SB3497 104TH GENERAL ASSEMBLY

LRB104 16328 AAS 29714 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3497

Introduced 2/5/2026, by Sen. Suzy Glowiak Hilton

SYNOPSIS AS INTRODUCED:

220 ILCS 5/9-224	from Ch. 111 2/3, par. 9-224
220 ILCS 5/9-224.1 new
220 ILCS 5/9-225	from Ch. 111 2/3, par. 9-225
220 ILCS 5/9-229

Amends the Public Utilities Act. In provisions concerning expenses that are recoverable by a public utility, provides that the Illinois Commerce Commission shall not consider as an expense of any public utility company, for the purpose of determining any rate or charge, any amount expended for political activity or lobbying, any amount expended for contributions to a trade association or a chamber of commerce, and any amount expended by a public utility for director and officer liability insurance and fiduciary liability insurance. Provides that, in determining whether the purchase of other types of insurance by a public utility is recoverable, the Commission shall determine whether the specific type of insurance is financially beneficial to the public utility's ratepayers or the public utility's shareholders. Provides that, if the Commission determines that the insurance purchased by the public utility is financially beneficial to its shareholders, then the purchase of the insurance shall not be a recoverable expense. Provides that goodwill or institutional advertising shall not be a recoverable expense by a public utility. Provides that the Commission shall deem as a nonrecoverable expense by a public utility (rather than the Commission shall specifically assess the justness and reasonableness of) any amount expended by a public utility to compensate attorneys or technical experts to prepare and litigate a general rate case filing. Provides that the amount that is deposited into the Consumer Intervenor Compensation Fund by a public utility shall not be a recoverable expense by the public utility. Provides that the computation of compensation awarded from the Fund shall take into consideration the market rates paid to persons of comparable training and experience who offer similar services, but may not exceed the comparable market rate for services paid by the public utility as part of its nonrecoverable rate case expense reported to the Commission (rather than as part of its rate case expense). Makes other changes.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Public Utilities Act is amended by changing Sections 9-224, 9-225, and 9-229 and by adding Section 9-224.1 as follows:

(220 ILCS 5/9-224) (from Ch. 111 2/3, par. 9-224)

Sec. 9-224. The Commission shall not consider as an expense of any public utility company, for the purpose of determining any rate or charge, any amount expended for political activity or lobbying, as defined in the Lobbyist Registration Act, and any amount expended for contributions to a trade association or a chamber of commerce.

(Source: P.A. 84-617.)

(220 ILCS 5/9-224.1 new)

Sec. 9-224.1. Amounts expended by public utilities for director and officer liability insurance and fiduciary liability insurance. The Commission shall not consider as an expense of any public utility company, for the purpose of determining any rate or charge, any amount expended by a public utility for director and officer liability insurance and fiduciary liability insurance. In determining whether the purchase of other types of insurance by the public utility is recoverable, the Commission shall determine whether the specific type of insurance is of financial benefit to the public utility's ratepayers or the public utility's shareholders. If the Commission determines that the insurance purchased by the public utility is beneficial to its shareholders, then the purchase of the insurance shall not be a recoverable expense.

(220 ILCS 5/9-225) (from Ch. 111 2/3, par. 9-225)

Sec. 9-225. (1) For the purposes of this Section:

(a) "Advertising" means the commercial use, by an electric, gas, water, or sewer utility, of any media, including newspapers, printed matter, radio and television, in order to transmit a message to a substantial number of members of the public or to such utility's consumers;

(b) "Political advertising" means any advertising for the purpose of influencing public opinion with respect to legislative, administrative or electoral matters, or with respect to any controversial issue of public importance;

(c) "Promotional advertising" means any advertising for the purpose of encouraging any person to select or use the service or additional service of a utility or the selection or installation of any appliance or equipment designed to use such utility's service; and

(d) "Goodwill or institutional advertising" means any advertising either on a local or national basis designed primarily to bring the utility's name before the general public in such a way as to improve the image of the utility or to promote controversial issues for the utility or the industry.

(2) In any general rate increase requested by any gas, electric, water, or sewer utility company under the provisions of this Act, the Commission shall not consider, for the purpose of determining any rate, charge, or classification of costs, any direct or indirect expenditures for promotional, political, or goodwill or institutional or goodwill advertising, unless the Commission finds the advertising to be in the best interest of the Consumer or authorized as provided pursuant to subsection (3) 3 of this Section.

(3) The following categories of advertising shall be considered allowable operating expenses for gas, electric, water, or sewer utilities:

(a) Advertising which informs consumers how they can conserve energy or water, reduce peak demand for electric or gas energy, or reduce demand for water;

(b) Advertising required by law or regulations, including advertising required under Part I of Title II of the National Energy Conservation Policy Act;

(c) Advertising regarding service interruptions, safety measures or emergency conditions;

(d) Advertising concerning employment opportunities with such utility;

(e) Advertising which promotes the use of energy efficient appliances, equipment or services;

(f) Explanations of existing or proposed rate schedules or notifications of hearings thereon;

(g) Advertising that identifies the location and operating hours of company business offices;

(h) Advertising which promotes the shifting of demand from peak to off-peak hours or which encourages the off-peak usage of the service; and

(i) "Other" categories of advertisements not includable in paragraphs (a) through (h), but which are not political, promotional, institutional or goodwill advertisements.

(4) Notwithstanding subsections (2) and (3) of this Section, goodwill or institutional advertising shall not be a recoverable expense.

(Source: P.A. 95-814, eff. 8-13-08.)

(220 ILCS 5/9-229)

Sec. 9-229. Consideration of attorney and expert compensation as an expense and the Consumer Intervenor Compensation Fund intervenor compensation fund.

(a) The Commission shall deem as a nonrecoverable expense by a public utility specifically assess the justness and reasonableness of any amount expended by a public utility to compensate attorneys or technical experts to prepare and litigate a general rate case filing. This issue shall be expressly addressed in the Commission's final order.

(b) The State of Illinois shall create a Consumer Intervenor Compensation Fund subject to the following:

(1) Provision of compensation for Consumer Interest Representatives that intervene in Illinois Commerce Commission proceedings will increase public engagement, encourage additional transparency, expand the information available to the Commission, and improve decision-making.

(2) As used in this Section, "Consumer interest representative" means:

(A) a residential utility customer or group of residential utility customers represented by a not-for-profit group or organization registered with the Illinois Attorney General under the Solicitation for Charity Act;

(B) representatives of not-for-profit groups or organizations whose membership is limited to residential utility customers; or

(C) representatives of not-for-profit groups or organizations whose membership includes Illinois residents and that address the community, economic, environmental, or social welfare of Illinois residents, except government agencies or intervenors specifically authorized by Illinois law to participate in Commission proceedings on behalf of Illinois consumers.

(3) A consumer interest representative is eligible to receive compensation from the Consumer Intervenor Compensation Fund consumer intervenor compensation fund if its participation included lay or expert testimony or legal briefing and argument concerning the expenses, investments, rate design, rate impact, or other matters affecting the pricing, rates, costs or other charges associated with utility service, the Commission adopts a material recommendation related to a significant issue in the docket, and participation caused a significant financial hardship to the participant; however, no consumer interest representative shall be eligible to receive an award pursuant to this Section if the consumer interest representative receives any compensation, funding, or donations, directly or indirectly, from parties that have a financial interest in the outcome of the proceeding.

(4) Within 30 days after September 15, 2021 (the effective date of Public Act 102-662), each utility that files a request for an increase in rates under Article IX or Article XVI shall deposit an amount equal to one half of the rate case attorney and expert expense allowed by the Commission, but not to exceed $500,000, into the fund within 35 days of the date of the Commission's final Order in the rate case or 20 days after the denial of rehearing under Section 10-113 of this Act, whichever is later. The Consumer Intervenor Compensation Fund shall be used to provide payment to consumer interest representatives as described in this Section, and the amount deposited into the Fund by a public utility shall not be a recoverable expense.

(5) An electric public utility with 3,000,000 or more retail customers shall contribute $450,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A combined electric and gas public utility serving fewer than 3,000,000 but more than 500,000 retail customers shall contribute $225,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A gas public utility with 1,500,000 or more retail customers that is not a combined electric and gas public utility shall contribute $225,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A gas public utility with fewer than 1,500,000 retail customers but more than 300,000 retail customers that is not a combined electric and gas public utility shall contribute $80,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A gas public utility with fewer than 300,000 retail customers that is not a combined electric and gas public utility shall contribute $20,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A combined electric and gas public utility serving fewer than 500,000 retail customers shall contribute $20,000 to the Consumer Intervenor Compensation Fund within 60 days after September 15, 2021 (the effective date of Public Act 102-662). A water or sewer public utility serving more than 100,000 retail customers shall contribute $80,000, and a water or sewer public utility serving fewer than 100,000 but more than 10,000 retail customers shall contribute $20,000.

(6)(A) Prior to the entry of a Final Order in a docketed case, the Commission Administrator shall provide a payment to a consumer interest representative that demonstrates through a verified application for funding that the consumer interest representative's participation or intervention without an award of fees or costs imposes a significant financial hardship based on a schedule to be developed by the Commission. The Administrator may require verification of costs incurred, including statements of hours spent, as a condition to paying the consumer interest representative prior to the entry of a Final Order in a docketed case.

(B) If the Commission adopts a material recommendation related to a significant issue in the docket and participation caused a financial hardship to the participant, then the consumer interest representative shall be allowed payment for some or all of the consumer interest representative's reasonable attorney's or advocate's fees, reasonable expert witness fees, and other reasonable costs of preparation for and participation in a hearing or proceeding. Expenses related to travel or meals shall not be compensable.

(C) The consumer interest representative shall submit an itemized request for compensation to the Consumer Intervenor Compensation Fund, including the advocate's or attorney's reasonable fee rate, the number of hours expended, reasonable expert and expert witness fees, and other reasonable costs for the preparation for and participation in the hearing and briefing within 30 days of the Commission's final order after denial or decision on rehearing, if any.

(7) Administration of the Fund.

(A) The Consumer Intervenor Compensation Fund is created as a special fund in the State treasury. All disbursements from the Consumer Intervenor Compensation Fund shall be made only upon warrants of the Comptroller drawn upon the Treasurer as custodian of the Fund upon vouchers signed by the Executive Director of the Commission or by the person or persons designated by the Director for that purpose. The Comptroller is authorized to draw the warrant upon vouchers so signed. The Treasurer shall accept all warrants so signed and shall be released from liability for all payments made on those warrants. The Consumer Intervenor Compensation Fund shall be administered by an Administrator that is a person or entity that is independent of the Commission. The administrator will be responsible for the prudent management of the Consumer Intervenor Compensation Fund and for recommendations for the award of consumer intervenor compensation from the Consumer Intervenor Compensation Fund. The Commission shall issue a request for qualifications for a third-party program administrator to administer the Consumer Intervenor Compensation Fund. The third-party administrator shall be chosen through a competitive bid process based on selection criteria and requirements developed by the Commission. The Illinois Procurement Code does not apply to the hiring or payment of the Administrator. All Administrator costs may be paid for using monies from the Consumer Intervenor Compensation Fund, but the Program Administrator shall strive to minimize costs in the implementation of the program.

(B) The computation of compensation awarded from the Fund fund shall take into consideration the market rates paid to persons of comparable training and experience who offer similar services, but may not exceed the comparable market rate for services paid by the public utility as part of its nonrecoverable rate case expense reported to the Commission.

(C)(1) Recommendations on the award of compensation by the administrator shall include consideration of whether the Commission adopted a material recommendation related to a significant issue in the docket and whether participation caused a financial hardship to the participant and the payment of compensation is fair, just and reasonable.

(2) Recommendations on the award of compensation by the administrator shall be submitted to the Commission for approval. Unless the Commission initiates an investigation within 45 days after the notice to the Commission, the award of compensation shall be allowed 45 days after notice to the Commission. Such notice shall be given by filing with the Commission on the Commission's e-docket system, and keeping open for public inspection the award for compensation proposed by the Administrator. The Commission shall have power, and it is hereby given authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders, without answer or other formal pleadings, but upon reasonable notice, to enter upon a hearing concerning the propriety of the award.

(c) The Commission may adopt rules to implement this Section.

(Source: P.A. 102-662, eff. 9-15-21; 103-605, eff. 7-1-24.)