SB1592ham004 95TH GENERAL ASSEMBLY

Rep. George Scully Jr.

Filed: 5/30/2007

09500SB1592ham004 LRB095 11114 RCE 37318 a

AMENDMENT TO SENATE BILL 1592

AMENDMENT NO. ______. Amend Senate Bill 1592 by inserting immediately above the enacting clause the following:

"WHEREAS, This Act shall be known as the Electricity Rate Relief Act of 2007; therefore,"; and

by replacing everything after the enacting clause with the following:

"ARTICLE 1. LEGISLATIVE INTENT

Section 1-5. Legislative intent. In the Electric Service Customer Choice and Rate Relief Law of 1997, the General Assembly authorized market-based electric rates only if retail and wholesale competition developed in Illinois and if the Illinois Commerce Commission declared electric service to be "competitive".

In 2006, however, the Illinois Commerce Commission authorized market-based rates for electric service that had not, and still has not, been declared competitive.

As a result, the General Assembly finds it necessary to take the steps set forth in this amendatory Act to provide immediate relief to consumers, who have been harmed by the Illinois Commerce Commission's approval of market-based rates in the absence of a competitive declaration.

ARTICLE 3. AMENDATORY PROVISIONS

Section 3-5. The Public Utilities Act is amended by changing Sections 16-102, 16-103, 16-111, and 16-113 and by adding Sections 8-205.5 and 16-135 as follows:

(220 ILCS 5/8-205.5 new)

Sec. 8-205.5. Termination of utility service prior to March 31, 2008. Notwithstanding any other provision of this Act or any other law to the contrary, a public utility that, on December 31, 2005, served at least 100,000 electric customers in Illinois may not terminate electric service to a residential customer for nonpayment prior to March 31, 2008.

(220 ILCS 5/16-102)

Sec. 16-102. Definitions. For the purposes of this Article the following terms shall be defined as set forth in this Section.

"Alternative retail electric supplier" means every person, cooperative, corporation, municipal corporation, company, association, joint stock company or association, firm, partnership, individual, or other entity, their lessees, trustees, or receivers appointed by any court whatsoever, that offers electric power or energy for sale, lease or in exchange for other value received to one or more retail customers, or that engages in the delivery or furnishing of electric power or energy to such retail customers, and shall include, without limitation, resellers, aggregators and power marketers, but shall not include (i) electric utilities (or any agent of the electric utility to the extent the electric utility provides tariffed services to retail customers through that agent), (ii) any electric cooperative or municipal system as defined in Section 17-100 to the extent that the electric cooperative or municipal system is serving retail customers within any area in which it is or would be entitled to provide service under the law in effect immediately prior to the effective date of this amendatory Act of 1997, (iii) a public utility that is owned and operated by any public institution of higher education of this State, or a public utility that is owned by such public institution of higher education and operated by any of its lessees or operating agents, within any area in which it is or would be entitled to provide service under the law in effect immediately prior to the effective date of this amendatory Act of 1997, (iv) a retail customer to the extent that customer obtains its electric power and energy from that customer's own cogeneration or self-generation facilities, (v) an entity that owns, operates, sells, or arranges for the installation of a customer's own cogeneration or self-generation facilities, but only to the extent the entity is engaged in owning, selling or arranging for the installation of such facility, or operating the facility on behalf of such customer, provided however that any such third party owner or operator of a facility built after January 1, 1999, complies with the labor provisions of Section 16-128(a) as though such third party were an alternative retail electric supplier, or (vi) an industrial or manufacturing customer that owns its own distribution facilities, to the extent that the customer provides service from that distribution system to a third-party contractor located on the customer's premises that is integrally and predominantly engaged in the customer's industrial or manufacturing process; provided, that if the industrial or manufacturing customer has elected delivery services, the customer shall pay transition charges applicable to the electric power and energy consumed by the third-party contractor unless such charges are otherwise paid by the third party contractor, which shall be calculated based on the usage of, and the base rates or the contract rates applicable to, the third-party contractor in accordance with Section 16-102.

"Base rates" means the rates for those tariffed services that the electric utility is required to offer pursuant to subsection (a) of Section 16-103 and that were identified in a rate order for collection of the electric utility's base rate revenue requirement, excluding (i) separate automatic rate adjustment riders then in effect, (ii) special or negotiated contract rates, (iii) delivery services tariffs filed pursuant to Section 16-108, (iv) real-time pricing, or (v) tariffs that were in effect prior to October 1, 1996 and that based charges for services on an index or average of other utilities' charges, but including (vi) any subsequent redesign of such rates for tariffed services that is authorized by the Commission after notice and hearing.

"Competitive service" includes (i) any service that has been declared to be competitive pursuant to Section 16-113 of this Act, (ii) contract service, and (iii) services, other than tariffed services, that are related to, but not necessary for, the provision of electric power and energy or delivery services.

"Contract service" means (1) services, including the provision of electric power and energy or other services, that are provided by mutual agreement between an electric utility and a retail customer that is located in the electric utility's service area, provided that, delivery services shall not be a contract service until such services are declared competitive pursuant to Section 16-113; and also means (2) the provision of electric power and energy by an electric utility to retail customers outside the electric utility's service area pursuant to Section 16-116. Provided, however, contract service does not include electric utility services provided pursuant to (i) contracts that retail customers are required to execute as a condition of receiving tariffed services, or (ii) special or negotiated rate contracts for electric utility services that were entered into between an electric utility and a retail customer prior to the effective date of this amendatory Act of 1997 and filed with the Commission.

"Delivery services" means those services provided by the electric utility that are necessary in order for the transmission and distribution systems to function so that retail customers located in the electric utility's service area can receive electric power and energy from suppliers other than the electric utility, and shall include, without limitation, standard metering and billing services.

"Electric utility" means a public utility, as defined in Section 3-105 of this Act, that has a franchise, license, permit or right to furnish or sell electricity to retail customers within a service area.

"Mandatory transition period" means the period from the effective date of Public Act 90-561 this amendatory Act of 1997 through January 1, 2007 and from the effective date of this amendatory Act of the 95th General Assembly through the date on which the Commission has approved declarations of competitive service, pursuant to Section 16-113, for all classes of service offered in the service areas of all electric utilities that, on December 31, 2005, served at least 100,000 residential customers.

"Municipal system" shall have the meaning set forth in Section 17-100.

"Real-time pricing" means tariffed retail charges for delivered electric power and energy that vary hour-to-hour and are determined from wholesale market prices using a methodology approved by the Illinois Commerce Commission.

"Residential customer" means those retail customers of an electric utility that receive (i) electric utility service for household purposes distributed to a dwelling of 2 or fewer units that is billed under a residential rate or (ii) electric utility service for household purposes distributed to a dwelling unit or units that is billed under a residential rate and is registered by a separate meter for each dwelling unit.

"Retail customer" means a single entity using electric power or energy at a single premises and that (A) either (i) is receiving or is eligible to receive tariffed services from an electric utility, or (ii) that is served by a municipal system or electric cooperative within any area in which the municipal system or electric cooperative is or would be entitled to provide service under the law in effect immediately prior to the effective date of this amendatory Act of 1997, or (B) an entity which on the effective date of this Act was receiving electric service from a public utility and (i) was engaged in the practice of resale and redistribution of such electricity within a building prior to January 2, 1957, or (ii) was providing lighting services to tenants in a multi-occupancy building, but only to the extent such resale, redistribution or lighting service is authorized by the electric utility's tariffs that were on file with the Commission on the effective date of this Act.

"Service area" means (i) the geographic area within which an electric utility was lawfully entitled to provide electric power and energy to retail customers as of the effective date of this amendatory Act of 1997, and includes (ii) the location of any retail customer to which the electric utility was lawfully providing electric utility services on such effective date.

"Small commercial retail customer" means those nonresidential retail customers of an electric utility consuming 15,000 kilowatt-hours or less of electricity annually in its service area.

"Tariffed service" means services provided to retail customers by an electric utility as defined by its rates on file with the Commission pursuant to the provisions of Article IX of this Act, but shall not include competitive services.

"Transition charge" means a charge expressed in cents per kilowatt-hour that is calculated for a customer or class of customers as follows for each year in which an electric utility is entitled to recover transition charges as provided in Section 16-108:

(1) the amount of revenue that an electric utility would receive from the retail customer or customers if it were serving such customers' electric power and energy requirements as a tariffed service based on (A) all of the customers' actual usage during the 3 years ending 90 days prior to the date on which such customers were first eligible for delivery services pursuant to Section 16-104, and (B) on (i) the base rates in effect on October 1, 1996 (adjusted for the reductions required by subsection (b) of Section 16-111, for any reduction resulting from a rate decrease under Section 16-101(b), for any restatement of base rates made in conjunction with an elimination of the fuel adjustment clause pursuant to subsection (b), (d), or (f) of Section 9-220 and for any removal of decommissioning costs from base rates pursuant to Section 16-114) and any separate automatic rate adjustment riders (other than a decommissioning rate as defined in Section 16-114) under which the customers were receiving or, had they been customers, would have received electric power and energy from the electric utility during the year immediately preceding the date on which such customers were first eligible for delivery service pursuant to Section 16-104, or (ii) to the extent applicable, any contract rates, including contracts or rates for consolidated or aggregated billing, under which such customers were receiving electric power and energy from the electric utility during such year;

(2) less the amount of revenue, other than revenue from transition charges and decommissioning rates, that the electric utility would receive from such retail customers for delivery services provided by the electric utility, assuming such customers were taking delivery services for all of their usage, based on the delivery services tariffs in effect during the year for which the transition charge is being calculated and on the usage identified in paragraph (1);

(3) less the market value for the electric power and energy that the electric utility would have used to supply all of such customers' electric power and energy requirements, as a tariffed service, based on the usage identified in paragraph (1), with such market value determined in accordance with Section 16-112 of this Act;

(4) less the following amount which represents the amount to be attributed to new revenue sources and cost reductions by the electric utility through the end of the period for which transition costs are recovered pursuant to Section 16-108, referred to in this Article XVI as a "mitigation factor":

(A) for nonresidential retail customers, an amount equal to the greater of (i) 0.5 cents per kilowatt-hour during the period October 1, 1999 through December 31, 2004, 0.6 cents per kilowatt-hour in calendar year 2005, and 0.9 cents per kilowatt-hour in calendar year 2006, multiplied in each year by the usage identified in paragraph (1), or (ii) an amount equal to the following percentages of the amount produced by applying the applicable base rates (adjusted as described in subparagraph (1)(B)) or contract rate to the usage identified in paragraph (1): 8% for the period October 1, 1999 through December 31, 2002, 10% in calendar years 2003 and 2004, 11% in calendar year 2005 and 12% in calendar year 2006; and

(B) for residential retail customers, an amount equal to the following percentages of the amount produced by applying the base rates in effect on October 1, 1996 (adjusted as described in subparagraph (1)(B)) to the usage identified in paragraph (1): (i) 6% from May 1, 2002 through December 31, 2002, (ii) 7% in calendar years 2003 and 2004, (iii) 8% in calendar year 2005, and (iv) 10% in calendar year 2006;

(5) divided by the usage of such customers identified in paragraph (1),

provided that the transition charge shall never be less than zero.

"Unbundled service" means a component or constituent part of a tariffed service which the electric utility subsequently offers separately to its customers.

(Source: P.A. 94-977, eff. 6-30-06.)

(220 ILCS 5/16-103)

Sec. 16-103. Service obligations of electric utilities.

(a) An electric utility shall continue offering to retail customers each tariffed service that it offered as a distinct and identifiable service on the effective date of this amendatory Act of 1997 until the service is (i) declared competitive pursuant to Section 16-113, or (ii) abandoned pursuant to Section 8-508. Nothing in this subsection shall be construed as limiting an electric utility's right to propose, or the Commission's power to approve, allow or order modifications in the rates, terms and conditions for such services pursuant to Article IX or Section 16-111 of this Act.

(b) An electric utility shall also offer, as tariffed services, delivery services in accordance with this Article, the power purchase options described in Section 16-110 and real-time pricing as provided in Section 16-107.

(c) Notwithstanding any other provision of this Article, each electric utility shall continue offering to all residential customers and to all small commercial retail customers in its service area, as a tariffed service, bundled electric power and energy delivered to the customer's premises consistent with the bundled utility service provided by the electric utility on the effective date of this amendatory Act of 1997. Upon declaration of the provision of electric power and energy as competitive, the electric utility shall continue to offer to such customers, as a tariffed service, bundled service options at rates which reflect recovery of all cost components for providing the service. For those components of the service which have been declared competitive, cost shall be the market based prices. Market based prices as referred to herein shall mean, for electric power and energy, either (i) those prices for electric power and energy determined as provided in Section 16-112, or (ii) the electric utility's cost of obtaining the electric power and energy at wholesale through a competitive bidding or other arms-length acquisition process.

(c-1) Electric utilities that serve at least 1,000,000 customers must provide tariffed service to Unit Owners' Associations, as defined by Section 2 of the Condominium Property Act, for condominium properties that are not restricted to nonresidential use at rates that do not exceed the rates offered to residential customers. Within 10 days after the effective date of this amendatory Act of the 95th General Assembly, each electric utility shall provide the tariffed service to Unit Owners' Associations required by this subsection and shall reinstate any all-electric discount applicable to any Unit Owners' Association that received such a discount on December 31, 2006.

(d) Any residential or small commercial retail customer which elects delivery services is entitled to return to the electric utility's bundled utility tariffed service offering provided in accordance with subsection (c) of this Section upon payment of a reasonable administrative fee which shall be set forth in the tariff, provided, however, that the electric utility shall be entitled to impose the condition that such customer may not elect delivery services for up to 24 months thereafter.

(e) Notwithstanding any other provision of this Section or this Act, on and after the effective date of this amendatory Act of the 95th General Assembly, the Illinois Power Authority has sole authority to implement and execute the process of procuring electricity for electric utilities that on January 2, 2007 served over 100,000 customers. The Commission shall not require an electric utility to offer any tariffed service other than the services required by this Section, and shall not require an electric utility to offer any competitive service.

(Source: P.A. 90-561, eff. 12-16-97.)

(220 ILCS 5/16-111)

Sec. 16-111. Rates and restructuring transactions during mandatory transition period.

(a) During the mandatory transition period, notwithstanding any provision of Article IX of this Act, and except as provided in subsections (b), (d), (e), and (f) of this Section, the Commission shall order each electric utility that, on December 31, 2005, served at least 100,000 customers in this State to file and implement tariffs: (A) to reinstate, within 10 days after the effective date of this amendatory Act of the 95th General Assembly, all rates charged to the electric utility's customers on December 31, 2006, except that the utility may charge any rate under any delivery services tariff of the utility that became effective on or after January 2, 2007; and (B) to refund to the utility's customers any amounts charged to those customers, from January 2, 2007 until 10 days after the effective date of this amendatory Act of the 95th General Assembly, that exceed the rates charged to the electric utility's customers on December 31, 2006, not including any rate charged under any delivery services tariff of the utility that became effective on or after January 2, 2007. This refund:

(1) must be issued no later than October 1, 2007;

(2) must be made by a negotiable check of the utility to be paid to the order of the customer;

(3) must include interest on the full amount of the refund, beginning January 2, 2007, at the same interest rate the Commission requires utilities to pay on customer deposits; and

(4) must be accompanied by a notice that states, in at least 14-point bold type, "THIS REFUND IS MADE IN ACCORDANCE WITH A MANDATE OF THE GENERAL ASSEMBLY OF THE STATE OF ILLINOIS." No other communication may be contained in the envelope with the refund check and no other communication concerning the refund may be contained on the notice, check, or envelope. After electric rates are reinstated in accordance with this subsection (a), the Commission shall not, prior to July 1, 2008, (i) initiate, authorize or order any change by way of increase to those components of the reinstated rates that reflect the cost of electric energy (other than in connection with a request for rate increase which was filed after September 1, 1997 but prior to October 15, 1997, by an electric utility serving less than 12,500 customers in this State) or (ii) , (ii) initiate or, unless requested by the electric utility, authorize or order any change by way of decrease, restructuring or unbundling (except as provided in Section 16-109A), in the rates of any electric utility that were in effect on October 1, 1996, or (iii) in any order approving any application for a merger pursuant to Section 7-204 that was pending as of May 16, 1997, impose any condition requiring any filing for an increase, decrease, or change in, or other review of, an electric utility's rates or enforce any such condition of any such order. However, ; provided, however, that this subsection shall not prohibit the Commission from:

(1) (blank); approving the application of an electric utility to implement an alternative to rate of return regulation or a regulatory mechanism that rewards or penalizes the electric utility through adjustment of rates based on utility performance, pursuant to Section 9-244;

(2) authorizing an electric utility to eliminate its fuel adjustment clause and adjust its base rate tariffs in accordance with subsection (b), (d), or (f) of Section 9-220 of this Act, to fix its fuel adjustment factor in accordance with subsection (c) of Section 9-220 of this Act, or to eliminate its fuel adjustment clause in accordance with subsection (e) of Section 9-220 of this Act;

(3) ordering into effect tariffs for delivery services and transition charges in accordance with Sections 16-104 and 16-108, for real-time pricing in accordance with Section 16-107, or the options required by Section 16-110 and subsection (n) of 16-112, allowing a billing experiment in accordance with Section 16-106, or modifying delivery services tariffs in accordance with Section 16-109; or

(4) ordering or allowing into effect any tariff to recover charges pursuant to Sections 9-201.5, 9-220.1, 9-221, 9-222 (except as provided in Section 9-222.1), 16-108, and 16-114 of this Act, Section 5-5 of the Electricity Infrastructure Maintenance Fee Law, Section 6-5 of the Renewable Energy, Energy Efficiency, and Coal Resources Development Law of 1997, and Section 13 of the Energy Assistance Act.

After December 31, 2004, the provisions of this subsection (a) shall not apply to an electric utility whose average residential retail rate was less than or equal to 90% of the average residential retail rate for the "Midwest Utilities", as that term is defined in subsection (b) of this Section, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995, and which served between 150,000 and 250,000 retail customers in this State on January 1, 1995 unless the electric utility or its holding company has been acquired by or merged with an affiliate of another electric utility subsequent to January 1, 2002. This exemption shall be limited to this subsection (a) and shall not extend to any other provisions of this Act.

(a-5) During the remainder of the mandatory transition period, if any, the Commission may modify rates only in accordance with Article IX of this Act.

(b) Notwithstanding the provisions of subsection (a), each Illinois electric utility serving more than 12,500 customers in Illinois shall file tariffs (i) reducing, effective August 1, 1998, each component of its base rates to residential retail customers by 15% from the base rates in effect immediately prior to January 1, 1998 and (ii) if the public utility provides electric service to (A) more than 500,000 customers but less than 1,000,000 customers in this State on January 1, 1999, reducing, effective May 1, 2002, each component of its base rates to residential retail customers by an additional 5% from the base rates in effect immediately prior to January 1, 1998, or (B) at least 1,000,000 customers in this State on January 1, 1999, reducing, effective October 1, 2001, each component of its base rates to residential retail customers by an additional 5% from the base rates in effect immediately prior to January 1, 1998. Provided, however, that (A) if an electric utility's average residential retail rate is less than or equal to the average residential retail rate for a group of Midwest Utilities (consisting of all investor-owned electric utilities with annual system peaks in excess of 1000 megawatts in the States of Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, Ohio, and Wisconsin), based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995, then it shall only be required to file tariffs (i) reducing, effective August 1, 1998, each component of its base rates to residential retail customers by 5% from the base rates in effect immediately prior to January 1, 1998, (ii) reducing, effective October 1, 2000, each component of its base rates to residential retail customers by the lesser of 5% of the base rates in effect immediately prior to January 1, 1998 or the percentage by which the electric utility's average residential retail rate exceeds the average residential retail rate of the Midwest Utilities, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1999, and (iii) reducing, effective October 1, 2002, each component of its base rates to residential retail customers by an additional amount equal to the lesser of 5% of the base rates in effect immediately prior to January 1, 1998 or the percentage by which the electric utility's average residential retail rate exceeds the average residential retail rate of the Midwest Utilities, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 2001; and (B) if the average residential retail rate of an electric utility serving between 150,000 and 250,000 retail customers in this State on January 1, 1995 is less than or equal to 90% of the average residential retail rate for the Midwest Utilities, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995, then it shall only be required to file tariffs (i) reducing, effective August 1, 1998, each component of its base rates to residential retail customers by 2% from the base rates in effect immediately prior to January 1, 1998; (ii) reducing, effective October 1, 2000, each component of its base rates to residential retail customers by 2% from the base rate in effect immediately prior to January 1, 1998; and (iii) reducing, effective October 1, 2002, each component of its base rates to residential retail customers by 1% from the base rates in effect immediately prior to January 1, 1998. Provided, further, that any electric utility for which a decrease in base rates has been or is placed into effect between October 1, 1996 and the dates specified in the preceding sentences of this subsection, other than pursuant to the requirements of this subsection, shall be entitled to reduce the amount of any reduction or reductions in its base rates required by this subsection by the amount of such other decrease. The tariffs required under this subsection shall be filed 45 days in advance of the effective date. Notwithstanding anything to the contrary in Section 9-220 of this Act, no restatement of base rates in conjunction with the elimination of a fuel adjustment clause under that Section shall result in a lesser decrease in base rates than customers would otherwise receive under this subsection had the electric utility's fuel adjustment clause not been eliminated.

(c) Any utility reducing its base rates by 15% on August 1, 1998 pursuant to subsection (b) shall include the following statement on its bills for residential customers from August 1 through December 31, 1998: "Effective August 1, 1998, your rates have been reduced by 15% by the Electric Service Customer Choice and Rate Relief Law of 1997 passed by the Illinois General Assembly.". Any utility reducing its base rates by 5% on August 1, 1998, pursuant to subsection (b) shall include the following statement on its bills for residential customers from August 1 through December 31, 1998: "Effective August 1, 1998, your rates have been reduced by 5% by the Electric Service Customer Choice and Rate Relief Law of 1997 passed by the Illinois General Assembly.".

Any utility reducing its base rates by 2% on August 1, 1998 pursuant to subsection (b) shall include the following statement on its bills for residential customers from August 1 through December 31, 1998: "Effective August 1, 1998, your rates have been reduced by 2% by the Electric Service Customer Choice and Rate Relief Law of 1997 passed by the Illinois General Assembly.".

(d) (Blank). During the mandatory transition period, but not before January 1, 2000, and notwithstanding the provisions of subsection (a), an electric utility may request an increase in its base rates if the electric utility demonstrates that the 2-year average of its earned rate of return on common equity, calculated as its net income applicable to common stock divided by the average of its beginning and ending balances of common equity using data reported in the electric utility's Form 1 report to the Federal Energy Regulatory Commission but adjusted to remove the effects of accelerated depreciation or amortization or other transition or mitigation measures implemented by the electric utility pursuant to subsection (g) of this Section and the effect of any refund paid pursuant to subsection (e) of this Section, is below the 2-year average for the same 2 years of the monthly average yields of 30-year U.S. Treasury bonds published by the Board of Governors of the Federal Reserve System in its weekly H.15 Statistical Release or successor publication. The Commission shall review the electric utility's request, and may review the justness and reasonableness of all rates for tariffed services, in accordance with the provisions of Article IX of this Act, provided that the Commission shall consider any special or negotiated adjustments to the revenue requirement agreed to between the electric utility and the other parties to the proceeding. In setting rates under this Section, the Commission shall exclude the costs and revenues that are associated with competitive services and any billing or pricing experiments conducted under Section 16-106.

(e) (Blank). For the purposes of this subsection (e) all calculations and comparisons shall be performed for the Illinois operations of multijurisdictional utilities. During the mandatory transition period, notwithstanding the provisions of subsection (a), if the 2-year average of an electric utility's earned rate of return on common equity, calculated as its net income applicable to common stock divided by the average of its beginning and ending balances of common equity using data reported in the electric utility's Form 1 report to the Federal Energy Regulatory Commission but adjusted to remove the effect of any refund paid under this subsection (e), and further adjusted to include the annual amortization of any difference between the consideration received by an affiliated interest of the electric utility in the sale of an asset which had been sold or transferred by the electric utility to the affiliated interest subsequent to the effective date of this amendatory Act of 1997 and the consideration for which such asset had been sold or transferred to the affiliated interest, with such difference to be amortized ratably from the date of the sale by the affiliated interest to December 31, 2006, exceeds the 2-year average of the Index for the same 2 years by 1.5 or more percentage points, the electric utility shall make refunds to customers beginning the first billing day of April in the following year in the manner described in paragraph (3) of this subsection. For purposes of this subsection (e), the "Index" shall be the sum of (A) the average for the 12 months ended September 30 of the monthly average yields of 30-year U.S. Treasury bonds published by the Board of Governors of the Federal Reserve System in its weekly H.15 Statistical Release or successor publication for each year 1998 through 2006, and (B) (i) 4.00 percentage points for each of the 12-month periods ending September 30, 1998 through September 30, 1999 or 8.00 percentage points if the electric utility's average residential retail rate is less than or equal to 90% of the average residential retail rate for the "Midwest Utilities", as that term is defined in subsection (b) of this Section, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995, and the electric utility served between 150,000 and 250,000 retail customers on January 1, 1995, (ii) 7.00 percentage points for each of the 12-month periods ending September 30, 2000 through September 30, 2006 if the electric utility was providing service to at least 1,000,000 customers in this State on January 1, 1999, or 9.00 percentage points if the electric utility's average residential retail rate is less than or equal to 90% of the average residential retail rate for the "Midwest Utilities", as that term is defined in subsection (b) of this Section, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995 and the electric utility served between 150,000 and 250,000 retail customers in this State on January 1, 1995, (iii) 11.00 percentage points for each of the 12-month periods ending September 30, 2000 through September 30, 2006, but only if the electric utility's average residential retail rate is less than or equal to 90% of the average residential retail rate for the "Midwest Utilities", as that term is defined in subsection (b) of this Section, based on data reported on Form 1 to the Federal Energy Regulatory Commission for calendar year 1995, the electric utility served between 150,000 and 250,000 retail customers in this State on January 1, 1995, and the electric utility offers delivery services on or before June 1, 2000 to retail customers whose annual electric energy use comprises 33% of the kilowatt hour sales to that group of retail customers that are classified under Division D, Groups 20 through 39 of the Standard Industrial Classifications set forth in the Standard Industrial Classification Manual published by the United States Office of Management and Budget, excluding the kilowatt hour sales to those customers that are eligible for delivery services pursuant to Section 16-104(a)(1)(i), and offers delivery services to its remaining retail customers classified under Division D, Groups 20 through 39 on or before October 1, 2000, and, provided further, that the electric utility commits not to petition pursuant to Section 16-108(f) for entry of an order by the Commission authorizing the electric utility to implement transition charges for an additional period after December 31, 2006, or (iv) 5.00 percentage points for each of the 12-month periods ending September 30, 2000 through September 30, 2006 for all other electric utilities or 7.00 percentage points for such utilities for each of the 12-month periods ending September 30, 2000 through September 30, 2006 for any such utility that commits not to petition pursuant to Section 16-108(f) for entry of an order by the Commission authorizing the electric utility to implement transition charges for an additional period after December 31, 2006 or 11.00 percentage points for each of the 12-month periods ending September 30, 2005 and September 30, 2006 for each electric utility providing service to fewer than 6,500, or between 75,000 and 150,000, electric retail customers in this State on January 1, 1995 if such utility commits not to petition pursuant to Section 16-108(f) for entry of an order by the Commission authorizing the electric utility to implement transition charges for an additional period after December 31, 2006.

(1) For purposes of this subsection (e), "excess earnings" means the difference between (A) the 2-year average of the electric utility's earned rate of return on common equity, less (B) the 2-year average of the sum of (i) the Index applicable to each of the 2 years and (ii) 1.5 percentage points; provided, that "excess earnings" shall never be less than zero.

(2) On or before March 31 of each year 2000 through 2007 each electric utility shall file a report with the Commission showing its earned rate of return on common equity, calculated in accordance with this subsection, for the preceding calendar year and the average for the preceding 2 calendar years.

(3) If an electric utility has excess earnings, determined in accordance with paragraphs (1) and (2) of this subsection, the refunds which the electric utility shall pay to its customers beginning the first billing day of April in the following year shall be calculated and applied as follows:

(i) The electric utility's excess earnings shall be multiplied by the average of the beginning and ending balances of the electric utility's common equity for the 2-year period in which excess earnings occurred.

(ii) The result of the calculation in (i) shall be multiplied by 0.50 and then divided by a number equal to 1 minus the electric utility's composite federal and State income tax rate.

(iii) The result of the calculation in (ii) shall be divided by the sum of the electric utility's projected total kilowatt-hour sales to retail customers plus projected kilowatt-hours to be delivered to delivery services customers over a one year period beginning with the first billing date in April in the succeeding year to determine a cents per kilowatt-hour refund factor.

(iv) The cents per kilowatt-hour refund factor calculated in (iii) shall be credited to the electric utility's customers by applying the factor on the customer's monthly bills to each kilowatt-hour sold or delivered until the total amount calculated in (ii) has been paid to customers.

(f) During the mandatory transition period, an electric utility may file revised tariffs reducing the price of any tariffed service offered by the electric utility for all customers taking that tariffed service, which shall be effective 7 days after filing.

(g) During the mandatory transition period, an electric utility may, without obtaining any approval of the Commission other than that provided for in this subsection and notwithstanding any other provision of this Act or any rule or regulation of the Commission that would require such approval:

(1) implement a reorganization, other than a merger of 2 or more public utilities as defined in Section 3-105 or their holding companies;

(2) retire generating plants from service;

(3) sell, assign, lease or otherwise transfer assets to an affiliated or unaffiliated entity and as part of such transaction enter into service agreements, power purchase agreements, or other agreements with the transferee; provided, however, that the prices, terms and conditions of any power purchase agreement must be approved or allowed into effect by the Federal Energy Regulatory Commission; or

(4) use any accelerated cost recovery method including accelerated depreciation, accelerated amortization or other capital recovery methods, or record reductions to the original cost of its assets.

In order to implement a reorganization, retire generating plants from service, or sell, assign, lease or otherwise transfer assets pursuant to this Section, the electric utility shall comply with subsections (c) and (d) of Section 16-128, if applicable, and subsection (k) of this Section, if applicable, and provide the Commission with at least 30 days notice of the proposed reorganization or transaction, which notice shall include the following information:

(i) a complete statement of the entries that the electric utility will make on its books and records of account to implement the proposed reorganization or transaction together with a certification from an independent certified public accountant that such entries are in accord with generally accepted accounting principles and, if the Commission has previously approved guidelines for cost allocations between the utility and its affiliates, a certification from the chief accounting officer of the utility that such entries are in accord with those cost allocation guidelines;

(ii) a description of how the electric utility will use proceeds of any sale, assignment, lease or transfer to retire debt or otherwise reduce or recover the costs of services provided by such electric utility;

(iii) a list of all federal approvals or approvals required from departments and agencies of this State, other than the Commission, that the electric utility has or will obtain before implementing the reorganization or transaction;

(iv) an irrevocable commitment by the electric utility that it will not, as a result of the transaction, impose any stranded cost charges that it might otherwise be allowed to charge retail customers under federal law or increase the transition charges that it is otherwise entitled to collect under this Article XVI; and

(v) if the electric utility proposes to sell, assign, lease or otherwise transfer a generating plant that brings the amount of net dependable generating capacity transferred pursuant to this subsection to an amount equal to or greater than 15% of the electric utility's net dependable capacity as of the effective date of this amendatory Act of 1997, and enters into a power purchase agreement with the entity to which such generating plant is sold, assigned, leased, or otherwise transferred, the electric utility also agrees, if its fuel adjustment clause has not already been eliminated, to eliminate its fuel adjustment clause in accordance with subsection (b) of Section 9-220 for a period of time equal to the length of any such power purchase agreement or successor agreement, or until January 1, 2005, whichever is longer; if the capacity of the generating plant so transferred and related power purchase agreement does not result in the elimination of the fuel adjustment clause under this subsection, and the fuel adjustment clause has not already been eliminated, the electric utility shall agree that the costs associated with the transferred plant that are included in the calculation of the rate per kilowatt-hour to be applied pursuant to the electric utility's fuel adjustment clause during such period shall not exceed the per kilowatt-hour cost associated with such generating plant included in the electric utility's fuel adjustment clause during the full calendar year preceding the transfer, with such limit to be adjusted each year thereafter by the Gross Domestic Product Implicit Price Deflator.

(vi) In addition, if the electric utility proposes to sell, assign, or lease, (A) either (1) an amount of generating plant that brings the amount of net dependable generating capacity transferred pursuant to this subsection to an amount equal to or greater than 15% of its net dependable capacity on the effective date of this amendatory Act of 1997, or (2) one or more generating plants with a total net dependable capacity of 1100 megawatts, or (B) transmission and distribution facilities that either (1) bring the amount of transmission and distribution facilities transferred pursuant to this subsection to an amount equal to or greater than 15% of the electric utility's total depreciated original cost investment in such facilities, or (2) represent an investment of $25,000,000 in terms of total depreciated original cost, the electric utility shall provide, in addition to the information listed in subparagraphs (i) through (v), the following information: (A) a description of how the electric utility will meet its service obligations under this Act in a safe and reliable manner and (B) the electric utility's projected earned rate of return on common equity, calculated in accordance with subsection (d) of this Section, for each year from the date of the notice through December 31, 2006 both with and without the proposed transaction. If the Commission has not issued an order initiating a hearing on the proposed transaction within 30 days after the date the electric utility's notice is filed, the transaction shall be deemed approved. The Commission may, after notice and hearing, prohibit the proposed transaction if it makes either or both of the following findings: (1) that the proposed transaction will render the electric utility unable to provide its tariffed services in a safe and reliable manner, or (2) that there is a strong likelihood that consummation of the proposed transaction will result in the electric utility being entitled to request an increase in its base rates during the mandatory transition period pursuant to subsection (d) of this Section. Any hearing initiated by the Commission into the proposed transaction shall be completed, and the Commission's final order approving or prohibiting the proposed transaction shall be entered, within 90 days after the date the electric utility's notice was filed. Provided, however, that a sale, assignment, or lease of transmission facilities to an independent system operator that meets the requirements of Section 16-126 shall not be subject to Commission approval under this Section.

In any proceeding conducted by the Commission pursuant to this subparagraph (vi), intervention shall be limited to parties with a direct interest in the transaction which is the subject of the hearing and any statutory consumer protection agency as defined in subsection (d) of Section 9-102.1. Notwithstanding the provisions of Section 10-113 of this Act, any application seeking rehearing of an order issued under this subparagraph (vi), whether filed by the electric utility or by an intervening party, shall be filed within 10 days after service of the order.

The Commission shall not in any subsequent proceeding or otherwise, review such a reorganization or other transaction authorized by this Section, but shall retain the authority to allocate costs as stated in Section 16-111(i). An entity to which an electric utility sells, assigns, leases or transfers assets pursuant to this subsection (g) shall not, as a result of the transactions specified in this subsection (g), be deemed a public utility as defined in Section 3-105. Nothing in this subsection (g) shall change any requirement under the jurisdiction of the Illinois Department of Nuclear Safety including, but not limited to, the payment of fees. Nothing in this subsection (g) shall exempt a utility from obtaining a certificate pursuant to Section 8-406 of this Act for the construction of a new electric generating facility. Nothing in this subsection (g) is intended to exempt the transactions hereunder from the operation of the federal or State antitrust laws. Nothing in this subsection (g) shall require an electric utility to use the procedures specified in this subsection for any of the transactions specified herein. Any other procedure available under this Act may, at the electric utility's election, be used for any such transaction.

(h) During the mandatory transition period, the Commission shall not establish or use any rates of depreciation, which for purposes of this subsection shall include amortization, for any electric utility other than those established pursuant to subsection (c) of Section 5-104 of this Act or utilized pursuant to subsection (g) of this Section. Provided, however, that in any proceeding to review an electric utility's rates for tariffed services pursuant to Section 9-201, 9-202, 9-250 or 16-111(d) of this Act, the Commission may establish new rates of depreciation for the electric utility in the same manner provided in subsection (d) of Section 5-104 of this Act. An electric utility implementing an accelerated cost recovery method including accelerated depreciation, accelerated amortization or other capital recovery methods, or recording reductions to the original cost of its assets, pursuant to subsection (g) of this Section, shall file a statement with the Commission describing the accelerated cost recovery method to be implemented or the reduction in the original cost of its assets to be recorded. Upon the filing of such statement, the accelerated cost recovery method or the reduction in the original cost of assets shall be deemed to be approved by the Commission as though an order had been entered by the Commission.

(i) Subsequent to the mandatory transition period, the Commission, in any proceeding to establish rates and charges for tariffed services offered by an electric utility, may shall consider, among other factors, only (1) the then current or projected revenues, costs, investments and cost of capital directly or indirectly associated with the provision of such tariffed services; (2) collection of transition charges in accordance with Sections 16-102 and 16-108 of this Act; (3) recovery of any employee transition costs as described in Section 16-128 which the electric utility is continuing to incur, including recovery of any unamortized portion of such costs previously incurred or committed, with such costs to be equitably allocated among bundled services, delivery services, and contracts with alternative retail electric suppliers; and (4) recovery of the costs associated with the electric utility's compliance with decommissioning funding requirements; and shall not consider any other revenues, costs, investments or cost of capital of either the electric utility or of any affiliate of the electric utility that are not associated with the provision of tariffed services. In setting rates for tariffed services, the Commission shall equitably allocate joint and common costs and investments between the electric utility's competitive and tariffed services. In determining the justness and reasonableness of the electric power and energy component of an electric utility's rates for tariffed services subsequent to the mandatory transition period and prior to the time that the provision of such electric power and energy is declared competitive, the Commission shall consider the extent to which the electric utility's tariffed rates for such component for each customer class exceed the market value determined pursuant to Section 16-112, and, if the electric power and energy component of such tariffed rate exceeds the market value by more than 10% for any customer class, may establish such electric power and energy component at a rate equal to the market value plus 10%. In any such case, the Commission may also elect to extend the provisions of Section 16-111(e) for any period in which the electric utility is collecting transition charges, using information applicable to such period.

(j) During the mandatory transition period, an electric utility may elect to transfer to a non-operating income account under the Commission's Uniform System of Accounts either or both of (i) an amount of unamortized investment tax credit that is in addition to the ratable amount which is credited to the electric utility's operating income account for the year in accordance with Section 46(f)(2) of the federal Internal Revenue Code of 1986, as in effect prior to P.L. 101-508, or (ii) "excess tax reserves", as that term is defined in Section 203(e)(2)(A) of the federal Tax Reform Act of 1986, provided that (A) the amount transferred may not exceed the amount of the electric utility's assets that were created pursuant to Statement of Financial Accounting Standards No. 71 which the electric utility has written off during the mandatory transition period, and (B) the transfer shall not be effective until approved by the Internal Revenue Service. An electric utility electing to make such a transfer shall file a statement with the Commission stating the amount and timing of the transfer for which it intends to request approval of the Internal Revenue Service, along with a copy of its proposed request to the Internal Revenue Service for a ruling. The Commission shall issue an order within 14 days after the electric utility's filing approving, subject to receipt of approval from the Internal Revenue Service, the proposed transfer.

(k) If an electric utility is selling or transferring to a single buyer 5 or more generating plants located in this State with a total net dependable capacity of 5000 megawatts or more pursuant to subsection (g) of this Section and has obtained a sale price or consideration that exceeds 200% of the book value of such plants, the electric utility must provide to the Governor, the President of the Illinois Senate, the Minority Leader of the Illinois Senate, the Speaker of the Illinois House of Representatives, and the Minority Leader of the Illinois House of Representatives no later than 15 days after filing its notice under subsection (g) of this Section or 5 days after the date on which this subsection (k) becomes law, whichever is later, a written commitment in which such electric utility agrees to expend $2 billion outside the corporate limits of any municipality with 1,000,000 or more inhabitants within such electric utility's service area, over a 6-year period beginning with the calendar year in which the notice is filed, on projects, programs, and improvements within its service area relating to transmission and distribution including, without limitation, infrastructure expansion, repair and replacement, capital investments, operations and maintenance, and vegetation management.

(l) The provisions of this amendatory Act of the 95th General Assembly relating to (i) the reinstatement of rates and (ii) refunds to customers are separate issues and severable. If either of those provisions or its application to any person or circumstance is held invalid, then the invalidity of that provision or application does not affect the other provision or its application. This subsection (l) does not in any way limit the general severability clause of Section 99-97 of this amendatory Act of the 95th General Assembly.

(Source: P.A. 91-50, eff. 6-30-99; 92-537, eff. 6-6-02; 92-690, eff. 7-18-02; revised 9-10-02.)

(220 ILCS 5/16-113)

Sec. 16-113. Declaration of service as a competitive service.

(a) An electric utility may, by petition, request the Commission to declare a tariffed service provided by the electric utility to be a competitive service. The electric utility shall give notice of its petition to the public in the same manner that public notice is provided for proposed general increases in rates for tariffed services, in accordance with rules and regulations prescribed by the Commission. The Commission shall hold a hearing and on the petition if a hearing is deemed necessary by the Commission. The Commission shall declare the class of tariffed service to be a competitive service for some identifiable customer segment or group of customers, or some clearly defined geographical area within the electric utility's service area, only after the electric utility demonstrates that at least 33% of the customers in the electric utility's service area that are eligible to take the class of tariffed service instead take service from alternative retail electric suppliers, as defined in Section 16-102, and that at least 3 alternative retail electric suppliers provide service that is comparable to the class of tariffed service to those customers in the utility's service area that do not take service from the electric utility; if the service or a reasonably equivalent substitute service is reasonably available to the customer segment or group or in the defined geographical area at a comparable price from one or more providers other than the electric utility or an affiliate of the electric utility, and the electric utility has lost or there is a reasonable likelihood that the electric utility will lose business for the service to the other provider or providers; provided, that the Commission may not declare the provision of electric power and energy to be competitive pursuant to this subsection with respect to (i) any retail customer or group of retail customers that is not eligible pursuant to Section 16-104 to take delivery services provided by the electric utility and (ii) any residential and small commercial retail customers prior to the last date on which such customers are required to pay transition charges. In determining whether to grant or deny a petition to declare the provision of electric power and energy competitive, the Commission shall consider, in applying the above criteria, whether there is adequate transmission capacity into the service area of the petitioning electric utility to make electric power and energy reasonably available to the customer segment or group or in the defined geographical area from one or more providers other than the electric utility or an affiliate of the electric utility, in accordance with this subsection. The Commission shall make its determination and issue its final order declaring or refusing to declare the service to be a competitive service within 180 120 days following the date that the petition is filed, or otherwise the petition shall be deemed to be granted; provided, that if the petition is deemed to be granted by operation of law, the Commission shall not thereby be precluded from finding and ordering, in a subsequent proceeding initiated by the Commission, and after notice and hearing, that the service is not competitive based on the criteria set forth in this subsection.

(b) Any customer except a customer identified in subsection (c) of Section 16-103 who is taking a tariffed service that is declared to be a competitive service pursuant to subsection (a) of this Section shall be entitled to continue to take the service from the electric utility on a tariffed basis for a period of 3 years following the date that the service is declared competitive, or such other period as is stated in the electric utility's tariff pursuant to Section 16-110. This subsection shall not require the electric utility to offer or provide on a tariffed basis any service to any customer (except those customers identified in subsection (c) of Section 16-103) that was not taking such service on a tariffed basis on the date the service was declared to be competitive.

(c) If the Commission denies a petition to declare a service to be a competitive service, or determines in a separate proceeding that a service is not competitive based on the criteria set forth in subsection (a), the electric utility may file a new petition no earlier than 6 months following the date of the Commission's order, requesting, on the basis of additional or different facts and circumstances, that the service be declared to be a competitive service.

(d) The Commission shall not deny a petition to declare a service to be a competitive service, and shall not find that a service is not a competitive service, on the grounds that it has previously denied the petition of another electric utility to declare the same or a similar service to be a competitive service or has previously determined that the same or a similar service provided by another electric utility is not a competitive service.

(e) An electric utility may declare a service, other than delivery services or the provision of electric power or energy, to be competitive by filing with the Commission at least 14 days prior to the date on which the service is to become competitive a notice describing the service that is being declared competitive and the date on which it will become competitive; provided, that any customer who is taking a tariffed service that is declared to be a competitive service pursuant to this subsection (e) shall be entitled to continue to take the service from the electric utility on a tariffed basis until the electric utility files, and the Commission grants, a petition to declare the service competitive in accordance with subsection (a) of this Section. The Commission shall be authorized to find and order, after notice and hearing in a subsequent proceeding initiated by the Commission, that any service declared to be competitive pursuant to this subsection (e) is not competitive in accordance with the criteria set forth in subsection (a) of this Section.

(Source: P.A. 90-561, eff. 12-16-97.)

(220 ILCS 5/16-135 new)

Sec. 16-135. The Consumers Overbilled and Reimbursed for Electricity Fund.

(a) The Consumers Overbilled and Reimbursed for Electricity Fund is created as a special fund in the State treasury. Subject to appropriation, moneys in the Fund shall be distributed and paid or credited as provided in this Section. Income earned on amounts in the Fund shall be deposited into the Fund.

(b) No later than November 2007, the Department of Revenue shall make payments from the Fund to each utility that has made refunds under item (B) in subsection (a) of Section 16-111 in the amount of those refunds made by the utility together with interest that is reasonably incurred from the date that the refunds were made to the date of payment to the utility under this subsection.

(c) Beginning 10 days after the effective date of this amendatory Act of the 95th General Assembly and through the end of the calendar month in which that date occurs constitutes the first rate-reduction month. Thereafter, each calendar month constitutes a rate-reduction month.

(d) For each rate-reduction month, the Department of Revenue shall make a payment from the Fund to each utility that is subject to subsection (a) of Section 16-111. Payments shall be made each calendar month beginning December 2007. The payment to each such utility for a rate-reduction month shall be in an amount equal to (i) the number of total kilowatt hours used by the utility's customers during the billing periods ending in the rate-reduction month, multiplied by (ii) a rate determined by subtracting the rate charged to the utility's customers on December 31, 2006 from the rate charged to the utility's customers on January 2, 2007 for each rate-reduction month through the rate-reduction month of June 2008; 66% of that amount for each rate-reduction month from July 2008 through June 2009; 33% of that amount for each rate-reduction month from July 2009 through June 2010; and none thereafter. For the purpose of calculating the payment under this subsection, the rate charged to the utility's customers on January 2, 2007 does not include the portion of the rate charged under any delivery services tariff of the utility that became effective on January 2, 2007.

Payments under this subsection (d) shall include interest that is reasonably incurred; interest shall be calculated on the remaining balance beginning 10 days after the end of the rate-reduction month through the date of payment. If there is not a sufficient balance in the Fund to make the payment under this subsection (d), then the Department of Revenue shall pay each utility a pro-rata share of the balance of the Fund (less any amount necessary to make refunds under Section 5-65 of the Electricity Generator Tax Act) based on the amount of the payment owing to that utility compared to the total of payments owing to all such utilities. Payments shall be made first with respect to the earliest rate-reduction month for which payment has not been made in full.

(e) For each rate-reduction month through and including June 2008, if, during the entire rate-reduction month, the utility charged its customers the same rates charged to its customers on December 31, 2006 (plus any rate charged under any of the utility's delivery services tariffs that became effective on or after January 2, 2007), then the amount paid to the utility for that rate-reduction month shall be retained by the utility. Otherwise, the amount paid to the utility for that rate-reduction month shall immediately be credited to the customers of the utility prorated based on the total kilowatt hours used by the customer during the rate-reduction month as compared to the total kilowatt hours used by all customers of that utility during the rate-reduction month. The utility must identify the credit on the bill as a STATE FUNDED CREDIT and must insert a separate notice with the bill to the customer showing the credit. That notice must state the following in at least 14-point bold type:

THE "STATE FUNDED CREDIT" SHOWN ON THIS BILL WAS FUNDED IN ACCORDANCE WITH A MANDATE OF THE GENERAL ASSEMBLY OF THE STATE OF ILLINOIS. No other communication concerning the credit may be contained on the notice or the bill or any other material sent with the bill.

(f) All information necessary to implement and administer this Section must be provided by each utility to the Commission within 10 days after the end of each calendar month. The Commission shall then verify the information and make certifications to the Department of Revenue necessary for the Department to make payments under this Section.

If a utility, without good cause shown, does not provide accurate information within the 10-day period and the payment based on that information is required to be credited to its customers under subsection (e), then the utility must additionally credit its customers with interest, at the utility's expense, for the period during which the application of the credit is delayed. The interest shall be at the same rate that the Commission requires the utility to pay on customer deposits.

The Commission must, and has all powers necessary to, (i) fully enforce this Section and (ii) examine and audit the books and records of utilities to ensure compliance with this Section.

For the public interest, safety, and welfare, in order to initially implement this Section, the Commission is authorized to adopt emergency rules under Section 5-45 of the Illinois Administrative Procedure Act.

Section 3-10. The State Finance Act is amended by changing Section 8h and by adding Section 5.675 as follows:

(30 ILCS 105/5.675 new)

Sec. 5.675. The Consumers Overbilled and Reimbursed for Electricity Fund.

(30 ILCS 105/8h)

Sec. 8h. Transfers to General Revenue Fund.

(a) Except as otherwise provided in this Section and Section 8n of this Act, and (c), (d), or (e), notwithstanding any other State law to the contrary, the Governor may, through June 30, 2007, from time to time direct the State Treasurer and Comptroller to transfer a specified sum from any fund held by the State Treasurer to the General Revenue Fund in order to help defray the State's operating costs for the fiscal year. The total transfer under this Section from any fund in any fiscal year shall not exceed the lesser of (i) 8% of the revenues to be deposited into the fund during that fiscal year or (ii) an amount that leaves a remaining fund balance of 25% of the July 1 fund balance of that fiscal year. In fiscal year 2005 only, prior to calculating the July 1, 2004 final balances, the Governor may calculate and direct the State Treasurer with the Comptroller to transfer additional amounts determined by applying the formula authorized in Public Act 93-839 to the funds balances on July 1, 2003. No transfer may be made from a fund under this Section that would have the effect of reducing the available balance in the fund to an amount less than the amount remaining unexpended and unreserved from the total appropriation from that fund estimated to be expended for that fiscal year. This Section does not apply to any funds that are restricted by federal law to a specific use, to any funds in the Motor Fuel Tax Fund, the Intercity Passenger Rail Fund, the Hospital Provider Fund, the Medicaid Provider Relief Fund, the Teacher Health Insurance Security Fund, the Reviewing Court Alternative Dispute Resolution Fund, the Voters' Guide Fund, the Foreign Language Interpreter Fund, the Lawyers' Assistance Program Fund, the Supreme Court Federal Projects Fund, the Supreme Court Special State Projects Fund, the Supplemental Low-Income Energy Assistance Fund, the Good Samaritan Energy Trust Fund, the Low-Level Radioactive Waste Facility Development and Operation Fund, the Horse Racing Equity Trust Fund, or the Hospital Basic Services Preservation Fund, or to any funds to which subsection (f) of Section 20-40 of the Nursing and Advanced Practice Nursing Act applies. No transfers may be made under this Section from the Pet Population Control Fund. Notwithstanding any other provision of this Section, for fiscal year 2004, the total transfer under this Section from the Road Fund or the State Construction Account Fund shall not exceed the lesser of (i) 5% of the revenues to be deposited into the fund during that fiscal year or (ii) 25% of the beginning balance in the fund. For fiscal year 2005 through fiscal year 2007, no amounts may be transferred under this Section from the Road Fund, the State Construction Account Fund, the Criminal Justice Information Systems Trust Fund, the Wireless Service Emergency Fund, or the Mandatory Arbitration Fund.

In determining the available balance in a fund, the Governor may include receipts, transfers into the fund, and other resources anticipated to be available in the fund in that fiscal year.

The State Treasurer and Comptroller shall transfer the amounts designated under this Section as soon as may be practicable after receiving the direction to transfer from the Governor.

(a-5) Transfers directed to be made under this Section on or before February 28, 2006 that are still pending on May 19, 2006 (the effective date of Public Act 94-774) this amendatory Act of the 94th General Assembly shall be redirected as provided in Section 8n of this Act.

(b) This Section does not apply to: (i) the Ticket For The Cure Fund; (ii) any fund established under the Community Senior Services and Resources Act; or (iii) on or after January 1, 2006 (the effective date of Public Act 94-511), the Child Labor and Day and Temporary Labor Enforcement Fund.

(c) This Section does not apply to the Demutualization Trust Fund established under the Uniform Disposition of Unclaimed Property Act.

(d) This Section does not apply to moneys set aside in the Illinois State Podiatric Disciplinary Fund for podiatric scholarships and residency programs under the Podiatric Scholarship and Residency Act.

(e) Subsection (a) does not apply to, and no transfer may be made under this Section from, the Pension Stabilization Fund.

(f) This Section does not apply to the Consumers Overbilled and Reimbursed for Electricity Fund.

(Source: P.A. 93-32, eff. 6-20-03; 93-659, eff. 2-3-04; 93-674, eff. 6-10-04; 93-714, eff. 7-12-04; 93-801, eff. 7-22-04; 93-839, eff. 7-30-04; 93-1054, eff. 11-18-04; 93-1067, eff. 1-15-05; 94-91, eff. 7-1-05; 94-120, eff. 7-6-05; 94-511, eff. 1-1-06; 94-535, eff. 8-10-05; 94-639, eff. 8-22-05; 94-645, eff. 8-22-05; 94-648, eff. 1-1-06; 94-686, eff. 11-2-05; 94-691, eff. 11-2-05; 94-726, eff. 1-20-06; 94-773, eff. 5-18-06; 94-774, eff. 5-19-06; 94-804, eff. 5-26-06; 94-839, eff. 6-6-06; revised 6-19-06.)

Section 3-15. "An Act in relation to the competitive provision of utility services, amending named Acts", Public Act 90-561, approved December 16, 1997, is amended by changing Section 15 of Article I as follows:

(P.A. 90-561, Art. I, Sec. 15)

Sec. 15.

(a) If any provision added by this amendatory Act of 1997 is held invalid, this entire amendatory Act of 1997 shall be deemed invalid, and the provisions of Section 1.31, "Severability", of the Statute on Statutes are hereby expressly declared not applicable to this amendatory Act of 1997; provided, however (i) that any contracts entered into and performed, transactions completed, orders issued, services provided, billings rendered, or payments made in accordance with the provisions of this amendatory Act of 1997, other than as provided in clause (ii) below, prior to the date of the determination of such invalidity, shall not thereby be rendered invalid; (ii) that no presumption as to the validity or invalidity of any contracts, transactions, orders, billings, or payments pursuant to Article XVIII of the Public Utilities Act shall result from a determination of invalidity of this amendatory Act of 1997; and (iii) that the provisions of proviso (i) shall not be deemed to preserve the validity of any executory contracts or transactions, of any actions to be taken pursuant to orders issued, or of any services to be performed, billings to be rendered, or payments to be made, pursuant to provisions of this amendatory Act of 1997 subsequent to the date of determination of such invalidity.

(b) This Section applies only to Public Act 90-561; this Section does not apply to any Public Act (i) with an effective date after the effective date of Public Act 90-561 and (ii) that amends, adds to, or otherwise affects the provisions added by Public Act 90-561.

(Source: P.A. 90-561.)

ARTICLE 4

Section 4-1. Short title. This Article may be cited as the Illinois Power Authority Act. References in this Article to "this Act" mean this Article.

Section 4-5. Legislative findings and declarations. The General Assembly hereby finds and declares all of the following:

(1) The health, welfare, and prosperity of all Illinois citizens require the provision of adequate, efficient, reliable, environmentally safe, and least-cost electric service at prices that accurately reflect the long-term average cost of such services and that are equitable to all citizens, and that public utilities and alternative retail electric suppliers have failed to provide electric service that meets all of these criteria.

(2) Escalating and excessive prices for electricity in the State of Illinois pose a serious threat to the economic well-being, health, and safety of the residents of and the commerce and industry in the State.

(3) There is a lack of confidence that the electricity needs of residents, commerce, and industry can be supplied in a reliable, efficient, and economical manner in Illinois because ComEd and AmerenIP, AmerenCIPS, and AmerenCILCO have (i) increased their rates unreasonably and unnecessarily; (ii) repeatedly threatened bankruptcy; (iii) failed to maintain their transmission and distribution systems in a manner that ensures reliability; and (iv) in some cases, failed to restore power to customers for more than a week after an outage.

(4) The excessive rates and lack of confidence have deterred commerce and industry from locating in Illinois and have caused existing commerce and industry to seriously consider moving out of the State.

(5) The auction that ComEd and Ameren used to procure electricity resulted in rate increases of 26% to 55%, causing consumers' electric bills to skyrocket and straining the budgets of small and large ratepayers in the State. Some bill increases have been between 100% and 300%. Further substantial rate increases have been forecast by the utilities.

(6) These matters of State concern can best be addressed by creating a publicly-owned power authority. Such an authority can best accomplish the purposes and objectives of this Act by planning, procuring, generating, and supplying power for use by residents and businesses in the State.

The General Assembly therefore finds that it is necessary to create the Illinois Power Authority and that the goals and objectives of such Authority shall be to:

(A) prepare an annual integrated resource plan that identifies the least-cost mix of electric generating, energy-efficiency, and demand-response resources needed to serve Illinois residents and businesses 20 years into the future;

(B) procure least-cost electricity, energy efficiency and demand-response resources through competitive procurement processes to meet the electricity needs of all customers of electric utilities that on January 2, 2007 served at least 100,000 customers;

(C) construct, improve, rehabilitate, and operate electric generation and cogeneration facilities that use indigenous coal or renewable resources, or both, financed with bonds issued by the Illinois Power Authority; and

(D) supply electricity from the Authority's facilities at cost to municipal electric systems, municipal aggregators, and rural electric cooperatives in Illinois.

The General Assembly declares that the Authority's coal generating facilities shall use only Illinois coal and will provide safe and adequate service at rates that will be lower than the rates that would otherwise result and will facilitate investment in more beneficial energy and demand-side management alternatives, resulting in savings for consumers in the State and otherwise restoring the confidence and protecting the interests of consumers and the economy in the State. Moreover, competition with investor-owned utilities by the authority will result in an improved system, and reduction of future costs, a safer, more efficient, reliable, and economical supply of electric energy. The General Assembly further declares that the Authority shall use, to the fullest extent practical, all economical means of conservation, and technologies that rely on renewable energy resources, cogeneration, and improvements in energy efficiency that will benefit the interests of consumers of the State.

Section 4-10. Definitions. In this Act, unless a different meaning clearly appears from the context:

"Acquire" means, with respect to any right, title, or interest in or to any property, the act of taking by the exercise of the power of eminent domain, or acquisition by purchase or otherwise.

"Act" means the Illinois Power Authority Act.

"Authority" means the Illinois Power Authority.

"Board" means the board of trustees of the Authority.

"Bonds" or "notes" mean the bonds, notes, or other obligations issued by the Authority pursuant to this Act.

"Facility" means an electric generating unit or a cogeneration unit that produces electricity.

"Federal government" means the United States of America and any agency or instrumentality, corporate or otherwise, of the United States of America.

"Local government" means any unit of local government, as defined in Section 1 of Article VII of the Illinois Constitution, and any school district.

"Municipal electric system" means a municipality that owns and operates its own electric distribution system.

"Municipal aggregator" means one or more units of local government that procure electricity to serve residential retail electrical loads located within its or their jurisdiction.

"Project" means an action undertaken by the Authority that:

(i) causes the Authority to issue bonds, notes, or other obligations, or shares in any subsidiary corporation;

(ii) significantly modifies the use of an asset valued at more than $1,000,000 owned by the Authority or involves the sale, lease, or other disposition of such an asset; or

(iii) commits the Authority to a contract or agreement with a total consideration of greater than $1,000,000 and does not involve the day-to-day operations of the Authority.

"Real property" means lands, structures, franchises, and interests in land, including lands under water and riparian rights, and all other things and rights usually included within that term, and includes also all interests in such property less than full title, such as easements, rights-of-way, uses, leases, licenses, and all other incorporeal hereditaments and every estate, interest, or right, legal or equitable, including terms for years and liens thereon by way of judgments, mortgages, or otherwise, and also all claims for damages for that real estate.

"Renewable energy resources" includes energy from wind, solar thermal energy, photovoltaic cells and panels, dedicated crops grown for energy production and organic waste biomass, hydropower that does not involve new construction or significant expansion of hydropower dams, and other alternative sources of environmentally preferable energy. "Renewable energy resources" does not include, however, energy from the incineration, burning, or heating of waste wood, tires, garbage, general household, institutional, and commercial waste, industrial lunchroom or office waste, landscape waste, or construction or demolition debris.

"Rural electric cooperative" means an electric cooperative as defined in Section 3.4 of the Electric Supplier Act.

"Security" means any note, stock (whether common or preferred), bond, debenture, evidence of indebtedness, transferable share, voting-trust certificate, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase any of the foregoing.

"State" means the State of Illinois.

"State agency" means any board, authority, agency, department, commission, public corporation, body politic, or instrumentality of the State.

"Trustees" means the trustees of the Authority appointed pursuant to Section of this Act.

Section 4-15. Illinois Power Authority.

(a) For the purpose of effectuating the policy declared in Section 4-15 of this Act, there is hereby created a State agency to be known as the Illinois Power Authority, which shall be a body corporate and politic, a political subdivision of the State, exercising governmental and public powers, perpetual in duration, capable of suing and being sued, and having a seal, and which shall have the powers and duties enumerated in this Act, together with such others conferred upon it by law.

(b) The Authority shall report annually to the Governor and the General Assembly upon its operations and transactions. The annual report shall identify the Authority by its statutory name, and include a letter of transmittal in the report to the Governor and the General Assembly. The annual report shall also include, but not be limited to, the following: (1) the amount of power and energy produced by each Authority facility; (2) the quantity and price of any electricity procured by the Authority under wholesale contracts; (3) the quantity of electricity supplied by each Authority facility to municipal electric systems, municipal aggregators and rural electric cooperatives in Illinois; (4) the revenues as allocated by the Authority to each facility; (5) the costs as allocated by the Authority to each facility; (6) the accumulated depreciation for each facility; and (7) basic financial and operating information specifically detailed for the reporting year and including, but not limited to, income and expense statements, balance sheets, and changes in financial position, all in accordance with generally accepted accounting principles, debt structure, and a summary of funds on a cash basis. The requirement to provide information pursuant to this subsection is not intended to affect the Authority's responsibilities or obligations under this Act.

(c) The Authority is not created or organized, and its operations shall not be conducted, for the purpose of making a profit. No part of the revenues or assets of the Authority shall inure to the benefit of or be distributable to any of its trustees or officers or any other private persons, except as provided in this Act for actual services rendered.

Section 4-20. Trustees.

(a) The Authority shall consist of 5 trustees, each of whom shall serve respectively for terms of one, 2, 3, 4, or 5 years. Each trustee shall hold office until a successor has been appointed and qualified. The Governor shall appoint all trustees, with the advice and consent of the Senate and House of Representatives. No person serving as a Commissioner of the Illinois Commerce Commission on January 2, 2007 is eligible to be appointed to a term as a trustee of the Authority or as a temporary appointee. One appointee shall serve an initial term of one year; the second appointee shall serve an initial term of 2 years; the third appointee shall serve an initial term of 3 years; the fourth appointee shall serve an initial term of 4 years; and the fifth appointee shall serve an initial term of 5 years. Thereafter, all terms shall be for a period of 5 years. Three trustees shall be attorneys, certified public accountants, or professional engineers and shall each have at least 10 years of experience. Two trustees must have at least 10 years of experience in one of the following fields: (i) economics, (ii) finance, (iii) accounting, (iv) physical or natural sciences, (v) natural resources, or (vi) environmental studies.

(b) At the expiration of the term of each trustee, the Governor shall appoint a successor, with the advice and consent of the Senate and House of Representatives, who shall hold office for a term of 5 years. In the event of a vacancy occurring in the office of the trustee by death, resignation, or otherwise, the Governor shall appoint a successor, with the advice and consent of the Senate and House of Representatives, who shall hold office for the unexpired term. Three trustees constitute a quorum for the purpose of organizing the Authority and conducting its business.

(b-5) In the case of vacancy in office during a recess of the Senate or House of Representatives, the Governor shall make a temporary appointment until the next meeting of the Senate and House, when the Governor shall nominate some person to fill the office; and the person so nominated who is confirmed by the Senate and House, shall hold office during the remainder of the term and until a successor is appointed and qualified. No person rejected by the Senate or House for appointment shall, except at the request of both the Senate and House, be again nominated for appointment at the same session or be appointed to the office during a recess of the Senate or House.

(c) The trustees shall receive an annual salary of $50,000 or an amount set by the Compensation Review Board, whichever is greater. Each shall be entitled to reimbursement for reasonable expenses in the performance of duties assigned under this Act.

(d) Notwithstanding the provisions of any other law, no trustee, officer, or employee of the State, any State agency, or any local government that is appointed a trustee shall be deemed to have forfeited or shall forfeit his or her office or employment by reason of his or her acceptance of a trusteeship on the Authority, his or her service thereon, or his or her employment therewith.

(e) No trustee shall be employed by a public utility, independent power producer, power marketer, alternative retail electric supplier, an affiliate of any of the foregoing, or the Authority while serving as a trustee for 2 years prior to appointment or for 2 years after he or she leaves his or her position as a trustee.

(f) Trustees shall be prohibited from all of the following while serving as a trustee and for 2 years prior to the appointment or for 2 years after he or she leaves his or her position as a trustee:

(1) Owning or holding, directly or indirectly, 5% or more of the voting capital stock of any public utility, independent power producer, power marketer, alternative retail electric supplier, or an affiliate of any of the foregoing.

(2) Being in any chain of successive ownership of 5% or more of the voting capital stock of any public utility, independent power producer, power marketer, alternative retail electric supplier, or an affiliate of any of the foregoing.

(3) Receiving any form of compensation, fee, payment, or other consideration from any public utility, independent power producer, power marketer, alternative retail electric supplier, or an affiliate of any of the foregoing, including legal fees, consulting fees, bonuses, or other sums.

(g) Until the Board certifies in writing that it is fully operational and capable of carrying out its duties and powers under subsections (a) and (b) of Section 4-35, the Lieutenant Governor is authorized, empowered, and required to expeditiously carry out the duties and powers under those subsections (a) and (b) of Section 4-35. Within 28 days after the effective date of this Act, the Lieutenant Governor shall initiate a competitive solicitation process to retain a procurement officer who shall conduct the procurement process scheduled to occur in January 2008 for the procurement of electricity for delivery beginning in June 2008.

Section 4-25. Officers and employees; expenses. The trustees shall choose from among their own number a chairperson and vice-chairperson. They shall from time to time select such officers and employees, including a chief executive officer, and such engineering, marketing, and legal officers and employees, as they may require for the performance of their duties and shall prescribe the duties and compensation of each officer and employee. They shall adopt by-laws and rules and regulations suitable to the purposes of this Act. As long as and to the extent that the Authority is dependent upon appropriations for the payment of its expenses, it shall incur no obligations for salary, office, or other expenses prior to the making of appropriations adequate to meet those expenses.

Section 4-30. General powers of the Authority.

(a) The Authority is authorized to:

(1) prepare an annual integrated resource plan that identifies the least-cost mix of electric generating, energy-efficiency, and demand-response resources needed to serve Illinois residents and businesses 20 years into the future;

(2) procure least-cost electricity, energy efficiency and demand-response resources through competitive procurement processes to meet the electricity needs of all customers of electric utilities that on January 2, 2007 served at least 100,000 customers;

(3) construct, improve, rehabilitate, and operate electric generation and cogeneration facilities that use indigenous coal or renewable resources, or both, financed with bonds issued by the Illinois Power Authority; and

(4) supply electricity from the Authority's facilities at cost to municipal electric systems, municipal aggregators, and rural electric cooperatives in Illinois.

(b) Except as otherwise limited by this Act, the Authority shall have all of the powers necessary or convenient to carry out the purposes and provisions of this Act, including without limitation, the following:

(1) To sue and be sued in all courts and to participate in actions and proceedings, whether judicial, administrative, arbitrative, or otherwise.

(2) To have a corporate seal, and to alter that seal at pleasure, and to use it by causing it or a facsimile to be affixed or impressed or reproduced in any other manner.

(3) To appoint officers, agents, and employees, without regard to the Personnel Code or any other personnel or civil service law, rule, or regulation of the State and in accordance with guidelines adopted by the Authority, prescribe their duties and qualifications, and fix and pay their compensation.

(4) To purchase, receive, take by grant, gift, devise, bequest, or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use, and otherwise deal in and with, real or personal property whether tangible or intangible, or any interest therein, within the State.

(5) To acquire real or personal property, whether tangible or intangible, including without limitation property rights, interests in property, franchises, obligations, contracts, and debt and equity securities, by the exercise of the power of eminent domain; except that any real property acquired by the exercise of the power of eminent domain must be located within the State.

(6) To sell, convey, lease, exchange, transfer, abandon, or otherwise dispose of, or mortgage, pledge, or create a security interest in, any of its assets, properties, or any interest therein, wherever situated.

(7) To purchase, take, receive, subscribe for, or otherwise acquire, hold, make a tender offer for, vote, employ, sell, lend, lease, exchange, transfer, or otherwise dispose of, mortgage, pledge, or grant a security interest in, use and otherwise deal in and with, bonds and other obligations, shares, or other securities (or interests therein) issued by others, whether engaged in a similar or different business or activity.

(8) To make and execute agreements, contracts, and other instruments necessary or convenient in the exercise of the powers and functions of the Authority under this Act, including contracts with any person, firm, corporation, local government, State agency, or other entity, and all State agencies and all local governments are hereby authorized to enter into and do all things necessary to perform any such agreement, contract, or other instrument with the Authority.

(9) To borrow money at such rate or rates of interest as the Authority may determine, issue its notes, bonds, or other obligations to evidence that indebtedness, and secure any of its obligations by mortgage or pledge of any of its property or any interest therein, wherever situated.

(10) To arrange for guarantees of its bonds, notes, or other obligations by the federal government or by any private insurer or otherwise, and to pay any premiums therefor.

(11) To issue its bonds or notes or other obligations whether or not the income therefrom is exempt from federal income taxation.

(12) To purchase bonds, notes, or other obligations of the Authority at such price or prices as the Authority may determine.

(13) To lend money, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds loaned or invested.

(14) To procure insurance against any loss in connection with its properties or operations in such amount or amounts and from such insurers, including the federal government, as it may deem necessary or desirable, and to pay any premiums therefor.

(15) To negotiate and enter into agreements with trustees or receivers appointed by United States bankruptcy courts or federal district courts or in other proceedings involving adjustment of debts and authorize legal counsel for the Authority to appear in any such proceedings.

(16) To file a petition under Chapter 9 of Title 11 of the United States Bankruptcy Code or take other similar action for the adjustment of its debts.

(17) To enter into management agreements for the operation of any of the property or facilities owned by the Authority.

(18) To transfer any asset of the Authority to one or more municipal electric systems or rural electric agencies or cooperatives, for such consideration and upon such terms as the Authority may determine to be in the best interest of the citizens of the State of Illinois.

(19) To enter upon any lands and within any building whenever in its judgment it may be necessary for the purpose of making surveys and examinations to accomplish any purpose authorized by this Act.

(20) To enter into agreements to pay annual sums in lieu of taxes to any local government with respect to any real property that is owned by the Authority and is located in that local government.

(21) To maintain an office or offices at such place or places in the State as it may determine.

(22) To make any inquiry, investigation, survey, or study that the Authority may deem necessary to enable it effectively to carry out the provisions of this Act.

(23) To adopt, revise, amend, and repeal rules and regulations with respect to its operations, properties, and facilities as may be necessary or convenient to carry out the purposes of this Act, subject to the provisions of the Illinois Administrative Procedure Act.

Section 4-35. Specific powers. Without limiting the generality of the powers conferred upon the Authority by Section 4-30 of this Act, the Authority shall have the specific powers described in this Section.

(a) Least-cost planning.

(1) Electricity demand forecast. The Authority shall have the power to direct investor-owned utilities, municipal electric systems, rural electric cooperatives, municipal aggregators, and alternative retail electric suppliers that serve retail customers in Illinois to supply any data that the Authority deems necessary to prepare and annually update a 20-year electricity demand forecast for the State.

(2) Electric generating unit inventory. The Authority shall have the power to direct all owners of electric generating units in Illinois to supply any operational and cost data about their respective generating units that the Authority deems necessary to prepare and annually update an inventory of generating resources in Illinois.

(3) Energy efficiency and demand-response potential. The Authority shall have the power to survey Illinois residents and businesses to assess: (i) the potential for reductions in electricity consumption that can be achieved by implementing energy efficiency measures and the cost-effectiveness of such measures, expressed in cents per kilowatt-hour; and (ii) the potential to reduce peak demand that can be achieved by implementing demand-response programs and the cost-effectiveness of such programs.

(4) Least-cost plan to meet demand for electricity. The Authority shall have the power to contract with the University of Illinois and U.S. Department of Energy to develop and run any models of the Illinois electric system needed to prepare an annual least-cost plan that identifies the least-cost mix of electric generating, energy efficiency and demand-response resources needed to serve Illinois residents and businesses 20 years into the future.

(A) The Authority shall prepare a draft plan and solicit public comment on the draft plan. To facilitate public comment, the Authority shall hold at least 2 public hearings on the draft plan. At least 30-days' notice of the hearing shall be given by publication once in each week during such period in each of 6 newspapers within the State to be selected by the Authority. Copies of the draft plan shall be available for public inspection during that period of 30 days at the office or offices of the Authority and at such other places throughout the State as it may designate.

(B) The Authority shall review these comments and revise the draft plan, as necessary, before issuing the final plan.

(b) Least-cost procurement.

(1) The Board shall have the power to retain a Procurement Officer to develop and procure electricity, energy efficiency and demand-response resources at least cost through a competitive procurement process to meet the electricity needs of the customers of electric utilities that on January 2, 2007 served at least 100,000 customers. Such utilities shall execute all contracts awarded through the Authority procurement process and shall make direct payment to the counter-parties to those contracts. Such a utility may self-procure only the electricity that is necessary for load-following.

(A) Procurement for residential and small commercial customers. The Procurement Officer shall develop least-cost portfolios of contracts for electricity supply, energy efficiency measures and demand-response to meet the requirements of each utility's residential and small commercial customers, which shall be updated on a quarterly basis, and based on load data supplied by the utilities, the least-cost plan mandated under subsection (a) of this Section, and other sources of information that the Procurement Officer deems necessary to develop these portfolios. One portfolio shall be constructed for Commonwealth Edison. One portfolio shall be constructed for AmerenCIPS, AmerenCILCO and AmerenIP, collectively.

(i) Base load. When constructing these portfolios the Procurement Officer shall maximize the quantity of baseload electricity purchased through long-term, 100% load factor contracts.

(ii) Intermediate load. When constructing these portfolios the Procurement Officer shall maximize the load factor in intermediate load contracts by contracting for targeted energy efficiency and demand-response measures.

(iii) Peak load. When constructing these portfolios the Procurement Officer shall minimize the quantity of peak load electricity purchased by contracting for targeted energy efficiency and demand-response measures.

(iv) Renewable energy. When constructing these portfolios, the Procurement Officer shall designate a percentage of purchases made each year to be from electricity generated from renewable sources in Illinois, in the following quantities: no less than 2% in 2009; no less than 4% in 2010; no less than 8% in 2011; no less than 10% in 2012 and thereafter.

(v) Board approval. The portfolio design shall be subject to Board approval on a quarterly basis.

(B) Procurement of electric supply for residential and small commercial customers. The Procurement Officer shall conduct a rolling solicitation of sealed bids from electric generators for supply contracts identified in these portfolios.

(i) Bids will be assessed against benchmarks established by the Board. The benchmarks shall include prices in spot and forward electricity markets, production costs, and electricity rates in the states surrounding Illinois. If other benchmarks are adopted, the Board, in consultation with the Procurement Officer shall determine which, if any, of these benchmarks shall be disclosed to bidders. Separate benchmarks shall be established for purchases of electricity generated from renewable resources.

(ii) The Procurement Officer may reject any and all bids.

(iii) The Procurement Officer may enter into price negotiations with bidders.

(C) Procurement of energy efficiency and demand response measures for residential and small commercial customers. The Procurement Officer shall contract with energy services companies to provide cost-effective energy efficiency and demand-response measures to the residential and small commercial customers of the utilities. The Authority may also directly implement energy efficiency and demand-response measures for residential and small customers.

(D) Procurement for large commercial and industrial customers. The Procurement Officer shall solicit sealed bids from electricity suppliers on an annual basis to meet each utility's full requirements to serve the utility's large commercial and industrial customers.

(i) The Procurement Officer shall solicit bids to supply one or more 100 MW vertical tranches of load for each utility. Bid prices shall include all energy, capacity, transmission, ancillary services and line losses.

(ii) Bids will be assessed against benchmarks established by the Board. The benchmarks shall include prices in spot and forward electricity markets, production costs, and electricity rates in the states surrounding Illinois. If other benchmarks are adopted, the Board, in consultation with the Procurement Officer shall determine which, if any, of these benchmarks shall be disclosed to bidders.

(iii) The Procurement Officer may reject any and all bids.

(iv) The Procurement Officer may enter into price negotiations with bidders.

(v) The price that results from this procurement process shall be published no later than the first day of May each year. Thereafter, there will be a 30-day enrollment period for customers with peak demands from 400 kW to 3 MW.

(c) Acquisition and operation of electric generating units. The Illinois Power Authority shall have the power to acquire, construct, improve, rehabilitate, maintain and operate electric generation and cogeneration facilities that use indigenous coal or renewable resources, or both, financed with bonds issued by the Illinois Power Authority or the Illinois Finance Authority. The Authority, with Board approval, shall have the power:

(1) To acquire, construct, complete, improve, rehabilitate, maintain, and operate such facilities as the Authority deems necessary or desirable to maintain an adequate, dependable, and low-cost supply of electric power.

(A) The Authority shall ensure that these facilities are constructed and operated in accordance with practices, methods, and acts that, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, including, but not limited to, the practices, methods, and acts engaged in or approved by the electric industry.

(B) The Authority shall ensure that all of the Authority's projects achieve the expected result at the lowest reasonable cost.

(2) To determine the location, type, size, form of ownership, use, and operation of any generating facility, consistent with the provisions of this Act. The Authority shall give primary consideration to the construction of cogeneration and other high-efficiency facilities and facilities that use renewable resources. The Authority shall hold at least one public hearing before entering into a decision to acquire, construct, complete, improve or rehabilitate a facility. At least 30-days' notice of the hearing shall be given by publication once in each week during such period in each of 6 newspapers within the State to be selected by the Authority.

(A) The first generating facility that the Authority constructs, acquires, or completes shall be a coal-fired facility which uses coal from the State of Illinois.

(B) All coal-fired generating facilities that are owned or maintained by the Authority shall use coal from the State of Illinois.

(3) To apply to the appropriate agencies and officials of the federal and State governments for such licenses, permits, or approval of its plans or projects as it may deem necessary or advisable, and to accept such licenses, permits, or approvals as may be tendered to it by such agencies or officials, upon such terms and conditions as it may deem appropriate.

(4) To institute suit, or to apply to any legislative body for legislation, or to take such other action as it may deem necessary or advisable in the furtherance of the purposes of this Act and for the protection of its rights, if for any reason the Authority shall fail to secure any such license, permit, or approval as it may deem necessary or advisable.

(5) To cooperate with and to enter into contractual arrangements with private companies, public entities, schools and universities, and municipal electric systems and rural electric cooperatives:

(A) with respect to the construction, acquisition, ownership, operation and use of facilities by the Authority;

(B) with respect to the construction, completion, acquisition, ownership, and operation of generating facilities.

(6) To cooperate with and to enter into contractual arrangements with local governments with respect to the construction, improvement, rehabilitation, ownership, and operation of generating facilities.

(7) To cooperate with and to enter into contractual arrangements, in the discretion of the Authority, with the Capital Development Board in connection with the planning, siting, development, construction, operation, and maintenance of generating facilities of the Authority.

(d) Use of electricity from the Authority's facilities. The Authority shall supply, at cost, electricity produced by the Authority's facilities to municipal electric systems, municipal aggregators and rural electric cooperatives in Illinois.

(1) Contracts to supply power and energy from the Authority's facilities shall provide for the effectuation of the policies set forth in this Act and shall ensure recovery of:

(A) All operating and maintenance expenses of the Authority's facilities and projects, and

(B) Interest on and amortization and reserve charges sufficient within 50 years after the date of issuance to retire the bonds of the Authority issued for the projects.

(2) The contracts shall also provide that:

(A) Notwithstanding any provisions in the Public Utilities Act, entities supplied with power and energy from an Authority facility shall supply the power and energy to retail customers at the same price paid to purchase power and energy from the Authority.

(B) The entity shall make timely payment on all bills rendered by the Authority.

(C) Violation of these contract terms, as well as such other terms as the Authority may specify, shall result in cancellation and termination of the contract.

(D) Such other terms not inconsistent with the provisions and policy of this Act, as the Authority may deem advisable.

(3) Contracts negotiated by the Authority as provided in subsections (1) and (2) of this Section shall be entered into and executed as follows:

(A) After the parties have agreed to the terms of the contract, the Authority shall promptly transmit a copy of the proposed contract to the Governor, the Secretary of State, the Attorney General, the Treasurer, the Comptroller, and the legislative leaders of the General Assembly and shall hold a public hearing or hearings upon the terms thereof. At least 30-days' notice of the hearing shall be given by publication once in each week during such period in each of 6 newspapers within the State to be selected by the Authority. Copies of proposed contracts shall be available for public inspection during that period of 30 days at the office or offices of the Authority and at such other places throughout the State as it may designate.

(B) Following the public hearing, the Authority shall reconsider the terms of the proposed contract or contracts and shall negotiate such changes and modifications in the contract or contracts as the Authority deems necessary or advisable.

(C) When the contract or contracts are finally agreed upon in terms satisfactory to the Authority and its co-party or co-parties, and the Authority decides that the contract is in the public interest, the Authority shall report the proposed contract or contracts, together with its recommendations and the record of the public hearings to the Governor, the Secretary of State, the Attorney General, the Treasurer, the Comptroller, and the General Assembly.

(i) The Attorney General shall review the contract to ensure that it complies with all applicable laws. If the Attorney General determines that the contract meets all applicable laws, then the trustees shall approve the contract.

(ii) The contract, after receiving the required number of votes by the trustees, shall be executed by the chairperson and secretary of the Authority and shall come into full force and effect and be binding upon the Authority and all other parties in accordance with its terms.

(e) Planning and procurement under subsections (a) and (b) of this Section are not subject to the Illinois Procurement Code.

Section 4-40. Notes of the Authority. The Authority is authorized from time to time to issue its negotiable notes in conformity with applicable provisions of the Uniform Commercial Code for any corporate purpose and to refund from time to time any notes by the issuance of new notes, whether the notes to be refunded have or have not matured. The Authority may issue notes partly to refund notes or to discharge other obligations then outstanding and partly for any other corporate purpose of the Authority. The notes may be authorized, sold, executed, and delivered in the same manner as bonds. Any resolution authorizing notes of the Authority or any issue thereof may contain any provisions that the Authority is authorized to include in any resolution authorizing bonds of the Authority or any issue thereof, and the Authority may include in any notes any terms, covenants, or conditions that it is authorized to include in any bonds.

Section 4-60. Revenue bonds.

(a) The Authority shall have the continuing power to issue revenue bonds, notes, or other evidences of indebtedness in an aggregate amount not to exceed $4,000,000,000 for the purpose of developing, constructing, acquiring, or improving projects for acquiring and improving any property necessary and useful in connection therewith, and for the purposes of the Employee Ownership Assistance Act. The bonds must be issued under the supervision of the Illinois Finance Authority, as set forth under Section 825-13 of the Illinois Finance Authority Act. For the purpose of evidencing the obligations of the Authority to repay any money borrowed, the Authority may, pursuant to resolution, from time to time issue and dispose of its interest bearing revenue bonds, notes, or other evidences of indebtedness and may also from time to time issue and dispose of such bonds, notes, or other evidences of indebtedness to refund, at maturity, at a redemption date or in advance of either, any revenue bonds, notes, or other evidences of indebtedness pursuant to redemption provisions or at any time before maturity. All such revenue bonds, notes, or other evidences of indebtedness shall be payable solely from the revenues or income to be derived from loans made with respect to projects, from the leasing or sale of the projects, or from any other funds available to the Authority for such purposes, including, when so provided by ordinance of the Authority authorizing the issuance of revenue bonds or notes. The revenue bonds, notes, or other evidences of indebtedness may bear such date or dates, may mature at such time or times not exceeding 40 years from their respective dates, may bear interest at such rate or rates not exceeding the maximum rate permitted by the Bond Authorization Act, may be in such form, may carry such registration privileges, may be executed in such manner, may be payable at such place or places, may be made subject to redemption in such manner and upon such terms, with or without premium as is stated on the face thereof, may be authenticated in such manner, and may contain such terms and covenants as may be provided by an applicable resolution.

(b) The holder or holders of any revenue bonds, notes, or other evidences of indebtedness issued by the Authority may bring suits at law or proceedings in equity to compel the performance and observance by any corporation or person or by the Authority or any of its agents or employees of any contract or covenant made with the holders of such revenue bonds, notes, or other evidences of indebtedness, to compel such corporation, person, the Authority, and any of its agents or employees to perform any duties required to be performed for the benefit of the holders of any such revenue bonds, notes, or other evidences of indebtedness by the provision of the resolution authorizing their issuance and to enjoin such corporation, person, the Authority, and any of its agents or employees from taking any action in conflict with any such contract or covenant.

(c) If the Authority fails to pay the principal of or interest on any of the revenue bonds or premium, if any, as the same become due, a civil action to compel payment may be instituted in the appropriate circuit court by the holder or holders of the revenue bonds on which such default of payment exists or by an indenture trustee acting on behalf of such holders. Delivery of a summons and a copy of the complaint to the Chairperson of the Board shall constitute sufficient service to give the circuit court jurisdiction of the subject matter of such a suit and jurisdiction over the Authority and its officers named as defendants for the purpose of compelling such payment. Any case, controversy, or cause of action concerning the validity of this Act relates to the revenue of the State of Illinois.

(d) Notwithstanding the form and tenor of any such revenue bonds, notes, or other evidences of indebtedness and in the absence of any express recital on the face of any such revenue bond, note, or other evidence of indebtedness that it is nonnegotiable, all such revenue bonds, notes, and other evidences of indebtedness shall be negotiable instruments. Pending the preparation and execution of any such revenue bonds, notes, or other evidences of indebtedness, temporary revenue bonds, notes, or evidences of indebtedness may be issued as provided by ordinance.

(e) To secure the payment of any or all of such revenue bonds, notes, or other evidences of indebtedness, the revenues to be received by the Authority from a lease agreement or loan agreement shall be pledged, and, for the purpose of setting forth the covenants and undertakings of the Authority in connection with the issuance thereof and the issuance of any additional revenue bonds, notes, or other evidences of indebtedness payable from such revenues, income, or other funds to be derived from projects, the Authority may execute and deliver a mortgage or trust agreement. A remedy for any breach or default of the terms of any such mortgage or trust agreement by the Authority may be by mandamus proceedings in the appropriate circuit court to compel the performance and compliance therewith, but the trust agreement may prescribe by whom or on whose behalf the action may be instituted.

(f) The revenue bonds or notes shall be secured as provided in the authorizing ordinance which may, notwithstanding any other provision of this Act, include in addition to any other security a specific pledge or assignment of and lien on or security interest in any or all revenues or money of the Authority from whatever source which may by law be used for debt service purposes and a specific pledge or assignment of and lien on or security interest in any funds or accounts established or provided for by ordinance of the Authority authorizing the issuance of such revenue bonds or notes.

(g) The State of Illinois pledges to and agrees with the holders of the revenue bonds and notes of the Authority issued pursuant to this Section that the State will not limit or alter the rights and powers vested in the Authority by this Act so as to impair the terms of any contract made by the Authority with such holders or in any way impair the rights and remedies of such holders until such revenue bonds and notes, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of such holders, are fully met and discharged. The Authority is authorized to include these pledges and agreements of the State in any contract with the holders of revenue bonds or notes issued pursuant to this Section.

(h) In the event that the Authority determines that monies of the Authority will not be sufficient for the payment of the principal of and interest on its bonds during the next State fiscal year, the Chairperson, as soon as practicable, shall certify to the Governor the amount required by the Authority to enable it to pay such principal of and interest on the bonds. The Governor shall submit the amount so certified to the General Assembly as soon as practicable, but no later than the end of the current State fiscal year. This subsection (h) shall apply only to any bonds or notes as to which the Authority shall have determined, in the resolution authorizing the issuance of the bonds or notes, that this subsection shall apply. Whenever the Authority makes such a determination, that fact shall be plainly stated on the face of the bonds or notes and that fact shall also be reported to the Governor. In the event of a withdrawal of moneys from a reserve fund established with respect to any issue or issues of bonds of the Authority to pay principal or interest on those bonds, the Chairperson of the Authority, as soon as practicable, shall certify to the Governor the amount required to restore the reserve fund to the level required in the resolution or indenture securing those bonds. The Governor shall submit the amount so certified to the General Assembly as soon as practicable, but no later than the end of the current State fiscal year. The Authority shall obtain written approval from the Governor for any bonds and notes to be issued under this Section.

Section 4-65. State and local governments not liable on bonds or notes. The bonds, notes, and other obligations of the Authority shall not be a debt of the State or of any local government, and neither the State nor any local government shall be liable thereon. The Authority shall not have the power to pledge the credit, the revenues, or the taxing power of the State or of any local government, and neither the credit, the revenues, nor the taxing power of the State or of any local government shall be, or shall be deemed to be, pledged to the payment of any bonds, notes, or other obligations of the Authority. Each evidence of indebtedness of the Authority, including the bonds and notes of the Authority, shall contain a clear and explicit statement of the provisions of this Section.

Section 4-70. Deposit and investment of moneys of the Authority.

(a) All moneys of the Authority from whatever source derived, except as otherwise authorized or provided in this Act, shall be paid to the treasurer of the Authority and shall be deposited forthwith in a bank or banks designated by the Authority. The moneys in such accounts shall be withdrawn on the order of such person or persons as the Authority may authorize.

(b) The Authority may contract with holders of any of its bonds or notes, or any trustee therefor, as to the custody, collection, securing, investment, and payment of any moneys of the Authority and of any moneys held in trust or otherwise for the payment of bonds or notes, and to carry out any such contract. Moneys held in trust or otherwise for the payment of bonds or notes or in any way to secure bonds or notes and deposits of such moneys and all banks and trust companies in the State are authorized to give such security for such deposits.

(c) Subject to agreements with noteholders and bondholders or any trustee therefor, the Authority shall prescribe a uniform system of accounts in accordance with generally accepted accounting principles.

Section 4-75. Agreement of the State.

(a) The State of Illinois pledges and agrees with the holders of any obligations issued under this Act and the parties to any contracts with the Authority that the State will not limit or alter the rights vested in the Authority until those obligations together with the interest thereon are fully met and discharged and those contracts are fully performed on the part of the Authority, except that nothing in this Act precludes such limitation or alteration if adequate provision is made by law for the protection of the holders of the obligations of the Authority, or those entering into such contracts with the Authority. The Authority as agent for the State is authorized to include this pledge and agreement by the State in all agreements with the holders of such obligations and in all such contracts.

(b) Nothing in this Act shall be construed as diminishing or enlarging any valid existing rights under any license heretofore issued pursuant to the provisions of the Federal Power Act.

Section 4-80. Exemption from taxation.

(a) It is hereby found and declared that the operation of the Authority is primarily for the benefit of the people of the State of Illinois, for the improvement of their health, welfare, and prosperity, and has a public purpose, and the Authority shall be regarded as performing an essential governmental function in carrying out the provisions of this Act.

(b) The Authority shall not be required to pay taxes or assessments upon any of the property acquired or controlled by it or upon its activities in the operation and maintenance thereof or upon income derived therefrom, except that nothing in this Act shall prevent the Authority from entering into agreements to make payments in lieu of taxes with the governing bodies of local governments with respect to property acquired for any project when those payments are based solely on the value of real property without regard to any improvement thereof by the Authority.

(c) The securities and other obligations issued by the Authority, their transfer, and the income therefrom shall, at all times, be free from taxation by the State or any local government, except for estate and gift taxes.

(d) The securities and other obligations issued by the Authority, their transfer, and the income therefrom shall, at all times, be free from taxation within this State. It is furthermore declared that the object and purpose of this Act is that such projects shall be in all respects self-supporting.

(e) The Authority is not subject to the Electric Generator Tax.

Section 4-85. Repayment of State appropriations. All appropriations made by the State to the Authority shall be treated as advances by the State to the Authority, and shall be repaid to the State without interest either out of the proceeds of bonds issued by the Authority pursuant to this Act, or by the delivery of non-interest bearing bonds of the Authority to the State for all or any part of such advances, or out of excess revenues of the Authority, at such times and on such conditions as the State and the Authority mutually may agree upon.

Section 4-90. ICC lacks jurisdiction. The activities of the Authority authorized by this Act and any other function or duty of the Authority are not subject to the Public Utilities Act or to the jurisdiction of the Illinois Commerce Commission.

Section 4-95. Equal employment opportunity and minority-owned and women-owned business enterprise programs.

(a) All contracts entered into by the Authority pursuant to this Act of whatever nature and all documents soliciting bids or proposals therefor shall contain or make reference to the following provisions:

(1) The contractor will not discriminate against employees or applicants for employment because of race, creed, color, national origin, sex, age, disability, or marital status, and will undertake or continue existing programs of affirmative action to ensure that minority group persons and women are afforded equal opportunity without discrimination. Such programs shall include, but not be limited to, recruitment, employment, job assignment, promotion, upgrading, demotion, transfer, layoff, termination, rates of pay or other forms of compensation, and selection for training and retraining, including apprenticeship and on-the-job training.

(2) At the request of the Authority, the contractor shall request each employment agency, labor union, or authorized representative of workers with which it has a collective bargaining or other agreement or understanding and that is involved in the performance of the contract with the Authority to furnish a written statement that such employment agency, labor union, or representative shall not discriminate because of race, creed, color, national origin, sex, age, disability, or marital status and that such union or representative will cooperate in the implementation of the contractor's obligations under this Act.

(3) The contractor shall state, in all solicitations or advertisements for employees placed by or on behalf of the contractor in the performance of the contract with the Authority, that all qualified applicants will be afforded equal employment opportunity without discrimination because of race, creed, color, national origin, sex, age, disability, or marital status.

(4) The contractor will include the provisions of paragraphs (1) through (3) of this subsection in every subcontract or purchase order in such a manner that the provisions will be binding upon each subcontractor or vendor as to its work in connection with the contract with the Authority.

(b) The Authority shall establish measures, procedures, and guidelines to ensure that contractors and subcontractors undertake meaningful programs to employ and promote qualified minority group members and women. The procedures may require, after notice in a bid solicitation, the submission of a minority and women workforce utilization program prior to the award of any contract, or at any time thereafter, and may require the submission of compliance reports relating to the operation and implementation of any workforce utilization program. The Authority may take appropriate action, including the imposition of sanctions for non-compliance, to effectuate the provisions of this Section and shall be responsible for monitoring compliance with this Act.

(c) In the performance of projects pursuant to this Act, minority-owned and women-owned business enterprises shall be given the opportunity for meaningful participation. The Authority shall establish quantifiable standards and measures and procedures to secure meaningful participation and identify those contracts and items of work for which minority-owned and women-owned business enterprises may best bid to actively and affirmatively promote and assist their participation in projects, so as to facilitate the award of a fair share of contracts to such enterprises; except that nothing in this Act shall be construed to limit the ability of the Authority to assure that qualified minority-owned and women-owned business enterprises may participate in the program. The provisions of this subsection shall not be construed to limit the ability of any minority business enterprise to bid on any contract.

(d) In order to implement the requirements and objectives of this Section, the Authority shall establish procedures to monitor contractors compliance with provisions hereof, provide assistance in obtaining competing qualified minority-owned and women-owned business enterprises to perform contracts proposed to be awarded, impose contractual sanctions for non-compliance, and take other appropriate measures to improve the access of minority-owned and women-owned business enterprises to these contracts

Section 4-100. Authority subject to other Acts. The Authority is subject to the provisions of the Open Meetings Act and the Freedom of Information Act.

Section 4-105. Court proceedings; venue.

(a) The venue of any action or proceeding questioning the validity of this Act shall be in the county in which the principal office of the Authority is located.

(b) If any party appeals an award of compensation for the taking by the Authority of stock or assets, that party shall post a bond in such amount, if any, as the court of competent jurisdiction shall deem appropriate to adequately protect the interests of the other party under all the circumstances.

(c) All tort claims are subject to the Court of Claims Act.

Section 4-900. The Illinois Procurement Code is amended by changing Section 50-70 as follows:

(30 ILCS 500/50-70)

Sec. 50-70. Additional provisions. This Code is subject to applicable provisions of the following Acts:

(1) Article 33E of the Criminal Code of 1961;

(2) the Illinois Human Rights Act;

(3) the Discriminatory Club Act;

(4) the Illinois Governmental Ethics Act;

(5) the State Prompt Payment Act;

(6) the Public Officer Prohibited Activities Act; and

(7) the Drug Free Workplace Act; and .

(8) the Illinois Power Authority Act.

(Source: P.A. 90-572, eff. 2-6-98.)

Section 4-905. The Illinois Pension Code is amended by changing Section 1-109.1 as follows:

(40 ILCS 5/1-109.1) (from Ch. 108 1/2, par. 1-109.1)

Sec. 1-109.1. Allocation and Delegation of Fiduciary Duties.

(1) Subject to the provisions of Section 22A-113 of this Code and subsections (2) and (3) of this Section, the board of trustees of a retirement system or pension fund established under this Code may:

(a) Appoint one or more investment managers as fiduciaries to manage (including the power to acquire and dispose of) any assets of the retirement system or pension fund; and

(b) Allocate duties among themselves and designate others as fiduciaries to carry out specific fiduciary activities other than the management of the assets of the retirement system or pension fund.

(2) The board of trustees of a pension fund established under Article 5, 6, 8, 9, 10, 11, 12 or 17 of this Code may not transfer its investment authority, nor transfer the assets of the fund to any other person or entity for the purpose of consolidating or merging its assets and management with any other pension fund or public investment authority, unless the board resolution authorizing such transfer is submitted for approval to the contributors and pensioners of the fund at elections held not less than 30 days after the adoption of such resolution by the board, and such resolution is approved by a majority of the votes cast on the question in both the contributors election and the pensioners election. The election procedures and qualifications governing the election of trustees shall govern the submission of resolutions for approval under this paragraph, insofar as they may be made applicable.

(3) Pursuant to subsections (h) and (i) of Section 6 of Article VII of the Illinois Constitution, the investment authority of boards of trustees of retirement systems and pension funds established under this Code is declared to be a subject of exclusive State jurisdiction, and the concurrent exercise by a home rule unit of any power affecting such investment authority is hereby specifically denied and preempted.

(4) For the purposes of this Code, "emerging investment manager" means a qualified investment adviser that manages an investment portfolio of at least $10,000,000 but less than $2,000,000,000 and is a "minority owned business" or "female owned business" as those terms are defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act.

It is hereby declared to be the public policy of the State of Illinois to encourage the trustees of public employee retirement systems to use emerging investment managers in managing their system's assets to the greatest extent feasible within the bounds of financial and fiduciary prudence, and to take affirmative steps to remove any barriers to the full participation of emerging investment managers in investment opportunities afforded by those retirement systems.

Each retirement system subject to this Code shall prepare a report to be submitted to the Governor and the General Assembly by September 1 of each year. The report shall identify the emerging investment managers used by the system, the percentage of the system's assets under the investment control of emerging investment managers, and the actions it has undertaken to increase the use of emerging investment managers, including encouraging other investment managers to use emerging investment managers as subcontractors when the opportunity arises.

The use of an emerging investment manager does not constitute a transfer of investment authority for the purposes of subsection (2) of this Section.

(5) For the purposes of this Code, "Illinois Power Authority" means the Authority created under the Illinois Power Authority Act.

It is hereby declared to be the public policy of the State of Illinois to encourage the trustees of public employee retirement systems to invest their system's assets to the greatest extent feasible within the bounds of financial and fiduciary prudence in the Illinois Power Authority.

Each retirement system subject to this Code shall prepare a report to be submitted to the Governor and the General Assembly by September 1 of each year. The report shall identify investments in the Illinois Power Authority, the percentage of the system's assets invested in the Illinois Power Authority, and the actions it has undertaken to increase investments in the Illinois Power Authority.

(Source: P.A. 94-471, eff. 8-4-05.)

Section 4-910. The Public Utilities Act is amended by changing Section 3-105 as follows:

(220 ILCS 5/3-105) (from Ch. 111 2/3, par. 3-105)

Sec. 3-105. Public utility. "Public utility" means and includes, except where otherwise expressly provided in this Section, every corporation, company, limited liability company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever that owns, controls, operates or manages, within this State, directly or indirectly, for public use, any plant, equipment or property used or to be used for or in connection with, or owns or controls any franchise, license, permit or right to engage in:

a. the production, storage, transmission, sale, delivery or furnishing of heat, cold, power, electricity, water, or light, except when used solely for communications purposes;

b. the disposal of sewerage; or

c. the conveyance of oil or gas by pipe line.

"Public utility" does not include, however:

1. public utilities that are owned and operated by any political subdivision, public institution of higher education or municipal corporation of this State, or public utilities that are owned by such political subdivision, public institution of higher education, or municipal corporation and operated by any of its lessees or operating agents;

2. water companies which are purely mutual concerns, having no rates or charges for services, but paying the operating expenses by assessment upon the members of such a company and no other person;

3. electric cooperatives as defined in Section 3-119;

4. the following natural gas cooperatives:

(A) residential natural gas cooperatives that are not-for-profit corporations established for the purpose of administering and operating, on a cooperative basis, the furnishing of natural gas to residences for the benefit of their members who are residential consumers of natural gas. For entities qualifying as residential natural gas cooperatives and recognized by the Illinois Commerce Commission as such, the State shall guarantee legally binding contracts entered into by residential natural gas cooperatives for the express purpose of acquiring natural gas supplies for their members. The Illinois Commerce Commission shall establish rules and regulations providing for such guarantees. The total liability of the State in providing all such guarantees shall not at any time exceed $1,000,000, nor shall the State provide such a guarantee to a residential natural gas cooperative for more than 3 consecutive years; and

(B) natural gas cooperatives that are not-for-profit corporations operated for the purpose of administering, on a cooperative basis, the furnishing of natural gas for the benefit of their members and that, prior to 90 days after the effective date of this amendatory Act of the 94th General Assembly, either had acquired or had entered into an asset purchase agreement to acquire all or substantially all of the operating assets of a public utility or natural gas cooperative with the intention of operating those assets as a natural gas cooperative;

5. sewage disposal companies which provide sewage disposal services on a mutual basis without establishing rates or charges for services, but paying the operating expenses by assessment upon the members of the company and no others;

6. the Illinois Power Authority and its subsidiaries as provided in Section 4-90 of the Illinois Power Authority Act (Blank);

7. cogeneration facilities, small power production facilities, and other qualifying facilities, as defined in the Public Utility Regulatory Policies Act and regulations promulgated thereunder, except to the extent State regulatory jurisdiction and action is required or authorized by federal law, regulations, regulatory decisions or the decisions of federal or State courts of competent jurisdiction;

8. the ownership or operation of a facility that sells compressed natural gas at retail to the public for use only as a motor vehicle fuel and the selling of compressed natural gas at retail to the public for use only as a motor vehicle fuel; and

9. alternative retail electric suppliers as defined in Article XVI.

(Source: P.A. 94-738, eff. 5-4-06.)

Section 4-915. The Public Utilities Act is amended by changing Sections 2-101, 2-102, 2-103, 2-106, 9-225, 9-227, 10-101, 10-103, 10-111, 16-124, and 16-126 and by adding Sections 7-101A, 16-124A, 16-131, and 16-132 as follows:

(220 ILCS 5/2-101) (from Ch. 111 2/3, par. 2-101)

Sec. 2-101. Commerce Commission created. There is created an Illinois Commerce Commission consisting of 5 members not more than 3 of whom shall be members of the same political party at the time of appointment. Three Commissioners shall be attorneys, certified public accountants, or professional engineers and shall each have at least 10 years of experience in their respective professions. Two Commissioners must have at least 10 years of experience in one of the following fields: (i) economics, (ii) finance, (iii) energy policy, or (iv) environmental studies. The Governor shall appoint the members of such Commission by and with the advice and consent of the Senate and House of Representatives. In case of a vacancy in such office during the recess of the Senate or House, the Governor shall make a temporary appointment until the next meeting of the Senate and House of Representatives, when he shall nominate some person to fill such office; and any person so nominated who is confirmed by the Senate and House of Representatives, shall hold his office during the remainder of the term and until his successor shall be appointed and qualified. No person rejected by the Senate or House of Representatives for appointment shall, except at the request of both the Senate and House, be again nominated for appointment at the same session or be appointed to the office during a recess of the Senate or House. Each member of the Commission shall hold office for a term of 5 years from the third Monday in January of the year in which his predecessor's term expires.

Notwithstanding any provision of this Section to the contrary, the term of office of each member of the Illinois Commerce Commission serving on the effective date of this amendatory Act of the 95th General Assembly is abolished, and those members no longer hold office. No Commissioner serving on January 2, 2007 is eligible for reappointment to a term on the Commission or as a temporary appointee. The Illinois Commerce Commission shall be appointed by the Governor, with the advice and consent of both the Senate and House of Representatives.

Notwithstanding any provision of this Section to the contrary, the term of office of each member of the Commission is terminated on the effective date of this amendatory Act of 1995, but the incumbent members shall continue to exercise all of the powers and be subject to all of the duties of members of the Commission until their respective successors are appointed and qualified. Of the members initially appointed under the provisions of this amendatory Act of 1995, one member shall be appointed for a term of office which shall expire on the third Monday of January, 1997; 2 members shall be appointed for terms of office which shall expire on the third Monday of January, 1998; one member shall be appointed for a term of office which shall expire on the third Monday of January, 1999; and one member shall be appointed for a term of office which shall expire on the third Monday of January, 2000. Each respective successor shall be appointed for a term of 5 years from the third Monday of January of the year in which his predecessor's term expires in accordance with the provisions of the first paragraph of this Section.

Each member shall serve until his successor is appointed and qualified, except that if the Senate refuses to consent to the appointment of any member, such office shall be deemed vacant, and within 2 weeks of the date the Senate refuses to consent to the reappointment of any member, such member shall vacate such office. The Governor shall from time to time designate the member of the Commission who shall be its chairman. Consistent with the provisions of this Act, the Chairman shall be the chief executive officer of the Commission for the purpose of ensuring that the Commission's policies are properly executed.

If there is no vacancy on the Commission, 4 members of the Commission shall constitute a quorum to transact business; otherwise, a majority of the Commission shall constitute a quorum to transact business, and no vacancy shall impair the right of the remaining commissioners to exercise all of the powers of the Commission. Every finding, order, or decision approved by a majority of the members of the Commission shall be deemed to be the finding, order, or decision of the Commission.

(Source: P.A. 92-22, eff. 6-30-01.)

(220 ILCS 5/2-102) (from Ch. 111 2/3, par. 2-102)

Sec. 2-102. (a) Each commissioner and each person appointed to office by the Commission shall before entering upon the duties of his office take and subscribe the constitutional oath of office.

Before entering upon the duties of his office each commissioner shall give bond, with security to be approved by the Governor, in the sum of $20,000, conditioned for the faithful performance of his duty as such commissioner. Every person appointed or employed by the Commission, may, in the discretion of the Commission, before entering upon the duties of his office, be required to give bond for the faithful discharge of his duties, in such sum as the Commission may designate, which bond shall be approved by the Commission.

All bonds required to be filed pursuant to this section shall be filed in the office of the Secretary of State.

(b) No person in the employ of or holding any official relation to any corporation or person subject in whole or in part to regulation by the Commission, and no person holding stock or bonds in any such corporation, or who is in any other manner pecuniarily interested therein, directly or indirectly, shall be appointed to or hold the office of commissioner or be appointed or employed by the Commission; and if any such person shall voluntarily become so interested his office or employment shall ipso facto become vacant. If any person become so interested otherwise than voluntarily he shall within a reasonable time divest himself of such interest, and if he fails to do so his office or employment shall become vacant.

No commissioner or person appointed or employed by the Commission shall solicit or accept any gift, gratuity, emolument or employment from any person or corporation subject to the supervision of the Commission, or from any officer, agent or employee thereof; nor solicit, request from or recommend, directly or indirectly, to any such person or corporation, or to any officer, agent or employee thereof the appointment of any person to any place or position. Every such corporation and person, and every officer, agent or employee thereof, is hereby forbidden to offer to any commissioner or to any person appointed or employed by the Commission any gift, gratuity, emolument or employment. If any commissioner or any person appointed or employed by the Commission shall violate any provisions of this paragraph he shall be removed from the office or employment held by him. Every person violating the provisions of this paragraph shall be guilty of a Class A misdemeanor.

The provisions of this subsection (b) are applicable for the time period beginning 2 years prior to appointment to or employment by the Commission, during service as a Commissioner or employment by the Commission, and for 2 years thereafter.

(c) Each commissioner shall devote his entire time to the duties of his office, and shall hold no other office or position of profit, or engage in any other business, employment or vocation.

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

(220 ILCS 5/2-103) (from Ch. 111 2/3, par. 2-103)

Sec. 2-103. (a) No former member or employee of the Commission may, for a period of one year following the termination of his services with the Commission, represent any person before the Commission in a professional capacity with respect to any particular Commission matter in which he participated personally and substantially as a member or employee of the Commission.

(b) No former member or employee of the Commission may act as agent or attorney for any one other than the State of Illinois in connection with any particular Commission matter in which he participated personally and substantially as a member or employee of the Commission, through decision, approval, disapproval, recommendation, the rendering of service, investigation, or otherwise.

(c) No former member or employee of the Commission may accept any employment with any public utility or other corporation or person subject to Commission regulations for one year following the termination of his services with the Commission.

(d) No public utility or other corporation or person subject to Commission regulation shall offer a former member or employee of the Commission employment for a period of 2 years one year following the termination of the former Commission member's or former employee's service with the Commission, or otherwise hire such person as an agent or attorney where such employment or contractual relation would be in violation of this Section.

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

(220 ILCS 5/2-106) (from Ch. 111 2/3, par. 2-106)

Sec. 2-106. (a) The executive director shall employ hearing examiners to make valuations of public utility properties, or to estimate proper rates of service of public utilities, or to examine other questions coming before the Commission, by taking testimony or by independent investigation. The executive director shall designate one hearing examiner to serve as chief hearing examiner who shall be responsible for supervising and directing the activities of all hearing examiners, subject to the approval of the executive director. Hearing examiners shall, under the direction of the chief hearing examiner, take testimony of witnesses, examine accounts, records, books, papers and physical properties, either by holding hearings or making independent investigations, in any matter referred to them by the chief hearing examiner; and make report thereof to the chief hearing examiner, and attend at hearings before the Commission when so directed by the chief hearing examiner, for the purpose of explaining their investigations and the result thereof to the Commission and the parties interested; and perform such other duties as the chief hearing examiner may direct. All hearing examiners shall be attorneys licensed to practice in the State of Illinois. The chief hearing examiner shall have at least 10 years of litigation experience as a licensed attorney. Each hearing examiner shall have at least 5 years of litigation experience as a licensed attorney.

(b) All hearing examiners employed by the Commission shall be thoroughly familiar with applicable rules of evidence, procedure and administrative law. At least every two years after a hearing examiner is employed by the Commission, the executive director and chief hearing examiner shall review the performance of such hearing examiner based on whether the examiner:

(i) is, and is perceived to be, fair to all parties;

(ii) has a judicious and considerate temperament;

(iii) is capable of comprehending and properly conducting proceedings and other duties to which he is assigned;

(iv) is capable of understanding and rendering rulings on legal and evidentiary issues;

(v) is capable of independently evaluating the evidentiary record and drafting a proposed final order which reflects careful, impartial and competent analysis; and

(vi) meets any other qualifications deemed relevant or necessary by the executive director or chief hearing examiner.

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

(220 ILCS 5/7-101A new)

Sec. 7-101A. Restrictions on directors and corporate officers of electric utilities.

(a) An electric utility shall have a board of directors that is independent of all utility affiliates.

(b) An electric utility's board of directors shall not include any members that serve on the board of any of the utility's affiliates.

(c) No director or corporate officer of an electric utility may own stock in any of the utility's affiliates.

(d) No corporate officer or employee may have any formal or informal position or role in any affiliate of the electric utility.

(e) This Section applies only to electric utilities that on January 2, 2007 served over 100,000 customers.

(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 or gas 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 or electric 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, 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 of this Section. No cost incurred by a utility for advertising directed primarily outside of a utility's service territory may be considered an allowable operating expense.

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

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

(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) All advertising, including without limitation print, radio, television, internet and any other advertising medium using video, that relates to the positions, proposals, or conduct of a utility, shall prominently include the name of the utility in all cases where the utility pays for the advertising.

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

(220 ILCS 5/9-227) (from Ch. 111 2/3, par. 9-227)

Sec. 9-227. Political contributions and It shall be proper for the Commission to consider as an operating expense, for the purpose of determining whether a rate or other charge or classification is sufficient, donations made by a public utility for the public welfare or for charitable scientific, religious or educational purposes shall not be considered by the Commission as an operating expense, for the purpose of determining whether a rate or other charge or classification is sufficient. , provided that such donations are reasonable in amount. In determining the reasonableness of such donations, the Commission may not establish, by rule, a presumption that any particular portion of an otherwise reasonable amount may not be considered as an operating expense. The Commission shall be prohibited from disallowing by rule, as an operating expense, any portion of a reasonable donation for public welfare or charitable purposes.

(Source: P.A. 85-122.)

(220 ILCS 5/10-101) (from Ch. 111 2/3, par. 10-101)

Sec. 10-101. The Commission, or any commissioner or hearing examiner designated by the Commission, shall have power to hold investigations, inquiries and hearings concerning any matters covered by the provisions of this Act, or by any other Acts relating to public utilities subject to such rules and regulations as the Commission may establish. In the conduct of any investigation, inquiry or hearing the provisions of the Illinois Administrative Procedure Act, including but not limited to Sections 10-25 and 10-35 of that Act, shall be applicable and the Commission's rules shall be consistent therewith. Complaint cases initiated pursuant to any Section of this Act, investigative proceedings and ratemaking cases shall be considered "contested cases" as defined in Section 1-30 of the Illinois Administrative Procedure Act, any contrary provision therein notwithstanding. Any proceeding intended to lead to the establishment of policies, practices, rules or programs applicable to more than one utility may, in the Commission's discretion, be conducted pursuant to either rulemaking or contested case provisions, provided such choice is clearly indicated at the beginning of such proceeding and subsequently adhered to. No violation of this Section or the Illinois Administrative Procedure Act and no informality in any proceeding or in the manner of taking testimony before the Commission, any commissioner or hearing examiner of the Commission shall invalidate any order, decision, rule or regulation made, approved, or confirmed by the Commission in the absence of prejudice. All hearings conducted by the Commission shall be open to the public.

Each commissioner and every hearing examiner of the Commission designated by it to hold any inquiry, investigation or hearing, shall have the power to administer oaths and affirmations, certify to all official acts, issue subpoenas, compel the attendance and testimony of witnesses, and the production of papers, books, accounts and documents.

Hearings shall be held either by the Commission or by one or more commissioners or hearing examiners. In cases where a hearing examiner presides over the hearing, petitions for interlocutory review of the hearing examiner's rulings must be independently reviewed by the Commission without advice or recommendations, written or oral, from the hearing examiner whose ruling is being challenged or from any other hearing examiner or employee of the Commission, with the exception of a Commissioner's assistant.

When any counselor or attorney at law, licensed in any other state or territory, may desire to appear before the Commission, such counselor or attorney shall be allowed to appear before the Commission upon the same terms and in the same manner that counselors and attorneys at law licensed in this State now are or hereafter may be admitted to appear in such other state or territory before its Commission or equivalent body.

All evidence presented at hearings held by the Commission or under its authority shall become a part of the records of the Commission. In all cases in which the Commission bases any action on reports of investigation or inquiries not conducted as hearings, such reports shall be made a part of the records of the Commission. All proceedings of the Commission and all documents and records in its possession shall be public records, except as in this Act otherwise provided.

To the extent consistent with this Section and the Illinois Administrative Procedure Act, the Commission may adopt reasonable and proper rules and regulations relative to the exercise of its powers, and proper rules to govern its proceedings, and regulate the mode and manner of all investigations and hearings, and alter and amend the same.

(Source: P.A. 88-45.)

(220 ILCS 5/10-103) (from Ch. 111 2/3, par. 10-103)

Sec. 10-103. (a) In all proceedings, investigations or hearings conducted by the Commission, except in the disposition of matters which the Commission is authorized to entertain or dispose of on an ex parte basis, any finding, decision or order made by the Commission shall be based exclusively on the record for decision in the case, which shall include only the transcript of testimony and exhibits together with all papers and requests filed in the proceeding, including, in contested cases, the documents and information described in Section 10-35 of the Illinois Administrative Procedure Act.

(b) For purposes of this Section:

"Ex parte communication" means a communication between a person who is not a commissioner, commissioner's assistant, hearing examiner, or other person involved in the decisional process of the proceeding and a commissioner, commissioner's assistant, hearing examiner, or other person involved in the decisional process of the proceeding that relates to the substance of a pending Commission proceeding or that relates to the substance of a Commission proceeding that the party has reason to believe will be commenced, and that communication takes place outside the record of the proceeding. Communications directed to a hearing examiner regarding matters of procedure and practice, such as the format of a pleading, number of copies required, manner of service, and status of proceedings, are not considered ex parte communications.

"Party" means a public utility, telecommunications carrier, motor carrier, or any affiliated interest of a public utility, telecommunications carrier, or motor carrier who is named in the title of the matter or has intervened in the matter; any individual or organization or governmental representative that has intervened in the proceeding; and any person actively engaged in the development or advocacy of the Commission staff position in the contested proceeding.

(c) No commissioner, commissioner's assistant, hearing officer, or any other person who is or may reasonably be expected to be involved in the decisional process of a pending or impending proceeding shall engage in an ex parte communication in connection with the substance of any pending matter or matter that the person or party, or commissioner, commissioner's assistant, hearing officer, or any other person who is or may reasonably be expected to be involved in the decisional process has reason to believe will be commenced before the Commission pursuant to the contested case provisions of Article X of the Public Utilities Act with any party or the representative of any party to said matter or any other person who is not or may not reasonably be expected to be involved in the decisional process. This subsection (c) applies to any party, commissioner, commissioner's assistant, hearing examiner, or other person who is or may reasonably be expected to be involved in the decisional process of the proceeding or who knows, or should know upon reasonable inquiry, that the matter is pending or will be commenced before the Commission.

(d) The provisions of Section 10-60 of the Illinois Administrative Procedure Act shall apply in full to Commission proceedings, including ratemaking cases, any provision of the Illinois Administrative Procedure Act to the contrary notwithstanding. Commission staff who are engaged in investigatory, prosecutorial, or advocacy functions and other parties to the proceeding are specifically prohibited from communicating on an ex parte basis, directly or indirectly, with members of the Commission, commissioner's assistants, any hearing examiner in the proceeding, or any other person who is or may reasonably be expected to be involved in the decisional process of the proceeding. In addition, Commission staff are required to report, on the record, the substance of any communication with parties or other interested persons, consistent with Section 5-50 of the State Officials and Employees Ethics Act, along with any written material presented in connection with the ex parte communication. The provisions of Section 10-60 shall not apply, however, to communications between Commission employees who are engaged in investigatory, prosecutorial or advocacy functions and other parties to the proceeding, provided that such Commission employees are still prohibited from communicating on an ex parte basis, as designated in Section 10-60, directly or indirectly, with members of the Commission, any hearing examiner in the proceeding, or any Commission employee who is or may reasonably be expected to be involved in the decisional process of the proceeding.

(e) If a commissioner, commissioner's assistant, hearing examiner, or other person involved in the decisional process of the proceeding communicates with any person on any issue under review in a pending matter or a matter which any person or party to the communication has reason to believe will be commenced, the names of any such person or party shall be made a part of the record of the pending matter as soon as practicable after the prehearing conference. If any Any commissioner, hearing examiner, or other person Commission employee who is or may reasonably be expected to be involved in the decisional process of a proceeding, who receives, or who makes or knowingly causes to be made, a communication prohibited by this Section or Section 10-60 of the Illinois Administrative Procedure Act as modified by this Section, then he or she shall place on the public record of the proceeding (1) any and all such written communications; (2) memoranda stating the substance of any and all such oral communications; and (3) any and all written responses and memoranda stating the substance of any and all oral responses to the materials described in clauses (1) and (2).

(f) The Commission, or any commissioner or hearing examiner presiding over the proceeding, shall in the event of a violation of this Section, take whatever action is necessary to ensure that such violation does not prejudice any party or adversely affect the fairness of the proceedings, including dismissing the affected matter.

(Source: P.A. 88-45.)

(220 ILCS 5/10-111) (from Ch. 111 2/3, par. 10-111)

Sec. 10-111. In any hearing, proceeding, investigation or rulemaking conducted by the Commission, the Commission, commissioner or hearing examiner presiding, shall, after the close of evidentiary hearings, prepare a recommended or tentative decision, finding or order including a statement of findings and conclusions and the reasons or basis therefor, on all the material issues of fact, law or discretion presented on the record. Such recommended or tentative decision, finding or order shall be served on all parties who shall be entitled to a reasonable opportunity to respond thereto, either in briefs or comments otherwise to be filed or separately. The recommended or tentative decision, finding or order and any responses thereto, shall be included in the record for decision. The hearing examiner's proposed order and the parties' briefs on exception shall be forwarded directly to the Commission for the Commission's review, without further written or oral input from the hearing examiner. The Commission may hold oral argument prior to issuing a final order. The Commission may not request, and the hearing examiner shall not prepare, a post-exceptions proposed order nor shall the examiner play any role in drafting the Commission's final order. This Section shall not apply to any hearing, proceeding, or investigation conducted under Section 13-515.

(Source: P.A. 90-185, eff. 7-23-97.)

(220 ILCS 5/16-124)

Sec. 16-124. Metering for residential and small commercial retail customers. An electric utility that on January 2, 2007, served at least 100,000 customers shall install interval meters for all An electric utility shall not require a residential or small commercial retail customers by no later that 2010. The cost of installing these interval meters shall not be recovered from ratepayers, but the utility may apply for reimbursement of reasonable expenses incurred to comply with this requirement from the Consumers Overbilled and Reimbursed for Electricity Fund customer to take additional metering or metering capability as a condition of taking delivery services unless the Commission finds, after notice and hearing, that additional metering or metering capability is required to meet reliability requirements. Alternative retail electric suppliers serving such customers may provide such additional metering or metering capability at their own expense or take such additional metering or metering capability from the utility as a tariffed service. Any additional metering requirements shall be imposed in a nondiscriminatory manner. Nothing in this subsection shall be construed to prevent the normal maintenance, replacement or upgrade of meters as required to comply with Commission rules.

(Source: P.A. 90-561, eff. 12-16-97.)

(220 ILCS 5/16-124A new)

Sec. 16-124A. Direct load control devices for residential and small commercial retail customers. Electric utilities that on January 2, 2007, served at least 100,000 customers shall, by 2010, install direct load control devices on the central air conditioning systems of all residential and small commercial customers. Installation of direct load control devices shall be a condition of service to all customers that have central air conditioning in their homes, residential dwelling units or businesses. The utilities shall be required to dispatch the devices to minimize peak demand for electricity, in order to reduce costs for customers, reduce stress on the transmission system, and reduce power plant emissions. The cost of installing these direct load control devices shall not be recovered from ratepayers, but the utility may apply for reimbursement of reasonable expenses incurred to comply with this requirement from the Consumers Overbilled and Reimbursed for Electricity Fund.

(220 ILCS 5/16-126)

Sec. 16-126. Membership in an independent system operator.

(a) The General Assembly finds that the electric utilities that have joined establishment of one or more independent system operators are passing through escalating costs associated with their membership in those organizations, without a commensurate increase in benefits to customers. The utilities' membership in independent system operators has also eroded State control over key aspects of the utilities' operations.

(b) In order to reduce costs for utilities and customers in this State and maintain state control over the operations of state jurisdictional utilities, no public utility in the state of Illinois shall be a member of an independent system operator or regional transmission organization after December 31, 2007.

(c) The Commission shall allow utilities that were members of independent system operators on the effective date of this amendatory Act of the 95th General Assembly to recover reasonable costs associated with withdrawal from membership from the Consumers Overbilled and Reimbursed for Electricity Fund, but not from ratepayers. or their functional equivalents is required to facilitate the development of an open and efficient marketplace for electric power and energy to the benefit of Illinois consumers. Therefore, each Illinois electric utility owning or controlling transmission facilities or providing transmission services in Illinois and that is a member of the Mid-American Interconnected Network as of the effective date of this amendatory Act of 1997 shall submit for approval to the Federal Energy Regulatory Commission an application for establishing or joining an independent system operator that shall:

(1) independently manage and control transmission facilities of any electric utility;

(2) provide for nondiscriminatory access to and use of the transmission system for buyers and sellers of electricity;

(3) direct the transmission activities of the control area operators;

(4) coordinate, plan, and order the installation of new transmission facilities;

(5) adopt inspection, maintenance, repair, and replacement standards for the transmission facilities under its control and direct maintenance, repair, and replacement of all facilities under its control; and

(6) implement procedures and act to assure the provision of adequate and reliable service.

These standards shall be consistent with reliability criteria no less stringent than those established by the Mid-American Interconnected Network and the North American Electric Reliability Council or their successors.

(b) The requirements of this Section may be met by joining or establishing a regional independent system operator that meets the criteria enumerated in subsections (a), (c), and (d) of this Section, as determined by the Commission. To achieve the objectives set forth in subsection (a), the State of Illinois, through the appropriate officers, departments, and agencies, shall work cooperatively with the appropriate officials and agencies of those States contiguous to this State and the Federal Energy Regulatory Commission towards the formation of one or more regional independent system operators.

(c) The independent system operator's governance structure must be fair and nondiscriminatory, and the independent system operator must be independent of any one market participant or class of participants. The independent system operator's rules of governance must prevent control, or the appearance of control, of decision-making by any class of participants.

(d) Participants in the independent system operator shall make available to the independent system operator all information required by the independent system operator in performance of its functions described herein. The independent system operator and the electric utilities participating in the independent system operator shall make all filings required by the Federal Energy Regulatory Commission. The independent system operator shall ensure that additional filings at the Federal Energy Regulatory Commission request confirmation of the relevant provisions of this amendatory Act of 1997.

(e) If a spot market, exchange market, or other market-based mechanism providing transparent real-time market prices for electric power has not been developed, the independent system operator or a closely cooperating agent of the independent system operator may provide an efficient competitive power exchange auction for electric power and energy, open on a nondiscriminatory basis to all suppliers, which meets the loads of all auction customers at efficient prices.

(f) For those electric utilities referred to in subsection (a) which have not filed with the Federal Energy Regulatory Commission by June 30, 1998 an application for establishment or participation in an independent system operator or if such application has not been approved by the Federal Energy Regulatory Commission by March 31, 1999, a 5 member Oversight Board shall be formed. The Oversight Board shall (1) oversee the creation of an Illinois independent system operator and (2) determine the composition and initial terms of service of, and appoint the initial members of, the Illinois independent system operator board of directors. The Oversight Board shall consist of the following: (1) 3 persons appointed by the Governor; (2) one person appointed by the Speaker of the House of Representatives; and (3) one person appointed by the President of the Senate. The Oversight Board shall take the steps that are necessary to ensure the earliest possible incorporation of an Illinois independent system operator under the Business Corporation Act of 1983, and shall serve until the Illinois independent system operator is incorporated.

(g) After notice and hearing, the Commission shall require each electric utility referred to in subsection (a), that is not participating in an independent system operator meeting the requirements of subsections (a) and (c), to seek authority from the Federal Energy Regulatory Commission to transfer functional control of transmission facilities to the Illinois independent system operator for control by the Illinois independent system operator consistent with the requirements of subsection (a). Upon approval by the Federal Energy Regulatory Commission, electric utilities may also elect to transfer ownership of transmission facilities to the Illinois independent system operator. Nothing in this Act shall be deemed to preclude the Illinois independent system operator from (1) seeking authority, as necessary, to merge with or otherwise combine its operations with those of one or more other entities authorized to provide transmission services, (2) purchasing or leasing transmission assets from transmission-owning entities not required by this Section to lease transmission facilities to the Illinois independent system operator, or (3) operating as a transmission public utility under the Federal Power Act.

(h) Any other owner of transmission facilities in Illinois not required by this Section to participate in an independent system operator shall be permitted, but not required, to become a member of the Illinois independent system operator.

(i) The Illinois independent system operator created under this Section, and any other independent system operator authorized by the Federal Energy Regulatory Commission to provide transmission services as a public utility under the Federal Power Act within the State of Illinois, shall be deemed to be a public utility for purposes of Section 8-503 and 8-509 of this Act. An independent system operator or regional transmission organization that is the subject of an order entered by the Commission under Section 8-503 need not possess a certificate of service authority under Section 8-406 in order to be authorized to take the actions set forth in Section 8-509.

(j) Electric utilities referred to in subsection (a) may withdraw from the Illinois independent system operator upon becoming a member of an independent system operator or operators conforming with the criteria in subsections (a) and (c) and whose formation and operation has been approved by the Federal Energy Regulatory Commission. This subsection does not relieve any electric utility of any obligations under Federal law.

(d) (k) Nothing in this Section shall be construed as imposing any requirements or obligations that are in conflict with federal law.

(l) A regional transmission organization created under the rules of the Federal Energy Regulatory Commission shall be considered to be the functional equivalent of an independent system operator for purposes of this Section, and an electric utility shall be deemed to meet its obligations under this Section through membership in a regional transmission organization that fulfills the requirements of an independent system operator under this Section.

(Source: P.A. 92-12, eff. 7-1-01.)

(220 ILCS 5/16-131 new)

Sec. 16-131. Interconnection standards for small generators. I. Each electric utility shall permit small generators to interconnect facilities to those owned by the utility provided they meet the standards for such interconnection set forth in this Section, and must provide standby or other services to such generators. II. Definitions. The following words, when used in this section, have the following meanings:

"Adverse system impact" means a negative effect, due to technical or operational limits on conductors or equipment being exceeded, that compromises the safety or reliability of the electric distribution system.

"Affected system" means an electric system not owned or operated by the electric distribution company reviewing the interconnection request that may suffer an adverse system impact from the proposed interconnection.

"Applicant" means a person who has submitted an interconnection request to interconnect a small generator facility to an electric utility's distribution system.

"Area network" means a type of electric distribution system served by multiple transformers interconnected in an electrical network circuit, which is generally used in large metropolitan areas that are densely populated.

"Certificate of completion" means a certificate in a form approved by the Commission containing information about the interconnection equipment to be used, its installation and local inspections.

"Commissioning test" means a test applied to a small generator facility by the applicant after construction is completed to verify that the facility does not create adverse system impacts. At a minimum, the scope of the commissioning tests performed shall include the commissioning test specified in IEEE standard 1547 section 5.4 "Commissioning tests".

"Distribution upgrade" means a required addition or modification to the electric utility's distribution system to accommodate the interconnection of a small generator facility. Distribution upgrades do not include interconnection facilities.

"Draw-out type circuit breaker" means a switching device capable of making, carrying and breaking currents under normal and abnormal circuit conditions such as those of a short circuit. A draw-out circuit breaker can be physically removed from its enclosure creating a visible break in the circuit. The draw-out circuit breaker must be capable of being locked in the open, draw-out position.

"Electric distribution system" means:

(i) The facilities and equipment used to transmit electricity to ultimate usage points, such as homes, residential dwelling units and industries, from interchanges with higher voltage transmission networks that transport bulk power over longer distances. The voltage levels at which electric distribution systems operate differ among areas but generally carry less than 100 kilovolts of electricity.

(ii) Electric distribution system has the same meaning as the term "Area EPS", as used in 3.1.6.1 of IEEE Standard 1547.

"Fault current" means the electrical current that flows through a circuit during an electrical fault condition. A fault condition occurs when one or more electrical conductors contact ground or each other. Types of faults include phase to ground, double-phase to ground, three-phase to ground, phase-to-phase, and three-phase. Often, a fault current is several times larger in magnitude than the current that normally flows through a circuit.

"IEEE standard 1547" means the Institute of Electrical and Electronics Engineers, Inc. (IEEE) Standard 1547 (2003) ''Standard for Interconnecting Distributed Resources with Electric Power Systems'', as amended and supplemented, at the time the interconnection request is submitted.

"IEEE standard 1547.1" means the IEEE Standard 1547.1 (2005) ''Conformance Test Procedures for Equipment Interconnecting Distributed Resources with Electric Power Systems'', as amended and supplemented, at the time the interconnection request is submitted.

"Interconnection customer" means an entity that proposes to interconnect a small generator facility to an electric distribution system.

"Interconnection equipment" means a group of components or integrated system connecting an electric generator with a local electric power system or an electric distribution system that includes all interface equipment including switchgear, protective devices, inverters or other interface devices. Interconnection equipment may be installed as part of an integrated equipment package that includes a generator or other electric source.

"Interconnection facilities" means "facilities and equipment required by the electric utility to accommodate the interconnection of a small generator facility. Collectively, interconnection facilities include all facilities, and equipment between the small generator facility and the point of interconnection, including modification, additions, or upgrades that are necessary to physically and electrically interconnect the small generator facility to the electric distribution system. Interconnection facilities are sole use facilities and do not include distribution upgrades.

"Interconnection request" means an applicant's request for the interconnection of a new small generator facility or to increase the capacity or operating characteristics of an existing small generator facility that is interconnected with the electric utility's distribution system.

"Interconnection study" means any of the following studies:

(i) The interconnection feasibility study as described in XIV (5)(i).

(ii) The interconnection system impact study as described in XIV (5)(ii).

(iii) The interconnection facilities study as described in XIV (5)(iii).

"Line section" means that portion of an electric utility's distribution system connected to an interconnection customer, bounded by automatic sectionalizing devices or the end of the distribution line.

"Local electric power system" means facilities that deliver electric power to a load that are contained entirely within a single premises or group of premises. Local electric power system has the same meaning as the term local electric power system defined in 3.1.6.2 of IEEE Standard 1547.

"Minor equipment modification" means changes to the proposed small generator facility that do not have a significant impact on safety or reliability of the electric distribution system.

"Nameplate capacity" means the maximum rated output of a generator or other electric power production equipment under specific conditions designated by the manufacturer and is usually indicated on a nameplate physically attached to the power production equipment.

"NRTL" means "nationally recognized testing laboratory-A qualified private organization that meets the requirements of the Occupational Safety and Health Administration's (OSHA) regulations. NRTLs perform independent safety testing and product certification. Each NRTL must meet the requirements as set forth by OSHA in the NRTL program.

"Parallel operation-parallel" means the sustained state of operation over 100 milliseconds which occurs when a small generator facility is connected electrically to the electric distribution system and thus has the ability for electricity to flow from the small generator facility to the electric distribution system.

"Point of interconnection" means the point where the small generator facility is electrically connected to the electric distribution system. Point of interconnection has the same meaning as the term point of common coupling defined in 3.1.13 of IEEE Standard 1547.

"Primary line" means a distribution line rated at greater than 600 volts.

"Queue position" means the order of a completed interconnection request, relative to all other pending completed interconnection requests, that is established based upon the date and time of receipt of the completed interconnection request by the electric utility.

"Radial distribution circuit" means a circuit configuration in which independent feeders branch out radially from a common source of supply. From the standpoint of a utility system, the area described is between the generating source or intervening substations and the customer's electric service entrance equipment. A radial distribution system is the most common type of connection between a utility and load in which power flows in one direction from the utility to the load.

"Scoping meeting" means a meeting between representatives of the applicant and electric utility conducted for the purpose of discussing alternative interconnection options, exchanging information including any electric distribution system data and earlier study evaluations that would be reasonably expected to impact interconnection options, analyzing information, and determining the potential feasible points of interconnection.

"Secondary line" means a service line subsequent to the primary line that is rated for 600 volts or less, also referred to as the customer's service line.

"Shared transformer" a transformer that supplies secondary source voltage to more than one customer.

"Small generator facility" the equipment used by an interconnection customer to generate, or store electricity that operates in parallel with the electric distribution system. A small generator facility typically includes an electric generator and the interconnection equipment required to safely interconnect with the electric distribution system or local electric power system.

"Spot network" means a type of electric distribution system that uses two or more inter-tied transformers to supply an electrical network circuit. A spot network is generally used to supply power to a single customer or a small group of customers. Spot network has the same meaning as the term spot network defined in 4.1.4 of IEEE Standard 1547.

"Small generator interconnection agreement" means a set of forms of interconnection agreements which are applicable to interconnection requests pertaining to small generating facilities.

"UL Standard 1741" means Underwriters Laboratories' standard titled ''Inverters Converters, and Controllers for Use in Independent Power Systems", November 7, 2005 edition, as amended and supplemented.

"Witness test" means for lab certified or field approved equipment, verification (either by an on-site observation or review of documents) by the electric utility that the interconnection installation evaluation required by IEEE Standard 1547 Section 5.3 and the commissioning test required by IEEE Standard 1547 Section 5.4 have been adequately performed. For interconnection equipment that has not been lab certified or field approved, the witness test shall also include the verification by the electric utility of the on-site design tests as required by IEEE Standard 1547 Section 5.1 and verification by the electric utility of production tests required by IEEE Standard 1547 Section 5.2. All tests verified by the electric utility are to be performed in accordance with the test procedures specified by IEEE Standard 1547.1. III. Applicability. These interconnection procedures apply to applicants proposing to install and interconnect a small generator facility that satisfies the following criteria:

(1) The small generator facility is subject to state jurisdictional interconnection requirements and not the interconnection requirements of FERC or any RTO.

(2) The small generator facility is designed to operate in parallel with the electric distribution system. IV. Interconnection requests. Applicants seeking to interconnect a small generator facility shall submit an interconnection request to the electric utility that owns the electric distribution system to which interconnection is sought. The request shall be on a standard form approved by the Commission in accordance with this Section. Electric utilities shall establish processes for accepting interconnection requests electronically, within one month of the effective date of this Amendatory Act. V. Fees and forms. The Commission shall determine the appropriate interconnection application fees for levels 1 through 4 of the application process, as described herein, within one month of the effective date of this Amendatory Act. If standard forms and agreements are used for the interconnection process, electronic versions of those forms shall be approved by the Commission and posted on its website within one month of the effective date of this Amendatory Act. VI. Lab certified or field approved equipment. An interconnection request may be eligible for expedited interconnection review under VII (expedited review procedures) if the small generator facility uses lab certified or field approved interconnection equipment. To qualify for expedited review, the interconnection equipment must be either lab certified as provided for in subsection (1) or field approved as provided for in subsection (2)

(1) Interconnection equipment shall be deemed to be lab certified upon establishment of the following:

(i) The interconnection equipment has been tested in accordance IEEE 1547.1 in compliance with the appropriate codes and standards referenced below in paragraph (vii) by any nationally recognized testing laboratory (NRTL) recognized by the United States Occupational Safety and Health Administration to test and certify interconnection equipment pursuant to the relevant codes and standards listed in paragraph (vii).

(ii) The interconnection equipment has been labeled and is publicly listed by such NRTL at the time of the interconnection application.

(iii) The NRTL testing the interconnection equipment makes readily available for verification all test standards and procedures it utilized in performing such equipment certification, and, with consumer approval, the test data itself. The NRTL may make such information available on its web site and by encouraging such information to be included in the manufacturer's literature accompanying the equipment.

(iv) The applicant verifies that the intended use of the interconnection equipment falls within the use or uses for which the interconnection equipment was labeled, and listed by the NRTL.

(v) If the interconnection equipment is an integrated equipment package such as an inverter, then the applicant must show that the generator or other electric source being utilized is compatible with the interconnection equipment and is consistent with the testing and listing specified for this type of interconnection equipment.

(vi) If the interconnection equipment includes only interface components (switchgear, multi-function relays, or other interface devices), then the applicant must show that the generator or other electric source being utilized is compatible with the interconnection equipment and is consistent with the testing and listing specified for this type of interconnection equipment.

(vii) To meet the requirements for lab certification, interconnection equipment must be evaluated by a NRTL in accordance with the following codes and standards:

(a) IEEE 1547 Standard for Interconnecting Distributed Resources with Electric Power Systems (including use of IEEE 1547.1 testing protocols to establish conformity).

(b) UL 1741 Inverters, Converters, and Controllers for Use in Independent Power Systems.

(c) IEEE Std 929-2000 IEEE Recommended Practice for Utility Interface of Photovoltaic (PV) Systems.

(d) NFPA 70 National Electrical Code.

(e) IEEE Std C37.90.1-1989 (R1944) IEEE Standard Surge Withstand Capability (SWC) Tests for Protective Relays and Relay Systems.

(f) IEEE Std C37.90.2 (1995) IEEE Standard Withstand Capability of Relay Systems to Radiated Electromagnetic Interference from Transceivers.

(g) IEEE Std C37.108-1989 (R2002) IEEE Guide for the Protection of Network Transformers.

(h) IEEE Std C57.12.44-2000, IEEE Standard Requirements for Secondary Network Protectors.

(i) IEEE Std C62.41.2-2002, IEEE Recommended Practice on Characterization of Surges in Low Voltage (1000V and Less) AC Power Circuits.

(j) IEEE Std C62.45-1992 (R2002) IEEE Recommended Practice on Surge Testing for Equipment Connected to Low-Voltage (1000V) and Less) Power Circuits.

(k) ANSI C84.1-1995 Electric Power Systems and Equipment-Voltage Ratings (60 Hertz).

(l) IEEE Std 100-2000, IEEE Standard Dictionary of Electrical and Electronic.

(m) NEMA MG 1-1998, Motors and Small Resources, Revision 3.

(n) IEEE Std 519-1992, IEEE Recommended Practices and Requirements for Harmonic Control in Electrical Power Systems.

(o) NEMA MG 1-2003 (Rev 2004), Motors and Generators, Revision 1.

Lab certified interconnection equipment shall not require further design testing or production testing, as specified by IEEE standard 1547 Sections 5.1 and 5.2, or additional interconnection equipment modification to meet the requirements for expedited review; however, nothing herein shall preclude the need for an interconnection installation evaluation, commissioning tests or periodic testing as specified by IEEE standard 1547 Sections 5.3, 5.4 and 5.5 or for a witness test that may be conducted by an electric utility.

(2) Interconnection equipment shall be deemed to be field approved if within the previous 36 months of the date of the interconnection request, it has been previously approved for use with the proposed small generator facility and the following criteria are met:

(i) The electric utility has previously approved interconnection equipment identical to that being proposed under the Level 4 study review process described in XIV in a materially identical system application; or, the electric utility has agreed to accept a Level 4 study review conducted for identical interconnection equipment and system application by another electric utility.

(ii) The prior approval process included a successful witness test.

(iii) The applicant provides as part of its interconnection request the following information:

(a) A copy of the final certificate of completion from the prior approval process.

(b) A written statement that the proposed interconnection equipment is identical to what was previously approved.

(c) Documentation (or drawings) indicating the system interconnection details.

(3) Each electric utility shall retain copies of studies it performs to determine the feasibility of, system impacts of, or facilities required by the interconnection of any small generator facility, and shall avoid duplicating such studies to the extent possible. If requested by the applicant, the electric utility shall provide the applicant copies of any studies performed in analyzing an interconnection request, provided that information is not deemed confidential by the applicant or does not breach any defined security requirements. Any applicant can elect to provide any other applicant with copies of its own studies in the desire to streamline a future electric utility review; provided, however, that an electric utility has no obligation to provide any future applicants any information regarding prior interconnection requests, including but not limited to a prior applicant's name, copies of prior studies performed by the electric utility, or any other information surrounding the prior applicant's request. VII. Expedited review procedures. An electric utility shall review interconnection requests on an expedited basis using one or more of the following three review procedures and associated screens:

(1) An electric utility shall use Level 1 procedures for evaluation of all interconnection requests to connect inverter-based small generation facilities when:

(i) The small generator facility has a nameplate capacity of 10 kW or less; and

(ii) The customer interconnection equipment proposed for the small generator facility is lab certified.

(2) An electric utility shall use Level 2 procedures for evaluating interconnection requests when:

(i) the nameplate capacity rating is 2 MW or less; and

(ii) the interconnection equipment proposed for the small generator facility is lab certified or field approved; and

(iii) either the proposed interconnection is to a radial distribution circuit, or a spot network or the small generator facility was reviewed under Level 1 review procedures but not approved and the applicant has submitted a new interconnection request for consideration.

(3) An electric utility shall use Level 3 review procedures for evaluating interconnection requests to area networks and radial distribution circuits where power will not be exported based on the following criteria:

(i) For interconnection requests to the load side of an area network the following criteria must be satisfied to qualify for a Level 3 expedited review:

(a) The nameplate capacity of the small generator facility is less than or equal to 50kW.

(b) The proposed small generator facility utilizes a lab certified inverter-based equipment package.

(c) The small generator facility utilizes reverse power relays or other protection functions, or both, that prevent the export of power into the area network.

(d) The aggregate of all generation on the area network does not exceed the smaller of 5% of an area network's maximum load or 50kW.

(e) No construction of facilities by the electric distribution company shall be required to accommodate the small generator facility.

(ii) For interconnection requests to a radial distribution circuit, the following criteria must be satisfied to qualify for a Level 3 expedited review:

(a) The small generator facility has a nameplate capacity of 10 MW or less.

(b) The aggregated total of the nameplate capacity of all of the generators on the circuit, including the proposed small generator facility, is 10 MW or less.

(c) The small generator will use reverse power relays or other protection functions that prevent power flow onto the electric distribution system.

(d) The small generator is not served by a shared transformer.

(e) No construction of facilities by the electric distribution company on its own system shall be required to accommodate the small generator facility. VIII. Study review procedures. An electric utility shall use the Level 4 study review procedures for evaluating interconnection requests when:

(1) the small generator facility is subject to state jurisdictional interconnection requirements and not the interconnect requirements of FERC or any RTO; and

(2) the interconnection request was not approved under a Level 1, Level 2, or Level 3 expedited review and the applicant has submitted an interconnection request for consideration under a Level 4 study review or the interconnection request does not meet the criteria in Section VII for qualifying for an expedited review under Level 1, Level 2 or Level 3 review procedures.

(3) The interconnection request does not meet the criteria in Section VII for qualifying for an expedited review under Level 1, Level 2 or Level 3 review procedures. IX. Technical standards. The technical standard to be used in evaluating all interconnection requests under Level 1, Level 2, Level 3 and Level 4 reviews, unless otherwise provided for in these procedures, is IEEE standard 1547. X. Additional requirements. Additional requirements include:

(1) When an interconnection request is for a small generator facility that includes multiple energy production devices at a site for which the applicant seeks a single point of interconnection, the interconnection request shall be evaluated on the basis of the aggregate nameplate capacity of multiple devices.

(2) When an interconnection request is for an increase in capacity for an existing small generator facility, the interconnection request shall be evaluated on the basis of the new total nameplate capacity of the small generator facility.

(3) An electric utility shall maintain records of the following which it shall keep on file for a minimum of three years:

(i) The total number of and the nameplate capacity of the interconnection requests received, approved and denied under Level 1, Level 2, Level 3 and Level 4 reviews;

(ii) The fuel type, total number and the nameplate capacity of small generator facilities approved in each of the following categories, net metering, behind the meter load offset, combined heat and power, other;

(iii) The number of interconnection requests that were not processed within the timelines established in this rule;

(iv) The number of scoping meetings held and the number of feasibility studies, impact studies, and facility studies performed and the fees charged for these studies;

(v) The justifications for actions taken to deny interconnection requests; and

(4) An electric utility shall provide a report to the Commission in a format acceptable to the Commission containing the information required in paragraph (3) (i) - (iii) within 90 calendar days of the close of each calendar year.

(5) An electric utility shall designate a contact person, and contact information on its website and the commission's website for submission of all interconnection requests and from whom information on the interconnection request process and the electric utility's distribution system can be obtained through informal requests regarding a proposed project. The information may include studies and other materials useful to an understanding of the feasibility of interconnecting a small generator facility at a particular point on the electric utility's distribution system, except to the extent providing the materials would violate security requirements or confidentiality agreements, or be contrary to law or State or Federal regulations.

(6) When an interconnection request is deemed complete, a modification other than a minor equipment modification that is not agreed to in writing by the electric utility, shall require submission of a new interconnection request.

(7) When an applicant is not currently a customer of the electric utility at the proposed site, upon request from the electric utility, the applicant shall provide proof of site control evidenced by a property tax bill, deed, lease agreement or other legally binding contract.

(8) To minimize the cost of interconnecting multiple small generator facilities, the electric utility or the customer may propose a single point of interconnection for multiple small generator facilities located at a single site. If the applicant rejects the electric utility's proposal for a single point of interconnection, the applicant shall pay the additional cost, if any, of providing a separate point of interconnection for each small generator facility. If the electric utility unreasonably rejects the customer's proposal for a single point of interconnection without providing a written technical explanation, the electric utility shall pay the additional cost, if any, of providing a separate point of interconnection for each small generator facility.

(9) Small generator facilities over 10kW in total capacity shall be capable of being isolated from the electric utility. For small generator facilities interconnecting to a primary line, the isolation shall be by means of a lockable, visible-break isolation device accessible by the electric utility. For small generator facilities interconnecting to a secondary line, the isolation shall be by means of a lockable isolation device whose status is clearly indicated and is accessible by the electric utility. The isolation device shall be installed, owned and maintained by the owner of the small generation facility and located between the small generation facility and the point of interconnection. An accessible draw-out type circuit breaker with a provision for padlocking at the draw-out position can be considered an isolation device for purposes of this requirement.

(10) An interconnection customer may elect to provide the electric utility access to an isolation device that is contained in a building or area that may be unoccupied and locked or not otherwise readily accessible to the electric utility, by installing a lockbox provided by the electric utility that shall provide ready access to the isolation device. The interconnection customer shall install the lockbox in a location that is readily accessible by the electric utility and the interconnection customer shall permit the electric utility to affix a placard in a location of its choosing that provides clear instructions to electric utility operating personnel on access to the isolation device. In the event the interconnection customer fails to comply with the terms of this paragraph and the electric utility needs to gain access to the isolation device, the electric utility shall not be held liable for any damages resulting from any necessary electric utility action to isolate the interconnection customer.

(11) Any metering necessitated by a small generator interconnection shall be installed, operated and maintained in accordance with applicable tariffs. Any such metering requirements must be clearly identified as part of the standard small generator interconnection agreement executed by the interconnection customer and the electric utility.

(12) Electric utility monitoring and control of small generator facilities shall be permitted only if the nameplate rating is greater than 2 MW. Any monitoring and control requirements shall be consistent with the electric utility's written and published requirements and must be clearly identified as part of an interconnection agreement executed by the interconnection customer and the electric utility.

(13) The electric utility shall have the option of performing a witness test after construction of the small generator facility is completed. If the electric utility elects to perform a witness test, it shall contact the applicant to schedule the witness test at a mutually agreeable time within 10 business days of the scheduled commissioning test. For all interconnection requests evaluated under Level 2, Level 3 or Level 4 review procedures, the applicant shall provide the electric utility at least 30 business days notice of the planned commissioning test for the small generator facility unless the electric utility and the applicant agree to an alternative mutually acceptable notice period for the witness test. If the applicant changes the final scheduled commissioning test date from the planned commissioning test date, the electric utility shall use reasonable efforts to adjust the date for its witness test to accommodate the change; however, the electric utility may not schedule the witness test more than 20 business days from the final scheduled commissioning date unless agreed to by the applicant. If the electric utility does not perform the witness test within 10 business days of the commissioning test, the witness test is deemed waived unless the parties mutually agree to extend the date for scheduling the witness test or the electric utility provides written documentation describing an emergency condition that made it impossible to complete the witness test within the 10 business day period. If the witness test is not acceptable to the electric utility, the applicant shall be granted a period of 30 business days to address and resolve any deficiencies. The time period for addressing and resolving any deficiencies may be extended upon the mutual agreement of the electric utility and the applicant. If the applicant fails to address and resolve the deficiencies to the satisfaction of the electric utility, the interconnection request shall be deemed withdrawn and the applicant will cease all parallel operation of the small generator facility. If a witness test is not performed by the electric utility or an entity approved by the electric utility, the applicant must still satisfy the interconnection test specifications and requirements set forth in IEEE Standard 1547 Section 5. The applicant shall, if requested by the electric utility, provide a copy of all documentation in its possession regarding testing conducted pursuant to IEEE Standard 1547.1. XI. Level 1 expedited review.

(1) An electric utility shall use the Level 1 interconnection review procedure for an interconnection request that meets the criteria in VII(1) (relating to review procedures). An electric utility may not impose additional requirements for Level 1 reviews not specifically authorized under this section unless the electric utility and the Applicant mutually agree to do so.

(2) The electric utility shall evaluate the potential for adverse system impacts using the following screens which must be satisfied:

(i) For interconnection of a proposed small generator facility to a radial distribution circuit, the aggregated generation on the circuit, including the proposed small generator facility, may not exceed 15% of the line section annual peak load as most recently measured at the sub station or calculated for the line section.

(ii) For interconnection of a proposed small generator facility to the load side of spot network protectors, the proposed small generator facility shall utilize an inverter-based equipment package. The customer interconnection equipment proposed for the small generator facility must be lab certified, and when aggregated with other generation, may not exceed 5% of the spot network's maximum load.

(iii) When a proposed small generator facility is to be interconnected on a single-phase shared secondary line, the aggregate generation capacity on the shared secondary line, including the proposed small generator facility, may not exceed 20 kW.

(iv) When a proposed small generator facility is single-phase and is to be interconnected on a center tap neutral of a 240 volt service, its addition may not create an imbalance between the two sides of the 240 volt service of more than 20% of the nameplate rating of the service transformer.

(v) Construction of facilities by the electric utility on its own system is not required to accommodate the small generator facility.

(3) The Level 1 interconnection review must be conducted in accordance with the following procedures:

(i) An electric utility shall, within 10 business days after receipt of the interconnection request, inform the applicant that the interconnection request is complete or incomplete and what materials are missing.

(ii) The electric utility shall, within 15 business days after the end of the 10 business days noted in paragraph (i), verify that the small generator facility equipment can be interconnected safely and reliably using Level 1 screens.

(iii) Unless the electric utility determines and demonstrates that a small generator facility cannot be interconnected safely or reliably to its system and provides a letter to the applicant explaining its reasons for denying an interconnection request, the electric utility shall approve the interconnection request subject to the following conditions:

(a) The small generator facility has been approved by local or municipal electric code officials with jurisdiction over the interconnection; and

(b) A certificate of completion has been returned to the electric utility. Completion of local inspections may be designated on inspection forms used by local inspecting authorities; and

(c) The witness test has been successfully completed or waived; and

(d) The applicant has signed a standard small generator interconnection agreement. When an applicant does not sign the agreement within 30 business days after receipt from the electric utility, the interconnection request be deemed withdrawn unless the applicant requests to have the deadline extended. The request for extension shall not be unreasonably denied by the electric utility.

(iv) When a small generator facility is not approved under a Level 1 review, the applicant may submit a new interconnection request for consideration under Level 2, Level 3 or Level 4 procedures. XII. Level 2 expedited review.

(1) An electric utility shall use the Level 2 review procedure for an interconnection request that meets the criteria in VII (2) (relating to expedited review procedures). An electric utility shall not impose additional requirements for Level 2 reviews not specifically authorized under this subchapter unless otherwise mutually agreed to.

(2) The electric utility shall evaluate the potential for adverse system impacts using the following screens which must be satisfied:

(i) For interconnection of a proposed small generator facility to a radial distribution circuit, the aggregated generation on the circuit, including the proposed small generator facility, may not exceed 15% of the line section annual peak load most recently measured at the sub-station or calculated for the line section.

(ii) For interconnection of a proposed small generator facility to the load side of spot network protectors, the proposed small generator facility shall utilize an inverter-based equipment package. The customer interconnection equipment proposed for the small generator facility must be lab certified or field approved and, when aggregated with other generation, may not exceed 5% of a spot network's maximum load.

(iii) The proposed small generator facility, in aggregation with other generation on the distribution circuit, may not contribute more than 10 % to the distribution circuit's maximum fault current at the point on the primary line nearest the point of interconnection.

(iv) The proposed small generator facility, in aggregate with other generation on the distribution circuit, may not cause any distribution protective devices and equipment (including substation breakers, fuse cutouts, and line reclosers), or other customer equipment on the electric distribution system to be exposed to fault currents exceeding 90% of the short circuit interrupting capability. The interconnection request may not request interconnection on a circuit that already exceeds 90% of the short circuit interrupting capability.

(v) The proposed small generator facility's point of interconnection may not be on a transmission line.

(vi) When a customer-generator facility is to be connected to 3 phase, 3 wire primary electric utility distribution lines, a 3 phase or single-phase generator shall be connected phase-to-phase.

(vii) When a customer-generator facility is to be connected to 3 phase, 4 wire primary electric utility distribution lines, a 3 phase or single phase generator will be connected line-to-neutral and will be effectively grounded.

(viii) When the proposed small generator facility is to be interconnected on single-phase shared secondary line, the aggregate generation capacity on the shared secondary line, including the proposed small generator facility, shall not exceed 20 kW.

(ix) When a proposed small generator facility is single-phase and is to be interconnected on a center tap neutral of a 240 volt service, its addition may not create an imbalance between the two sides of the 240 volt service of more than 20% of the nameplate rating of the service transformer.

(x) A small generator facility, in aggregate with other generation interconnected to the distribution side of a substation transformer feeding the circuit where the small generator facility proposes to interconnect, may not exceed 10 MW in an area where there are known or posted transient stability limitations to generating units located in the general electrical vicinity (for example, three or four distribution busses from the point of interconnection).

(xi) Except as permitted by an additional review in VII (5), no construction of facilities by an electric utility on its own system shall be required to accommodate the small generator facility.

(3) The Level 2 interconnection review must be conducted in accordance with the following procedures:

(i) An electric utility shall, within 10 business days after receipt of the interconnection request, inform the interconnection that the interconnection request is complete or incomplete and what materials are missing.

(ii) When an interconnection request is complete, the electric utility shall assign a queue position. The queue position of the interconnection request shall be used to determine the potential adverse system impact of the small generator facility based on the relevant screening criteria. The electric utility shall notify the applicant about other higher-queued applicants on the same substation bus or spot network for which interconnection is sought.

(iii) When an electric utility determines additional information is required to complete an evaluation, the electric utility shall request the information. The time necessary to complete the evaluation may be extended, but only to the extent of the delay required for receipt of the additional information. The electric utility may not revert to the start of the review process or alter the applicant's queue position.

(iv) Within 20 business days after the electric utility notifies the applicant it has received a completed interconnection request, the electric utility shall:

(a) Evaluate the interconnection request using the Level 2 screening criteria.

(b) Review the applicant's analysis, if provided by applicant, using the same criteria.

(c) Provide the applicant with the electric utility's evaluation, including a comparison of the results of its own analyses with those of applicant, if applicable. When an electric utility does not have a record of receipt of the interconnection request and the applicant can demonstrate that the original interconnection request was delivered, the electric utility shall expedite its review to complete the evaluation of the interconnection request within 20 business days of the applicant's resubmittal.

(d) However, the electric utility shall not be obligated to meet the timeline for reviewing the interconnection request as provided for in this section (iv) until such time as the electric utility has completed the review of all other interconnection requests that have a higher queue position.

(4) When an electric utility determines that the interconnection request passes the Level 2 screening criteria, or fails one or more of the Level 2 screening criteria but determines that the small generator facility can be interconnected safely and reliably, it shall provide the applicant a standard small generator interconnection agreement within 5 business days after the determination.

(5) Additional review may be appropriate when a small generator facility has failed to meet one or more of the Level 2 screens. An electric utility shall offer to perform additional review to determine whether minor modifications to the electric distribution system would enable the interconnection to be made consistent with safety, reliability and power quality criteria. The electric utility shall provide the applicant with a nonbinding, good faith estimate of the costs of additional review and minor modifications. The electric utility shall undertake the additional review or modifications only after the applicant consents to pay for the review.

(6) An applicant shall have 30 business days or another mutually agreeable time after receipt of the standard small generator interconnection agreement to sign and return the agreement. When an applicant does not sign the agreement within 30 business days, the interconnection request shall be deemed withdrawn unless the applicant requests to have the deadline extended prior to the expiration of the 30 business day period. The request for extension may not be unreasonably denied by the electric utility. When construction is required under the provisions of paragraph (5), the interconnection of the small generator facility shall proceed according to any milestones agreed to by the parties in the standard small generator interconnection agreement. The standard small generator interconnection agreement may not become final until:

(i) The milestones agreed to in the standard small generator interconnection agreement are satisfied; and

(ii) The small generator facility is approved by electric code officials with jurisdiction over the interconnection; and

(iii) The applicant provides a certificate of completion to the electric utility. Completion of local inspections may be designated on inspection forms used by local inspecting authorities; and

(iv) There is a successful completion of the witness test, unless waived.

(7) If the small generator facility is not approved under a Level 2 review the electric utility shall provide the applicant a letter explaining its reasons for denying the interconnection request. The applicant may submit a new interconnection request for consideration under a Level 3 or Level 4 interconnection review; however, the queue position assigned to the Level 2 interconnection request shall be retained provided the request is made within 15 business days of notification that the current interconnection request is denied. XIII. Level 3 expedited review.

(1) An electric utility shall use the Level 3 expedited review procedure for an interconnection request that meets the criteria in VII (3) (relating to expedited review procedures). An electric utility may not impose additional requirements for Level 3 reviews not specifically authorized under this section unless otherwise mutually agreed to.

(2) Once the interconnection request is deemed complete by the electric utility, the electric utility shall assign a queue position based upon the date and time the interconnection request is determined to be complete. The queue position of each interconnection request shall be used to determine the potential adverse system impact of the small generator facility based on the relevant screening criteria. The applicant will proceed under the timeframes of this section. The electric utility shall notify the applicant about other higher-queued applicants on the same radial line or area network that the applicant is seeking to interconnect to.

(3) Interconnection requests meeting the requirements set forth in VII (3)(i) for non-exporting small generator facilities interconnecting to an area network shall be presumed to be appropriate for interconnection. The electric utility shall process the interconnection request to area networks using the following procedures:

(i) The electric utility shall evaluate the interconnection request under Level 2 interconnection review procedures as set forth in XII (3) except that the electric utility may have 25 business days to conduct an area network impact study to determine any potential adverse system impacts of interconnecting to the electric utility's area network; however, the electric utility shall not be obligated to meet the timeline for reviewing the interconnection request as provided for herein until such time as the electric utility has completed the review of all other interconnection requests that have a higher queue position.

(ii) In the event the area network impact study identifies potential adverse system impacts, the electric utility may determine at its sole discretion that it is inappropriate for the small generator facility to interconnect to the area network in which case the interconnection request shall be denied; however, the applicant may elect to submit a new interconnection request for consideration under Level 4 procedures in which case the queue position assigned to the Level 3 interconnection request will be retained provided the request is made within 15 business days of notification that the current application is denied.

(iii) The electric utility will conduct the area network impact study at its own expense.

(iv) In the event the electric utility denies the interconnection request, the electric utility shall provide the applicant with a copy of its area network impact study and written justification for denying the interconnection request.

(4) Interconnection request meeting the requirements set forth in VII (3)(ii) for non-exporting small generator facilities interconnecting to a radial distribution circuit shall be presumed to be appropriate for interconnection and shall be evaluated under the following Level 2 expedited review screens (Section XII (2) (ii thru xi), Section XII (3) (i thru iv), and Sections (4) and (5).

(5) For a small generator facility that satisfies the criteria in paragraph (3) or paragraph (4), the electric utility shall approve the interconnection request and provide a standard interconnection agreement for the applicant to sign.

(6) The applicant shall have either 30 calendar days, or another mutually agreeable timeframe after receipt of the standard small generator interconnection agreement, to sign and return the standard small generator interconnection agreement. If the applicant does not sign the standard small generator interconnection agreement within 30 calendar days, the request shall be deemed withdrawn unless the parties mutually agree to extend the time period for executing the standard small generator interconnection agreement prior to the expiration of the 30 business day period. After the standard small generator interconnection agreement is signed by the parties, interconnection of the small generator facility shall proceed according to any milestones agreed to by the parties in the standard small generator interconnection agreement.

(7) The interconnection agreement will not be final until:

(i) Any milestones agreed to in the standard small generator interconnection agreement are satisfied; and

(ii) The small generator facility is approved by electric code officials with jurisdiction over the interconnection; and

(iii) The applicant provides a certificate of completion to the electric utility; and

(iv) There is a successful completion of the witness test, if conducted by the electric utility.

(8) If the small generator facility is not approved under a Level 3 review, the applicant may submit a new interconnection request for consideration under the Level 4 procedures specified in XIV without sacrificing the original queue position provided the revised interconnection request is submitted within 15 business days of notice that the current request has not been approved. XIV Level 4 study review.

(1) An electric utility shall use the Level 4 study review procedure for an interconnection request that meets the criteria in VIII (relating to study review procedures).

(2) Within 10 business days from receipt of an interconnection request, the electric utility shall notify the applicant whether the request is complete. When the interconnection request is not complete, the electric utility shall provide the applicant a written list detailing information that shall be provided to complete the interconnection request. The applicant shall have 10 business days to provide appropriate data in order to complete the interconnection request or the interconnection request shall be considered withdrawn. The parties may agree to extend the time for receipt of the additional information. The interconnection request shall be deemed complete when the required information has been provided by the applicant, or the parties have agreed that the applicant may provide additional information at a later time.

(3) When an interconnection request is complete, the electric utility shall assign a queue position. The queue position of an interconnection request shall be used to determine the cost responsibility necessary for the facilities to accommodate the interconnection. The electric utility shall notify the applicant about other higher-queued applicants. Any required interconnection studies shall not begin until the electric utility has completed its review of all other interconnection requests that have a higher queue position.

(4) The following procedures shall be followed in performing a Level 4 study review:

(i) By mutual agreement of the parties, the scoping meeting, interconnection feasibility study, interconnection impact study, or interconnection facilities studies provided for in a Level 4 review and discussed in this paragraph may be waived.

(ii) If agreed to by the parties, a scoping meeting will be held within 10 business days, or other mutually agreed to time, after the electric utility has notified the applicant that the interconnection request is deemed complete, or the applicant has requested that its interconnection request proceed after failing the requirements of a Level 2 review or Level 3 review. The purpose of the meeting must be to review the interconnection request, existing studies relevant to the interconnection request, and the results of the Level 1, Level 2 or Level 3 screening criteria.

(iii) When the parties agree at a scoping meeting that an interconnection feasibility study shall be performed, the electric utility shall provide to the applicant, no later than 5 business days after the scoping meeting, an interconnection feasibility study agreement, including an outline of the scope of the study and a nonbinding good faith estimate of the cost to perform the study.

(iv) When the parties agree at a scoping meeting that an interconnection feasibility study is not required, the electric utility shall provide to the applicant, no later than 5 business days after the scoping meeting, an interconnection system impact study agreement, including an outline of the scope of the study and a nonbinding good faith estimate of the cost to perform the study.

(v) When the parties agree at the scoping meeting that an interconnection feasibility study and system impact study are not required, the electric utility shall provide to the applicant, no later than 5 business days after the scoping meeting, an interconnection facilities study agreement including an outline of the scope of the study and a nonbinding good faith estimate of the cost to perform the study.

(5) The following guidelines shall be followed in conducting all required interconnection studies:

(i) An interconnection feasibility study shall include any necessary analyses for the purpose of identifying a potential adverse system impact to the electric utility's electric distribution system that would result from the interconnection from among the following:

(a) Initial identification of any circuit breaker short circuit capability limits exceeded as a result of the interconnection.

(b) Initial identification of any thermal overload or voltage limit violations resulting from the interconnection.

(c) Initial review of grounding requirements and system protection.

(d) Description and nonbinding estimated cost of facilities required to interconnect the small generator facility to the electric utility's electric distribution system in a safe and reliable manner.

(e) When an applicant requests that the interconnection feasibility study evaluate multiple potential points of interconnection, additional evaluations may be required. Additional evaluations shall be paid by the applicant.

(f) An interconnection system impact study is not required when the interconnection feasibility study concludes there is no adverse system impact, or when the study identifies an adverse system impact, but the electric utility is able to identify a remedy without the need for an interconnection system impact study.

(g) The parties shall use a form of interconnection feasibility study agreement approved by the Commission.

(ii) An interconnection system impact study shall evaluate the impact of the proposed interconnection on both the safety and reliability of the electric utility's electric distribution system. The study shall identify and detail the system impacts that result when a small generator facility is interconnected without project or system modifications, focusing on the adverse system impacts identified in the interconnection feasibility study, or potential impacts including those identified in the scoping meeting. The study shall consider all generating facilities that, on the date the interconnection system impact study is commenced, are directly interconnected with the electric utility's system, have a pending higher queue position to interconnect to the system, or have a signed a standard small generator interconnection agreement. As part of its impact study, the electric utility shall agree to evaluate and consider any separate studies prepared by the applicant that evaluate alternatives for interconnecting the small generator facility including the applicant's assessment of potential impacts of the small generator facility on the electric distribution system. The electric utility shall provide the applicant with the electric utility's final impact study evaluation including a comparison of the results of its own analyses with those provided by the applicant.

(a) A distribution interconnection system impact study shall be performed when a potential distribution system adverse system impact is identified in the interconnection feasibility study. The electric utility shall send the applicant an interconnection system impact study agreement within 5 business days of transmittal of the interconnection feasibility study report. The agreement will include an outline of the scope of the study and a good faith estimate of the cost to perform the study. The impact study shall include any necessary elements from among the following:

1. A load flow study.

2. Identification of affected systems.

3. An analysis of equipment interrupting ratings.

4. A protection coordination study.

5. Voltage drop and flicker studies.

6. Protection and set point coordination studies.

7. Grounding reviews.

8. Impact on system operation.

(b) An interconnection system impact study must consider any necessary criteria from among the following:

1. A short circuit analysis.

2. A stability analysis.

3. Alternatives for mitigating adverse system impacts on affected systems.

4. Voltage drop and flicker studies.

5. Protection and set point coordination studies.

6. Grounding reviews.

(c) The final interconnection system impact study must provide the following:

1. The underlying assumptions of the study.

2. The results of the analyses.

3. A list of any potential impediments to providing the requested interconnection service.

4. Required distribution upgrades.

5. A nonbinding good faith estimate of cost and time to construct any required distribution upgrades.

(d) The parties shall use an interconnection impact study agreement as approved by the Commission.

(iii) The interconnection facilities study shall be conducted as follows:

(a) Within 5 business days of completion of the interconnection system impact study, a report shall be transmitted to the applicant with an interconnection facilities study agreement, which includes an outline of the scope of the study and a nonbinding good faith estimate of the cost to perform the study.

(b) The interconnection facilities study shall estimate the cost of the equipment, engineering, procurement and construction work, including overheads, needed to implement the conclusions of the interconnection feasibility study and the interconnection system impact study to interconnect the small generator facility. The interconnection facilities study shall identify:

1. The electrical switching configuration of the equipment, including transformer, switchgear, meters and other station equipment.

2. The nature and estimated cost of the electric utility's interconnection facilities and distribution upgrades necessary to accomplish the interconnection.

3. An estimate of the time required to complete the construction and installation of the facilities.

(c) The parties may agree to permit an applicant to separately arrange for a third party to design and construct the required interconnection facilities. The electric utility may review the design of the facilities under the interconnection facilities study agreement. When the parties agree to separately arrange for design and construction, and to comply with security and confidentiality requirements, the electric utility shall make all relevant information and required specifications available to the applicant to permit the applicant to obtain an independent design and cost estimate for the facilities, which must be built in accordance with the specifications.

(d) Upon completion of the interconnection facilities study, and with the agreement of the applicant to pay for the interconnection facilities and distribution upgrades identified in the interconnection facilities study, the electric utility shall provide the applicant with a standard small generator interconnection agreement within 5 business days.

(e) In the event that distribution upgrades are identified in the impact study that must be added only in the event that higher-queued customers not yet interconnected eventually complete and interconnect their generation facilities, an applicant may elect to interconnect without paying for such upgrades at the time of the interconnection under the condition that the customer shall pay for such upgrades at the time the higher-queued customer is ready to interconnect. If the customer does not pay for such upgrades at that time, the electric utility will require the customer to immediately disconnect its generating facility so that the higher-queued customer can be accommodated.

(f) The parties shall use an interconnection facility study agreement approved by the Commission.

(6) When an electric utility determines, as a result of the studies conducted under a Level 4 review, that it is appropriate to interconnect the small generator facility, the electric utility shall provide the applicant with a standard small generator interconnection agreement. If the interconnection request is denied, the electric utility shall provide the applicant a written explanation.

(7) An applicant shall have 30 business days, or another mutually agreeable time frame after receipt of the standard small generator interconnection agreement to sign and return the agreement. When an applicant does not sign the agreement within 30 business days, the interconnection request shall be deemed withdrawn unless the applicant requests to have the deadline extended. The request for extension may not be unreasonably denied by the electric utility. When construction is required, the interconnection of the small generator facility shall proceed according to milestones agreed to by the parties in the standard small generator interconnection agreement. The standard small generator interconnection agreement may not be final until:

(i) The milestones agreed to in the standard small generator interconnection agreement are satisfied.

(ii) The small generator facility is approved by electric code officials with jurisdiction over the interconnection.

(iii) The applicant provides a certificate of completion to the electric utility. Completion of local inspections may be designated on inspection forms used by local inspecting authorities.

(iv) There is a successful completion of the witness test, unless waived. XV. Dispute Resolution.

(1) A party shall attempt to resolve all disputes regarding interconnection as provided in this section promptly, equitably, and in a good faith manner.

(2) When a dispute arises, a party may seek immediate resolution through complaint procedures available through the Commission, or an alternative dispute resolution process approved by the Commission, by providing written notice to the Commission and the other party stating the issues in dispute. Dispute resolution shall be conducted in an informal, expeditious manner to reach resolution with minimal costs and delay. When available, dispute resolution may be conducted by phone.

(3) When disputes relate to the technical application of this section, the Commission may designate a technical master to resolve the dispute. The Commission may designate a Department of Energy National Laboratory or a college or university with distribution system engineering expertise as the technical master. When the Federal Energy Regulatory Commission identifies a National technical dispute resolution team, the Commission may designate the team as its technical master. Upon Commission designation, the parties shall use the technical master to resolve disputes related to interconnection. Costs for a dispute resolution conducted by the technical master shall be established by the technical master, subject to review by the Commission. Pursuit of dispute resolution may not affect an applicant with regard to consideration of an interconnection request or an applicant's queue position.

(220 ILCS 5/16-132 new)

Sec. 16-132. Ownership of electric utilities. After 2009, no electric utility that served at least 100,000 customers on January 2, 2007 shall be owned, in whole or in part, by or affiliated with a company that is an independent power producer, a power marketer, or an alternative retail electric supplier.

Section 4-930. The Eminent Domain Act is amended by adding Sections 15-5-45 and 25-5-5 and by changing the heading of Part 5 of Article 25 as follows:

(735 ILCS 30/15-5-45 new)

Sec. 15-5-45. Eminent domain powers in new Acts. The following provisions of law may include express grants of the power to acquire property by condemnation or eminent domain:

Illinois Power Authority Act.

(735 ILCS 30/Art. 25, Pt. 5 heading)

Part 5. New Quick-take Powers

(Reserved)

(Source: P.A. 94-1055, eff. 1-1-07.)

(735 ILCS 30/25-5-5 new)

Sec. 25-5-5. Quick-take; Illinois Power Authority. Quick-take proceedings under Article 20 may be used by the Illinois Power Authority for the purposes specified in the Illinois Power Authority Act.

ARTICLE 5. ELECTRICITY GENERATOR TAX ACT

Section 5-1. Short title. This Article may be cited as the Electricity Generator Tax Act. References in this Article to "this Act" mean this Article.

Section 5-3. Definitions. As used in this Act:

"Capacity factor" means the ratio of the electric energy produced by a generating unit during a taxable year compared to the electric energy that could have been produced at continuous, full-power operation during the entire taxable year.

"Department" means the Department of Revenue.

"Generating unit" means a nuclear reactor, coal-fired boiler, coal-fired combustion turbine, or natural gas-fired turbine that produces electricity.

"Nameplate capacity" means the maximum rated output of a generating unit under specific conditions, as designated by the manufacturer on a nameplate that is physically attached to the generating unit.

"Taxable year" means a calendar year. For 2007, however, taxable year means the effective date of this Act through and including December 31, 2007.

"Taxpayer" means a person who operates a generating unit in this State at any time during the taxable year.

"Vertically integrated utility" means a public utility that owns generating units, a transmission system, and distribution lines to provide all aspects of electric service in the utility's service territory.

Section 5-5. Tax imposed.

(a) A tax is imposed on the privilege of operating, at any time during the taxable year, a generating unit within this State.

(b) The tax imposed under this Act applies to taxable years beginning on or after the effective date of this Act and through and including the taxable year in which the State Comptroller, State Treasurer, and Director of Revenue jointly certify that the tax no longer need be imposed to meet any liabilities for payments under Sections 16-124, 16-124A, 16-126, and 16-135 of the Public Utilities Act.

(c) No tax under this Act is imposed on any of the following:

(1) a generating unit owned by a municipal corporation, a unit of local government, or an electric cooperative;

(2) a generating unit that generates electricity from a renewable energy resource, as defined in the Renewable Energy, Energy Efficiency, and Coal Resources Development Law of 1997;

(3) a generating unit designed to produce both heat and electricity from a single heat source;

(4) a generating unit that has a nameplate capacity of less than 100 megawatts;

(5) a generating unit operated fewer than 876 hours during the taxable year (or fewer than 438 hours during taxable year 2007); or

(6) any portion of the nameplate capacity of a generating unit that is owned by a vertically integrated utility.

Section 5-10. Rate. For each generating unit that is not exempt under subsection (c) of Section 5-5, the tax under this Act is imposed annually in the amount equal to $70,000 per megawatt of nameplate capacity of the generating unit multiplied by the average capacity factor for the taxable year.

Section 5-15. Returns and notices.

(a) Each taxpayer subject to the tax imposed under this Act shall make a return under this Act for that taxable year.

(b) Each taxpayer shall keep any record, render any statement, make any return and notice, and comply with any rule that the Department may, from time to time, adopt. If, in the judgment of the Director of Revenue it is necessary, he or she may require any person, by notice served upon that person or by rule, to make any return and notice, render any statement, or keep any record that the Director deems sufficient to show whether or not that person is liable for tax under this Act.

Section 5-20. Time and place for filing returns.

(a) Returns required by this Act must be filed at the place that the Department may require by rule.

(b) A return due under this Act for any taxable year must be filed on or before the 15th day of the third month following the close of the taxable year.

(c) The fact that an individual's name is signed to a return or notice is prima facie evidence for all purposes that the document was actually signed by that individual. If a return is prepared by an income tax return preparer for a taxpayer, then that preparer shall sign the return as the preparer of that return. If a return is transmitted to the Department electronically, then the Department may presume that the electronic return originator has obtained and is transmitting a valid signature document pursuant to the rules adopted by the Department for the electronic filing of tax returns, or the Department may authorize electronic return originators to maintain the signature documents and associated documentation, subject to the Department's right of inspection at any time without notice, rather than transmitting those documents to the Department, and the Department may process the return.

A return or notice required of a corporation must be signed by the president, vice-president, treasurer, or any other officer duly authorized so to act or, in the case of a limited liability company, by a manager or member. In the case of a return or notice made for a corporation by a fiduciary, the fiduciary shall sign the document. The fact that an individual's name is signed to a return or notice is prima facie evidence that the individual is authorized to sign the document on behalf of the taxpayer.

A return or notice of a partnership must be signed by any one of the partners or, in the case of a limited liability company, by a manager or member. The fact that a person's name is signed to a return or notice is prima facie evidence that the individual is authorized to sign the document on behalf of the partnership or limited liability company.

(d) If a taxpayer fails to sign a return within 30 days after proper notice and demand for signature by the Department, the return is considered valid, and any amount shown to be due on the return is deemed assessed. Any overpayment of tax shown on the face of an unsigned return is considered forfeited if, after notice and demand for signature by the Department, the taxpayer fails to provide a signature and 3 years have passed from the date the return was filed.

(e) Each return required to be filed under this Act must contain or be verified by a written declaration that it is made under the penalties of perjury. A taxpayer's signing a fraudulent return under this Act is perjury, as defined in Section 32-2 of the Criminal Code of 1961.

(f) The Department may require electronic filing of any return due under this Act.

Section 5-25. Payment on due date of return.

(a) Each taxpayer required to file a return under this Act shall, without assessment, notice, or demand, pay any tax due thereon to the Department at the place fixed by rules adopted by the Department for filing on or before the date fixed for filing the return (determined without regard to any extension of time for filing the return). In making payment as provided in this Section, there remains payable only the balance of the tax remaining due after giving effect to payments of estimated tax made by the taxpayer under Section 5-30 of this Act for the taxable year and to tentative payments under subsection (b) of this Section for the taxable year.

(b) The taxpayer shall file a tentative tax return and pay, on or before the date required by law for the filing of the return the amount properly estimated as his or her tax for the taxable year.

(c) Interest and penalty on any amount of tax due and unpaid for the period of any extension is payable as provided by the Uniform Penalty and Interest Act.

(d) The Department may, by rule, require any taxpayer to make payments due under this Act by electronic funds transfer.

Section 5-30. Payment of estimated tax.

(a) Beginning July 1, 2007, each taxpayer is required to pay estimated tax for the taxable year in the form and manner that the Department requires by rule. Each installment of estimated tax must be paid on or before the 10th day of each calendar month.

(b) The amount of each required installment is an amount equal to:

(1) the total amount of the tax that is estimated to be due for the taxable year under Section 5-10 less the amount of all estimated payments previously paid by the taxpayer for that taxable year; divided by

(2) the number of calendar months remaining in the taxable year, including the current calendar month.

(c) In case of any underpayment of estimated tax by a taxpayer, the taxpayer is liable to a penalty in an amount determined at the rate set forth under Section 3-3 of the Uniform Penalty and Interest Act upon the amount of the underpayment, determined under subsection (b), for each required installment. For the purposes of this subsection (c), the amount of the underpayment is the excess of:

(1) the amount of the installment that would be required to be paid under subsection (b); less

(2) the amount, if any, of the installment paid on or before the last date prescribed for payment.

Section 5-35. Collection authority. The Department shall collect the taxes imposed by this Act and shall deposit the amounts collected under this Act into the Consumers Overbilled and Reimbursed for Electricity Fund in the State treasury. To the extent that the State Comptroller, State Treasurer, and Director of Revenue jointly certify that any of the balance in the Fund is not needed to meet any liabilities for payments under Section 16-135 of the Public Utilities Act, the State Comptroller shall order and the State Treasurer shall transfer that excess balance to the General Revenue Fund.

Section 5-40. Notice and demand.

(a) Except as provided in subsection (b), the Director of Revenue shall, as soon as practical after an amount payable under this Act is deemed assessed (as provided in Section 5-45 of this Act), give notice to each person liable for any unpaid portion of that assessment, stating the amount unpaid and demanding payment thereof. In the case of tax deemed assessed with the filing of a return, the Director shall give notice no later than 3 years after the date the return was filed. Upon receipt of any notice and demand, there must be paid, at the place and time stated in the notice, the amount stated in the notice. The notice must be left at the dwelling or usual place of business of the person or shall be sent by mail to the person's last known address.

(b) In the case of a deficiency deemed assessed under Section 5-45 of this Act, after the filing of a protest, notice and demand may not be made with respect to the assessment until all proceedings in court for the review of the assessment have terminated or the time for the taking thereof has expired without the proceedings being instituted.

(c) The Department may bring an action in any court of competent jurisdiction within or without this State in the name of the people of this State to recover the amount of any taxes, penalties, and interest due and unpaid under this Act. In that action, the certificate of the Department showing the amount of the delinquency is prima facie evidence of the correctness of the amount, its assessment, and of the compliance by the Department with all the provisions of this Act.

Section 5-45. Assessment.

(a) The amount of tax that is shown to be due on the return is deemed to be assessed on the date of filing of the return (including any amended returns showing an increase of tax). If the amount of tax is understated on the taxpayer's return due to a mathematical error, the Department shall notify the taxpayer that the amount of tax in excess of that shown on the return is due and has been assessed. The notice of additional tax due must be issued no later than 3 years after the date the return was filed. The notice of additional tax due is not considered to be a notice of deficiency nor does the taxpayer have any right of protest. In the case of a return properly filed without the computation of the tax, the tax computed by the Department is deemed to be assessed on the date when payment is due.

(b) If a notice of deficiency has been issued, the amount of the deficiency is deemed assessed on the date provided in Section 5-50 if no protest is filed or, if a protest is filed, then upon the date when the decision of the Department becomes final.

(c) Any amount paid as tax or in respect of tax paid under this Act, other than amounts paid as estimated tax under Section 5-30, are deemed to be assessed upon the date of receipt of payment, notwithstanding any other provisions of this Act.

(d) No deficiency may be assessed with respect to a taxable year for which a return was filed unless a notice of deficiency for that year was issued not later than the date prescribed in Section 5-55.

Section 5-50. Deficiencies and overpayments.

(a) As soon as practical after a return is filed, the Department shall examine it to determine the correct amount of tax. If the Department finds that the amount of tax shown on the return is less than the correct amount, it shall issue a notice of deficiency to the taxpayer that sets forth the amount of tax and penalties proposed to be assessed. If the Department finds that the tax paid is more than the correct amount, it shall credit or refund the overpayment as provided by Section 5-65. The findings of the Department under this subsection are prima facie correct and are prima facie evidence of the correctness of the amount of tax and penalties due.

(b) If the taxpayer fails to file a tax return, the Department shall determine the amount of tax due according to its best judgment and information, and the amount so fixed by the Department is prima facie correct and is prima facie evidence of the correctness of the amount of tax due. The Department shall issue a notice of deficiency to the taxpayer that sets forth the amount of tax and penalties proposed to be assessed.

(c) A notice of deficiency issued under this Act must set forth the adjustments giving rise to the proposed assessment and the reasons therefor.

(d) Assessment when no protest. Upon the expiration of 60 days after the date on which it was issued, a notice of deficiency constitutes an assessment of the amount of tax and penalties specified therein, except only for such amounts as to which the taxpayer has filed a protest with the Department.

Section 5-55. Limitations on notices of deficiency and assessments.

(a) A notice of deficiency must be issued not later than 3 years after the date that the return was filed. No deficiency may be assessed or collected with respect to the year for which the return was filed unless the notice is issued within that period.

(b) If no return is filed or a false and fraudulent return is filed with intent to evade the tax imposed by this Act, a notice of deficiency may be issued at any time.

(c) In any case in which there has been an erroneous refund of tax payable under this Act, a notice of deficiency may be issued at any time within 2 years from the making of the refund, or within 5 years from the making of the refund if it appears that any part of the refund was induced by fraud or the misrepresentation of a material fact, but the amount of any proposed assessment set forth in the notice is limited to the amount of the erroneous refund.

(d) If a protest has been filed with respect to a notice of deficiency issued by the Department with respect to a taxable year and the decision of the Department on the protest has become final, the Department is barred from issuing a further or additional notice of deficiency for that taxable year, except in the case of fraud, mathematical error, or a return that is not considered processable, as the term is defined in Section 3-2 of the Uniform Penalty and Interest Act.

(e) The taxpayer at any time, whether or not a notice of deficiency has been issued, has the right to waive the restrictions on assessment and collection of the whole or any part of any proposed assessment under this Act by a signed notice in writing filed with the Department in the form and manner that the Department may provide by rule.

Section 5-60. Procedure on protest.

(a) Within 60 days after the issuance of a notice of deficiency, the taxpayer may file with the Department of Revenue a written protest against the proposed assessment, in the form and manner that the Department may provide by rule, setting forth the grounds on which the protest is based. If a protest is filed, the Department shall reconsider the proposed assessment and, if the taxpayer has so requested, shall grant the taxpayer or his or her authorized representative a hearing.

(b) As soon as practical after the reconsideration and hearing, if any, the Department shall issue a notice of decision by mailing the notice by certified or registered mail. The notice must set forth briefly the Department's findings of fact and the basis of decision in each case decided in whole or in part adversely to the taxpayer.

(c) Within 30 days after the mailing of a notice of decision, the taxpayer may file with a Department a written request for rehearing in the form and manner that the Department may provide by rule, setting forth the grounds on which the rehearing is requested. In any such case, the Department shall, in its discretion, grant either a rehearing or Departmental review unless, within 10 days after receipt of the request, it issues a denial of the request by mailing the denial to the taxpayer by certified or registered mail. If rehearing or Departmental review is granted, as soon as practical after the rehearing or Departmental review, the Department shall issue a notice of final decision as provided in subsection (b).

(d) The action of the Department on the taxpayer's protest becomes final:

(1) 30 days after the issuance of a notice of decision as provided in subsection (b); or

(2) if a timely request for rehearing was made, upon the issuance of a denial of the request or the issuance of a notice of final decision, as provided in subsection (c).

Section 5-65. Credits and refunds.

(a) In the case of any overpayment, the Department of Revenue may credit the amount of the overpayment, including any interest allowed thereon, against any liability in respect of the tax imposed by this Act or any other act administered by the Department or against any liability of the taxpayer collectible by the Department, regardless of whether other collection remedies are closed to the Department on the part of the person who made the overpayment and shall refund any balance to that person.

(b) The Department may adopt rules providing for the crediting against the estimated tax for any taxable year of the amount determined by the taxpayer or the Department to be an overpayment of the tax imposed by this Act for a preceding taxable year.

(c) Interest is allowed and paid at the rate and in the manner set forth under Section 3-2 of the Uniform Penalty and Interest Act upon any overpayment in respect of the tax imposed by this Act. For purposes of this subsection, no amount of tax, for any taxable year, may be treated as having been paid before the date on which the tax return for that year was due under Section 5-20.

(d) Every claim for refund must be filed with the Department in writing in the form and manner that the Department may provide by rule, and must state the specific grounds upon which it is founded.

(e) As soon as practical after a claim for refund is filed, the Department shall examine it and either issue a notice of refund, abatement, or credit to the claimant or issue a notice of denial. If the Department has failed to approve or deny the claim before the expiration of 6 months after the date the claim was filed, then the claimant may nevertheless thereafter file with the Department a written protest in the form and manner that the Department may provide by rule. If a protest is filed, the Department shall consider the claim and, if the taxpayer has so requested, shall grant the taxpayer or the taxpayer's authorized representative a hearing within 6 months after the date the request is filed.

A denial of a claim for refund becomes final 60 days after the date of issuance of the notice of the denial except for those amounts denied as to which the claimant has filed a protest with the Department under Section 5-70.

(f) An overpayment of tax shown on the face of an unsigned return is considered forfeited to the State if, after notice and demand for signature by the Department, the taxpayer fails to provide a signature and 3 years have passed after the date the return was filed. An overpayment of tax refunded to a taxpayer whose return was filed electronically is considered an erroneous refund if, after proper notice and demand by the Department, the taxpayer fails to provide a required signature document. A notice and demand for signature in the case of a return reflecting an overpayment may be made by first class mail.

(g) The Department shall pay refunds from the Consumers Overbilled and Reimbursed for Electricity Fund.

Section 5-70. Procedure on denial of claim for refund.

(a) Within 60 days after the denial of the claim, the claimant may file with the Department a written protest against the denial in the form and manner that the Department may provide by rule, setting forth the grounds on which the protest is based. If a protest is filed, the Department shall reconsider the denial and, if the taxpayer has so requested, shall grant the taxpayer or the taxpayer's authorized representative a hearing.

(b) As soon as practical after the reconsideration and hearing, if any, the Department shall issue a notice of decision by mailing the notice by certified or registered mail. The notice must set forth briefly the Department's findings of fact and the basis of decision in each case decided in whole or in part adversely to the claimant.

(c) Within 30 days after the mailing of a notice of decision, the claimant may file with the Department a written request for rehearing in the form and manner that the Department may provide by rule, setting forth the grounds on which rehearing is requested. In any such case, the Department shall, in its discretion, grant either a rehearing or Departmental review unless, within 10 days after the receipt of the request, it issues a denial of the request by mailing the denial to the claimant by certified or registered mail. If rehearing or Departmental review is granted, as soon as practical after the rehearing or Departmental review, the Department shall issue a notice of final decision as provided in subsection (b).

(d) The action of the Department on the claimant's protest becomes final:

(1) 30 days after issuance of a notice of decision as provided in subsection (b); or

(2) if a timely request for rehearing was made, upon the issuance of a denial of the request or the issuance of a notice of final decision as provided in subsection (c).

Section 5-75. Limitations on claims for refund.

(a) A claim for refund must be filed no later than 3 years after the date that the return was filed or one year after the date that the tax was paid, whichever is the later. No credit or refund is allowed or made with respect to the year for which the claim was filed unless the claim is filed within that period.

(b) If the claim was filed by the claimant during the 3-year period set forth in subsection (a), then the amount of the credit or refund may not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return. If the claim was not filed within that 3-year period, then the amount of the credit or refund may not exceed the portion of the tax paid during the one year immediately preceding the filing of the claim.

Section 5-80. Recovery of erroneous refund. An erroneous refund is considered to be a deficiency of tax on the date made and is deemed to be assessed and must be collected as provided in Sections 5-45 and 5-50.

Section 5-85. Lien for tax.

(a) If any taxpayer neglects or refuses to pay the tax due under this Act after demand, then the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) is a lien in favor of the State of Illinois upon all property and rights to property, whether real or personal, belonging to that person.

(b) Unless another date is specifically fixed by law, the lien imposed by subsection (a) of this Section arises at the time the assessment is made and continues until the liability for the amount so assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time.

(c) If the lien arises from an assessment pursuant to a notice of deficiency, then the lien does not attach and the notice referred to in this Section may not be filed until all proceedings in court for review of the assessment have terminated or the time for the taking thereof has expired without the proceedings being instituted.

(d) Notice of lien. The lien created by assessment terminates unless a notice of lien is filed, as provided in Section 5-95, within 3 years after the date all proceedings in court for the review of the assessment have terminated or the time for the taking thereof has expired without the proceedings being instituted. If the lien results from the filing of a return without payment of the tax or penalty shown therein to be due, then the lien terminates unless a notice of lien is filed within 3 years after the date the return was filed with the Department. For the purposes of this subsection (c), a tax return filed before the last day prescribed by law, including any extension thereof, is deemed to have been filed on that last day.

Section 5-90. Jeopardy assessment and lien.

(a) Assessment. If the Department finds that a taxpayer is about to conceal property or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect any amount of tax or penalties imposed under this Act unless court proceedings are brought without delay or if the Department finds that the collection of that amount will be jeopardized by delay, the Department shall give the taxpayer notice of those findings and shall make demand for immediate return and payment of that amount, whereupon that amount is deemed to be assessed and becomes immediately due and payable.

(b) If the taxpayer, within 5 days after the notice under subsection (a) does not comply with the notice or show to the Department that the findings in such notice are erroneous, then the Department may file a notice of jeopardy assessment lien in the office of the recorder of the county in which any property of the taxpayer may be located and shall notify the taxpayer of the filing. The jeopardy assessment lien has the same scope and effect as a statutory lien under this Act. The taxpayer is liable for the filing fee incurred by the Department for filing the lien and the filing fee incurred by the Department to file the release of that lien. The filing fees must be paid to the Department in addition to payment of the tax, penalty, and interest included in the amount of the lien.

(c) In the case of a tax for a current taxable year, the Director shall declare the taxable period of the taxpayer immediately terminated and his or her notice and demand for a return and immediate payment of the tax relates to the period declared terminated.

(d) If the taxpayer believes that he or she does not owe some or all of the amount for which the jeopardy assessment lien against him or her has been filed or that no jeopardy to the revenue in fact exists, he or she may protest within 20 days after being notified by the Department of the filing of the jeopardy assessment lien and request a hearing, whereupon the Department shall hold a hearing in conformity with the provisions of Section 5-120 and, pursuant thereto, shall notify the taxpayer of its decision as to whether the jeopardy assessment lien will be released.

Section 5-95. Filing and priority of liens.

(a) Nothing in this Act may be construed to give the Department a preference over the rights of any bona fide purchaser, holder of a security interest, mechanics lienor, mortgagee, or judgment lien creditor arising prior to the filing of a regular notice of lien or a notice of jeopardy assessment lien in the office of the recorder in the county in which the property subject to the lien is located. For purposes of this Section, the term "bona fide" does not include any mortgage of real or personal property or any other credit transaction that results in the mortgagee or the holder of the security acting as trustee for unsecured creditors of the taxpayer mentioned in the notice of lien who executed the chattel or real property mortgage or the document evidencing the credit transaction. The lien is inferior to the lien of general taxes, special assessments, and special taxes heretofore or hereafter levied by any political subdivision of this State.

(b) If title to land to be affected by the notice of lien or notice of jeopardy assessment lien is registered under the provisions of the Registered Titles (Torrens) Act, then the notice must be filed in the office of the registrar of titles of the county within which the property subject to the lien is situated and must be entered upon the register of titles as a memorial of charge upon each folium of the register of titles affected by such notice, and the Department does not have a preference over the rights of any bona fide purchaser, mortgagee, judgment creditor, or other lien holder arising prior to the registration of the notice.

(c) The recorder of each county shall procure a file labeled "State Tax Lien Notices" and an index book labeled "State Tax Lien Index". When notice of any lien or jeopardy assessment lien is presented to him or her for filing, he or she shall file it in numerical order in the file and shall enter it alphabetically in the index. The entry must show the name and last known address of the person named in the notice, the serial number of the notice, the date and hour of filing, whether it is a regular lien or a jeopardy assessment lien, and the amount of tax and penalty due and unpaid, plus the amount of interest due at the time when the notice of lien or jeopardy assessment is filed.

(d) No recorder or registrar of titles of any county may require that the Department pay any costs or fees in connection with recordation of any notice or other document filed by the Department under this Act at the time the notice or other document is presented for recordation. The recorder or registrar of each county, in order to receive payment for fees or costs incurred by the Department, may present the Department with monthly statements indicating the amount of fees and costs incurred by the Department and for which no payment has been received.

(e) The taxpayer is liable for the filing fee incurred by the Department for filing the lien and the filing fee incurred by the Department to file the release of that lien. The filing fees must be paid to the Department in addition to payment of the tax, penalty, and interest included in the amount of the lien.

Section 5-100. Duration of lien. The lien provided under this Act continues for 20 years from the date of filing the notice of lien under the provisions of Section 5-95 unless sooner released or otherwise discharged.

Section 5-105. Release of liens.

(a) In general. Upon payment by the taxpayer to the Department in cash or by guaranteed remittance of an amount representing the filing fees and charges for the lien and the filing fees and charges for the release of that lien, the Department shall release all or any portion of the property subject to any lien provided for in this Act and file that complete or partial release of lien with the recorder of the county where that lien was filed if it determines that the release will not endanger or jeopardize the collection of the amount secured thereby.

(b) If, on judicial review, the final judgment of the court is that the taxpayer does not owe some or all of the amount secured by the lien against him or her, or that no jeopardy to the revenue exists, then the Department shall release its lien to the extent of that finding of nonliability or to the extent of that finding of no jeopardy to the revenue. The taxpayer is, however, liable for the filing fee paid by the Department to file the lien and the filing fee required to file a release of the lien. The filing fees must be paid to the Department.

(c) The Department shall also release its jeopardy assessment lien against the taxpayer if the tax and penalty covered by the lien, plus any interest that may be due and an amount representing the filing fee to file the lien and the filing fee required to file a release of that lien, are paid by the taxpayer to the Department in cash or by guaranteed remittance.

(d) The Department shall issue a certificate of complete or partial release of the lien upon payment by the taxpayer to the Department in cash or by guaranteed remittance of an amount representing the filing fee paid by the Department to file the lien and the filing fee required to file the release of that lien:

(1) to the extent that the fair market value of any property subject to the lien exceeds the amount of the lien plus the amount of all prior liens upon the property;

(2) to the extent that the lien becomes unenforceable;

(3) to the extent that the amount of the lien is paid by the person whose property is subject to the lien, together with any interest and penalty which may become due under this Act between the date when the notice of lien is filed and the date when the amount of the lien is paid;

(4) to the extent that there is furnished to the Department, on a form to be approved and with a surety or sureties satisfactory to the Department, a bond that is conditioned upon the payment of the amount of the lien, together with any interest which may become due under this Act after the notice of lien is filed, but before the amount thereof is fully paid; and

(5) to the extent and under the circumstances specified in this Section.

A certificate of complete or partial release of any lien is held to be conclusive that the lien upon the property covered by the certificate is extinguished to the extent indicated by the certificate. The release of lien must be issued to the person, or his or her agent, against whom the lien was obtained and must contain in legible letters a statement as follows:

FOR THE PROTECTION OF THE OWNER, THIS RELEASE SHALL BE FILED WITH THE RECORDER OR THE REGISTRAR OF TITLES IN WHOSE OFFICE THE LIEN WAS FILED.

(e) If a certificate of complete or partial release of lien issued by the Department is presented for filing in the office of the recorder or registrar of titles where a notice of lien or notice of jeopardy assessment lien was filed, then:

(1) the recorder, in the case of nonregistered property, shall permanently attach the certificate of release to the notice of lien or notice of jeopardy assessment lien and shall enter the certificate of release and the date in the "State Tax Lien Index" on the line where the notice of lien or notice of jeopardy assessment lien is entered; and

(2) in the case of registered property, the registrar of titles shall file and enter upon each folium of the register of titles affected thereby a memorial of the certificate of release, which when so entered, acts as a release pro tanto of any memorial of the notice of lien or notice of jeopardy assessment lien previously filed and registered.

Section 5-110. Nonliability for costs of legal proceedings. The Department is not be required to furnish any bond nor to make a deposit for or pay any costs or fees of any court or officer thereof in any legal proceedings pursuant to the provisions of this Act.

Section 5-115. Claim to property. If any process issued from any court for the enforcement or collection of any liability created by this Act is levied by any sheriff or other authorized person upon any personal property and the property is claimed by any person other than the defendant as exempt from enforcement of a judgment thereon by virtue of the exemption laws of this State, then it is the duty of the person making the claim to give notice in writing of his or her claim and of his or her intention to prosecute the same to the sheriff or other person within 10 days after the making of the levy. On receiving such a notice, the sheriff or other person shall proceed in accordance with the provisions of Part 2 of Article XII of the Code of Civil Procedure. The giving of the notice within the 10-day period is a condition precedent to any judicial action against the sheriff or other authorized person for wrongfully levying, seizing, or selling the property and any such person who fails to give notice within the time is forever barred from bringing any judicial action against the sheriff or other person for injury or damages to or conversion of the property.

Section 5-120. Foreclosure on real property. In addition to any other remedy provided for by the laws of this State, and provided that no hearing or proceedings for review provided by this Act is pending and the time for the taking thereof has expired, the Department may foreclose in the circuit court any lien on real property for any tax or penalty imposed by this Act to the same extent and in the same manner as in the enforcement of other liens. The proceedings to foreclose may not be instituted more than 5 years after the filing of the notice of lien under the provisions of Section 5-95. The process, practice, and procedure for the foreclosure is the same as provided in the Civil Practice Law.

Section 5-125. Demand and seizure. In addition to any other remedy provided for by the laws of this State, if the tax imposed by this Act is not paid within the time required by this Act, the Department, or some person designated by it, may cause a demand to be made on the taxpayer for the payment thereof. If the tax remains unpaid for 10 days after such a demand has been made and no proceedings have been taken to review the same, then the Department may issue a warrant directed to any sheriff or other person authorized to serve process, commanding the sheriff or other person to levy upon the property and rights to property (whether real or personal, tangible or intangible) of the taxpayer, without exemption, found within his or her jurisdiction, for the payment of the amount thereof with the added penalties, interest, and the cost of executing the warrant. The term "levy" includes the power of distraint and seizure by any means. In any case in which the warrant to levy has been issued, the sheriff or other person to whom the warrant was directed may seize and sell the property or rights to property. The warrant must be returned to the Department together with the money collected by virtue thereof within the time therein specified, which may not be less than 20 nor more than 90 days after the date of the warrant. The sheriff or other person to whom the warrant is directed shall proceed in the same manner as prescribed by law in respect to the enforcement against property upon judgments by a court, and is entitled to the same fees for his or her services in executing the warrant, to be collected in the same manner. The Department, or some officer, employee, or agent designated by it, is hereby authorized to bid for and purchase any property sold under the provisions of this Section. No proceedings for a levy under this Section may be commenced more than 20 years after the latest date for filing of the notice of lien under the provisions of Section 5-95, without regard to whether the notice was actually filed.

Any officer or employee of the Department designated in writing by the Director is authorized to serve process under this Section to levy upon accounts or other intangible assets of a taxpayer held by a financial organization, as defined in Section 1501 of the Illinois Income Tax Act. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director may levy upon the following property and rights to property belonging to a taxpayer: contractual payments, accounts and notes receivable and other evidences of debt, and interest on bonds by serving a notice of levy on the person making the payment. The levy may not be made until the Department has caused a demand to be made on the taxpayer in the manner provided in this Section. A lien obtained hereunder has priority over any subsequent lien obtained pursuant to Section 12-808 of the Code of Civil Procedure.

Any officer or employee of the Department designated in writing by the Director is authorized to serve process under this Section to levy upon accounts or other intangible assets of a taxpayer held by a financial organization, as defined in Section 1501 of the Illinois Income Tax Act. In addition to any other provisions of this Section, any officer or employee of the Department designated in writing by the Director may levy upon the following property and rights to property belonging to a taxpayer: contractual payments, accounts and notes receivable and other evidences of debt, and interest on bonds by serving a notice of levy on the person making the payment. The levy may not be made until the Department has caused a demand to be made on the taxpayer in the manner provided in this Section. A lien obtained hereunder has priority over any subsequent lien obtained pursuant to Section 12-808 of the Code of Civil Procedure.

In any case where property or rights to property have been seized by an officer of the Department of State Police, or successor agency thereto, under the authority of a warrant to levy issued by the Department of Revenue, the Department of Revenue may take possession of and may sell the property or rights to property and the Department of Revenue may contract with third persons to conduct sales of the property or rights to the property. In the conduct of these sales, the Department of Revenue shall proceed in the same manner as is prescribed by law for proceeding against property to enforce judgments that are entered by a circuit court of this State. If, in the Department of Revenue's opinion, no offer to purchase at the sale is acceptable and the State's interest would be better served by retaining the property for sale at a later date, then the Department may decline to accept any bid and may retain the property for sale at a later date.

Section 5-130. Redemption by State. The provisions of Section 5g of the Retailers' Occupation Tax Act (relating to time for redemption by the State of real estate sold at judicial or execution sale) apply for purposes of this Act as if those provisions were set forth in this Act in their entirety.

Section 5-135. Access to books and records. All books and records and other papers and documents that are required by this Act to be kept must, at all times during business hours of the day, be subject to inspection by the Department or its duly authorized agents and employees. If, during the course of any audit, investigation, or hearing, the Department determines that a taxpayer lacks necessary documentary evidence, the Department is authorized to notify the taxpayer, in writing, to produce the evidence. The taxpayer has 60 days, subject to the right of the Department to extend this period either on request for good cause shown or on its own motion, after the date the notice is personally delivered or sent to the taxpayer by certified or registered mail in which to obtain and produce the evidence for the Department's inspection. The failure to provide the requested evidence within the 60-day period precludes the taxpayer from providing the evidence at a later date during the audit, investigation, or hearing.

Section 5-140. Conduct of investigations and hearings. For the purpose of administering and enforcing the provisions of this Act, the Department, or any officer or employee of the Department designated, in writing, by the Director may hold investigations and hearings concerning any matters covered by this Act and may examine any books, papers, records, or memoranda bearing upon such matters, and may require the attendance of any person, or any officer or employee of that person, having knowledge of such matters, and may take testimony and require proof for its information. In the conduct of any investigation or hearing, neither the Department nor any officer or employee thereof is bound by the technical rules of evidence, and no informality in any proceeding, or in the manner of taking testimony, invalidates any order, decision, rule, or regulation made or approved or confirmed by the Department. The Director, or any officer or employee of the Department authorized by the Director has power to administer oaths to those persons. The books, papers, records, and memoranda of the Department, or parts thereof, may be proved in any hearing, investigation, or legal proceeding by a reproduced copy thereof or by a computer print-out of Department records, under the certificate of the Director. If reproduced copies of the Department's books, papers, records, or memoranda are offered as proof, then the Director must certify that those copies are true and exact copies of the records on file with the Department. If computer print-outs of records of the Department are offered as proof, then the Director must certify that those computer print-outs are true and exact representations of records properly entered into standard electronic computing equipment, in the regular course of the Department's business, at or reasonably near the time of the occurrence of the facts recorded, from trustworthy and reliable information. The reproduced copy shall, without further proof, be admitted into evidence before the Department or in any legal proceeding.

Section 5-145. Immunity of witnesses. No person is excused from testifying or from producing any books, papers, records, or memoranda in any investigation or upon any hearing, when ordered to do so by the Department or any officer or employee thereof, upon the ground that the testimony or evidence, documentary or otherwise, may tend to incriminate him or her or subject him or her to a criminal penalty, but no person may be prosecuted or subjected to any criminal penalty for, or on account of, any transaction made or thing concerning which he or she may testify or produce evidence, documentary or otherwise, before the Department or an officer or employee thereof; provided, that the immunity extends only to a natural person who, in obedience to a subpoena, gives testimony under oath or produces evidence, documentary or otherwise, under oath. No person so testifying is exempt from prosecution and punishment for perjury committed in so testifying.

Section 5-150. Production of witnesses and records.

(a) The Department or any officer or employee of the Department designated in writing by the Director, shall at its or his or her own instance, or on the written request of any other party to the proceeding, issue subpoenas requiring the attendance of and the giving of testimony by witnesses, and subpoenas duces tecum requiring the production of books, papers, records, or memoranda. All subpoenas and subpoenas duces tecum issued under this Act may be served by any person of full age.

(b) The fees of witnesses for attendance and travel are the same as the fees of witnesses before a Circuit Court of this State, such fees to be paid when the witness is excused from further attendance. When the witness is subpoenaed at the instance of the Department or any officer or employee thereof, the fees must be paid in the same manner as other expenses of the Department, and when the witness is subpoenaed at the instance of any other party to any such proceeding, the Department may require that the cost of service of the subpoena or subpoenas duces tecum and the fee of the witness be borne by the party at whose instance the witness is summoned. In such case, the Department, in its discretion, may require a deposit to cover the cost of the service and witness fees. A subpoena or subpoena duces tecum so issued must be served in the same manner as a subpoena issued out of a court.

(c) Any Circuit Court of this State, upon the application of the Department or any officer or employee thereof, or upon the application of any other party to the proceeding may, in its discretion, compel the attendance of witnesses, the production of books, papers, records, or memoranda and the giving of testimony before the Department or any officer or employee thereof conducting an investigation or holding a hearing authorized by this Act, by an attachment for contempt, or otherwise, in the same manner as production of evidence may be compelled before the Court.

Section 5-155. Place of hearings. All hearings provided for in this Act with respect to or concerning a taxpayer having a residence or its commercial domicile in this State must be held at the Department of Revenue's office nearest to the location of that residence or domicile, except that, if the taxpayer has its commercial domicile in Cook County, the hearing must be held in Cook County. If the taxpayer does not have its commercial domicile in this State, the hearing must be held in Cook County.

Section 5-160. Penalties and interest.

(a) Penalties and interest imposed by the Uniform Penalty and Interest Act with respect to the obligations of a taxpayer under this Act must be paid upon notice and demand and, except as provided in subsection (b), must be assessed, collected, and paid in the same manner as the tax imposed by this Act, and any reference in this Act to the tax imposed by this Act refers also to interest and penalties imposed by the Uniform Penalty and Interest Act.

(b) Interest is deemed to be assessed upon the assessment of the tax to which the interest relates. Penalties for late payment or underpayment are deemed to be assessed upon assessment of the tax to which the penalty relates.

Section 5-165. Administrative Review Law. The provisions of the Administrative Review Law, and the rules adopted pursuant thereto, apply to and govern all proceedings for the judicial review of final actions of the Department. These final actions constitute "administrative decisions", as defined in Section 3-101 of the Code of Civil Procedure.

Section 5-170. Venue. The Circuit Court of the county where the taxpayer has his or her residence or commercial domicile, or of Cook County in those cases where the taxpayer does not have his or her residence or commercial domicile in this State, has the power to review all final administrative decisions of the Department in administering the provisions of this Act.

Section 5-175. Service, certification, and dismissal.

(a) Service upon the Director or the Assistant Director of Revenue of summons issued in an action to review a final administrative decision of the Department is service upon the Department.

(b) The Department shall certify the record of its proceedings if the taxpayer pays to it the sum of $0.75 per page of testimony taken before the Department and $0.25 per page of all other matters contained in the record, except that these charges may be waived if the Department is satisfied that the aggrieved party is a poor person who cannot afford to pay the charges.

(c) If payment for the record is not made by the taxpayer within 30 days after notice from the Department or the Attorney General of the cost thereof, the court in which the proceeding is pending, on motion of the Department, shall dismiss the complaint and shall enter judgment against the taxpayer and in favor of the Department in accordance with the final action of the Department, together with interest on any deficiency to the date of entry of the judgment, and also for costs.

Section 5-180. Crimes.

(a) Any person who is subject to the provisions of this Act and who willfully fails to file a return, who files a fraudulent return, or who willfully attempts in any other manner to evade or defeat any tax imposed by this Act or the payment thereof or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act, is, in addition to other penalties, guilty of a Class 4 felony for the first offense and a Class 3 felony for each subsequent offense. Any person who is subject to this Act and who willfully violates any rule or regulation of the Department of Revenue for the administration and enforcement of this Act or who fails to keep books and records as required in this Act is, in addition to other penalties, guilty of a Class A misdemeanor.

(b) Any person who accepts money that is due to the Department under this Act from a taxpayer for the purpose of acting as the taxpayer's agent to make the payment to the Department, but who willfully fails to remit that payment to the Department when due, is guilty of a Class A misdemeanor. Any such person who purports to make that payment by issuing or delivering a check or other order upon a real or fictitious depository for the payment of money, knowing that it will not be paid by the depository, is guilty of a deceptive practice in violation of Section 17-1 of the Criminal Code of 1961.

(c) Any person whose commercial domicile or whose residence is in this State and who is charged with a violation under this Section must be tried in the county where his or her commercial domicile or his or her residence is located unless he or she asserts a right to be tried in another venue. A prosecution for any act or omission in violation of this Section may be commenced at any time within 5 years after the commission of that act or failure to act.

Section 5-185. Adoption of rules. The Department is authorized to make, adopt, and enforce such reasonable rules and regulations, and to prescribe such forms, relating to the administration and enforcement of the provisions of this Act, as it may deem appropriate.

Section 5-190. Notice. If notice is required by this Act, then the notice must, if not otherwise provided, be given or issued by mailing it by registered or certified mail addressed to the person concerned at his or her last known address.

Section 5-195. Amounts less than $1.

(a) Payments, refunds, etc. The Department may by rule provide that, if a total amount of less than $1 is payable, refundable, or creditable, then the amount may be disregarded or, alternatively, is disregarded if it is less than $0.50 and is increased to $1 if it is $0.50 or more.

(b) The Department may by rule provide that any amount that is required to be shown or reported on any return or other document under this Act is, if that amount is not a whole-dollar amount, increased to the nearest whole-dollar amount in any case where the fractional part of a dollar is $0.50 or more and decreased to the nearest whole-dollar amount when the fractional part of a dollar is less than $0.50.

Section 5-200. Administrative Procedure Act; application.

(a) The Illinois Administrative Procedure Act is hereby expressly adopted and applies to all administrative rules and procedures of the Department under this Act, except that: (1) paragraph (b) of Section 5-10 of the Illinois Administrative Procedure Act does not apply to final orders, decisions, and opinions of the Department; (2) subparagraph (a)(2) of Section 5-10 of the Illinois Administrative Procedure Act does not apply to forms established by the Department for use under this Act; and (3) the provisions of Section 10-45 of the Illinois Administrative Procedure Act regarding proposals for decision are excluded and not applicable to the Department under this Act.

(b) For the public interest, safety, and welfare, in order to initially implement this Act, the Department is authorized to adopt emergency rules under Section 5-45 of the Illinois Administrative Procedure Act.

ARTICLE 99. SEVERABILITY; EFFECTIVE DATE

Section 99-97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99-99. Effective date. This Act takes effect upon becoming law.".