves outstanding issues for resolution in further proceedings.

 

Section 418.140  Subsequent Tax Rate Adjustments

 

A municipality may, without requesting further action by the Commission, adjust the rates promulgated by the Commission under this Part by multiplying the cents per kilowatt-hour rate for each of the 10 usage categories by a fraction equal to (the desired new equivalent percentage tax rate) divided by (the equivalent percentage tax rate at which the Commission promulgated rates), provided that the new equivalent tax rate does not exceed 5%.  For example, if the Commission has promulgated a municipality's kilowatt-hour (kWh) tax rates at the equivalent of a 2% gross receipts tax, and at a later date the municipality decides to increase the tax to the equivalent of a 4% gross receipts tax, each of the 10 category tax rates that were determined assuming a 2% rate can be multiplied by 2 (4% divided by 2%) to derive the 10 category tax rates assuming a 4% gross receipt tax.  If the municipality wishes to spread the change in taxes over the 10 categories using a different approach, however, the municipality will be required to file the requested changed tax rates with the Commission, in accordance with Section 418.120.

SUBPART C: UTILITY REQUIREMENTS

 

Section 418.200  Assistance to Municipalities and Retention of Information

 

Each electric utility subject to the jurisdiction of the Commission shall provide all reasonable assistance requested by a municipality in order to comply with Section 8-11-2 of the Code.  In addition to the requirements of 83 Ill. Adm. Code 420, each electric utility shall maintain, through the end of 2007, for every municipality within its service area irrespective of whether the municipality imposes a municipal electric tax, all information required to be filed by a municipality under Sections 418.100 and 418.110.

 

Section 418.210  Tariff Filings

 

Pursuant to Section 9-201 of the Public Utilities Act, if the Commission determines that good cause exists for the filing, by any electric utility that is also a "public utility" as defined in Section 3-105 of the Public Utilities Act, of tariff sheets that set forth the rates of taxes on the use or consumption of electricity it is required by Section 8-11-2 of the Illinois Municipal Code (see Public Act 90-561), to collect from those subject to the tax.  Such tariff sheets shall also include, as factored into each of the charges established pursuant to the ordinance, the percentage amount added to the gross charge to reimburse the electric utility for expenses incurred in keeping records, billing customers, preparing and filing returns, remitting the tax and supplying data to the municipality upon request, as authorized by Section 8-11-2 of the Code. Special permission is hereby granted for the filing of tariff sheets that comply with this Section, provided that such tariff sheets are accompanied by a certified copy of the municipal ordinance imposing the tax.