SB2939sam001 99TH GENERAL ASSEMBLY

Sen. James F. Clayborne, Jr.

Filed: 5/26/2016

09900SB2939sam001 LRB099 19038 EGJ 48670 a

AMENDMENT TO SENATE BILL 2939

AMENDMENT NO. ______. Amend Senate Bill 2939 by replacing everything after the enacting clause with the following:

"Section 5. The Public Utilities Act is amended by changing Section 16-126.1 and by adding Section 16-126.2 as follows:

(220 ILCS 5/16-126.1)

Sec. 16-126.1. Regional transmission organization memberships. The State shall not directly or indirectly prohibit an electric utility that on December 31, 2005 provided electric service to at least 100,000 customers in Illinois from membership in a Federal Energy Regulatory Commission approved regional transmission organization of its choosing. Nothing in this Section limits any authority the Commission otherwise has to regulate that electric utility. This Section ceases to be effective on July 1, 2016 2022 unless extended by the General Assembly by law.

(Source: P.A. 95-481, eff. 8-28-07.)

(220 ILCS 5/16-126.2 new)

Sec. 16-126.2. Regional transmission organization capacity markets.

(a) The General Assembly finds that the electric generation capacity market design of one or more regional transmission organizations of which Illinois electric utilities are members fails to adequately provide price signals that (i) incent the development and availability of electric generation capacity resources at times of high demand or unusual stress on the electric generation and transmission system, and thereby fail to promote the provision of adequate, reliable, and efficient electric service to the citizens and businesses of the State of Illinois, and (ii) provide adequate compensation to providers of electric generation capacity resources needed to maintain, at all times of the day, week, and year and under all conditions affecting the electric generation and transmission resources and system, adequate, reliable, and efficient electric service to the citizens and businesses of the State of Illinois.

One of the regional transmission organizations of which Illinois electric utilities are members has a membership that overwhelmingly consists of vertically integrated utilities that own generating facilities the costs of which are recovered through cost-of-service-based rates that are charged to captive retail customers and that serve customers in states that, unlike Illinois, have elected not to enter into retail electric competition; and the other regional transmission organization has a membership that overwhelmingly consists of utilities that do not own the generation facilities but rather obtain their electric supply in competitive wholesale generation markets and that serve customers in states that, like Illinois, have adopted retail electric competition.

The State of Illinois has a direct interest and responsibility in ensuring that the citizens and businesses of the State of Illinois receive and obtain adequate, reliable, and efficient electric service at all hours of the day, week, and year and under all conditions affecting the electric generation and transmission resources and system serving the State of Illinois, and in thereby promoting the health, welfare, and safety of the citizens of this State.

It is in the public interest of the State of Illinois and its citizens for the State to ensure that electric utilities holding certificates of public convenience and necessity to provide service in this State and providing electric service to citizens and businesses in the State of Illinois participate in regional transmission organizations with wholesale electricity market structures and processes that provide price signals that (i) incent the development and availability of electric generation capacity resources at times of high demand or unusual stress on the electric generation and transmission system, and thereby promote the provision of adequate, reliable, and efficient electric service to the citizens and businesses of the State of Illinois, and (ii) provide adequate compensation to providers of electric generation capacity resources needed to maintain, at all times of the day, week, and year and under all conditions affecting the electric generation and transmission resources and system, adequate, reliable, and efficient electric service to the citizens and businesses of the State of Illinois, while (iii) maintaining appropriate mechanisms to measure and protect against the exercise of undue market power by both suppliers and buyers of electric generation capacity resources.

The General Assembly has heretofore allowed electric utilities serving customers in Illinois to exercise choice in determining which regional transmission organization to join, in the interests of experimentation during the formative years of regional transmission organizations and electric industry restructuring, the General Assembly now finds, based on the review of experience in Illinois, that having portions of the State of Illinois located within different regional transmission organizations is undesirable for numerous reasons, including those stated in the other findings in this subsection (a), and that it results in electric generating capacity located within the different regional transmission organizations receiving different compensation for providing the same electric capacity, energy, and reliability services and that absent overwhelming justification to the contrary, it is in the public interest of the State of Illinois and its citizens and businesses that all electric utilities in this State serving more than 100,000 retail electric customers should be members of the same regional transmission organization.

(b) On or before September 1, 2016, the Illinois Commerce Commission shall initiate a proceeding to evaluate the existing regional transmission organization of which each electric utility that on December 31, 2015 provided delivery services to at least 100,000 retail electric customers in Illinois is a member. No later than February 28, 2017, the Commission shall make a determination as to whether each such regional transmission organization met each of the following criteria as of September 1, 2016:

(1) The regional transmission organization maintains a market for the provision and acquisition of electric generation capacity resources including an electric generation capacity auction process that has the following characteristics:

(A) a downward-sloping demand curve for electric generation capacity resources;

(B) buyer-side and supplier-side market power mitigation mechanisms sufficient to prevent manipulation of the electric capacity market by both buyers and sellers of electric generation capacity, such as must-offer requirements for electric generation capacity resources, mandatory participation by load-serving entities for all load, structural market power tests based on numbers of suppliers, and minimum and maximum offer price requirements with energy and ancillary services revenue offsets;

(C) a forward term for the base electric generation capacity auction of at least 3 years from the date of each base electric generation capacity auction to the date when the electric generation capacity acquired in the auction is to be provided by the supplier; and

(D) an explicit capacity performance product component designed to drive improved generator reliability (i) that incents generators to make investments that help ensure that they perform reliably during extreme weather events and (ii) that places value upon dependable fuel supplies.

(2) At least 50% of the electric utilities that are members of the regional transmission organization primarily serve retail electricity customers located in states offering retail electricity competition, or the option to choose the customer's electricity supplier, to a majority of the retail customers in the state.

(c) If the Commission determines in the proceeding described in subsection (b) that an electric utility that on December 31, 2015 provided delivery services to at least 100,000 retail electricity customers in Illinois is not a member of a regional transmission organization meeting all of the criteria specified in subsection (b) as of September 1, 2016, then the Commission shall issue an order in the proceeding described in subsection (b) directing the electric utility to initiate all actions necessary to become a member of a regional transmission organization that the Commission has found meets the criteria specified in subsection (b). The actions that the Commission shall require of the electric utility shall include initiating all actions necessary to withdraw from membership in the regional transmission organization of which the electric utility is a member and applying for membership in a regional transmission organization that the Commission has found meets the criteria specified in subsection (b). For purposes of this subsection (c), "initiating all actions" shall include, without limitation: (1) submitting any required notice of withdrawal of membership to the regional transmission organization of which the electric utility is a member, (2) submitting any required application for membership to a regional transmission organization that the Commission has found meets the criteria specified in subsection (b), and (3) making any necessary filings with the Federal Energy Regulatory Commission for approval to withdraw from membership in one regional transmission organization and to become a member of a regional transmission organization meeting the criteria specified in subsection (b).

(d) If an electric utility that is directed by the Commission pursuant to subsection (c) to become a member of a different regional transmission organization owns electric transmission facilities in another state in addition to Illinois, the electric utility is required to comply with the Commission's order issued pursuant to subsection (c) only with respect to its transmission facilities located within the State of Illinois. Nothing in this subsection (d) shall preclude the electric utility from transferring all of its electric transmission facilities to a regional transmission organization that meets the criteria specified in subsection (b).

(e) If an electric utility that is required to withdraw from membership in a regional transmission organization pursuant to subsection (c) is assessed exit fees or similar charges, hereinafter referred to as "exit fees", by the regional transmission organization, and the assessment and amount of the exit fees is agreed to by the electric utility or confirmed or approved by the Federal Energy Regulatory Commission, the electric utility may file an application with the Commission for authority to recover the amount of the exit fees allocable to the electric utility's transmission facilities or operations in the State of Illinois through charges to the electric utility's delivery services customers in Illinois. The Commission shall authorize the electric utility to recover the amount of exit fees assessed by the regional transmission organization and agreed to by the electric utility or approved by the Federal Energy Regulatory Commission that are allocable to Illinois, less any amount of the exit fees that the electric utility is authorized to recover or be reimbursed for through other means, as a cost of service through the electric utility's delivery services tariffs. The exit fees shall be recovered through a charge per kilowatt-hour included in the electric utility's delivery services tariff. The charge per kilowatt-hour shall be uniform for all customer classes. The electric utility's tariff shall provide for annual reconciliation filings with the Commission to reconcile the amount collected with the amount authorized to be collected and to provide for surcharges or refunds to address any under-collections or over-collections. The Commission may direct that the amount of exit fees shall be recovered through charges in the electric utility's delivery services tariffs over a period longer than one year; provided, that in such event, the Commission shall authorize the electric utility to record carrying charges, at the rate of return authorized in setting the electric utility's delivery services rates, on the unrecovered balance of exit fees, and to include the carrying charges in the amount of exit fees to be recovered. The Commission shall issue its order granting the electric utility authority to recover exit fees and approving a tariff for this purpose, in accordance with this subsection (e), within 120 days following the filing of the electric utility's application.

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

(g) The Commission shall have authority, on its own motion or on complaint, to investigate and determine an electric utility's compliance with this Section, including, without limiting the scope of the Commission's authority, to determine the electric utility's compliance with this Section. Any investigation or complaint proceeding before the Commission shall be completed by the issuance of a final order within 6 months following the date that the Commission issued its order initiating the investigation or that the complaint was filed.

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