100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5083

 

Introduced , by Rep. Thomas Morrison

 

SYNOPSIS AS INTRODUCED:
 
220 ILCS 5/8-406  from Ch. 111 2/3, par. 8-406
220 ILCS 5/9-220.3
220 ILCS 5/9-228 new
220 ILCS 5/9-235 new
220 ILCS 5/9-237 new

    Amends the Public Utilities Act. Provides that a public utility shall demonstrate to the Illinois Commerce Commission that existing customers will not subsidize the cost of new facilities beyond what is provided for in rules and in excess of certain payments by customers for the Commission to approve new construction. Provides that the Commission's order concerning new construction shall explicitly address the economic impact on customers. Requires the Commission to annually report to the General Assembly a gas utility's projects related to a qualifying infrastructure plant, the projected timeline for the replacement of the cast iron and bare and vintage steel in the utility's system, and whether that timeline is adequate to address public safety concerns and reliability. Provides that when a gas public utility connects an applicant to its gas distribution system, certain costs associated with investments in plant additions shall be excluded from a cost-recovery mechanism that allocates the excess cost among existing customers. Requires the Commission to investigate each gas public utility tariff that provides for gas main extensions without additional charge to new customers. Requires the Commission to initiate a rulemaking proceeding providing for rules to establish a uniform method by which a natural gas public utility determines the value of a gas main extension provided to new customers without additional charge.


LRB100 18651 SMS 33878 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5083LRB100 18651 SMS 33878 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Sections 8-406 and 9-220.3 and by adding Sections 9-228, 9-235,
6and 9-237 as follows:
 
7    (220 ILCS 5/8-406)  (from Ch. 111 2/3, par. 8-406)
8    Sec. 8-406. Certificate of public convenience and
9necessity.
10    (a) No public utility not owning any city or village
11franchise nor engaged in performing any public service or in
12furnishing any product or commodity within this State as of
13July 1, 1921 and not possessing a certificate of public
14convenience and necessity from the Illinois Commerce
15Commission, the State Public Utilities Commission or the Public
16Utilities Commission, at the time this amendatory Act of 1985
17goes into effect, shall transact any business in this State
18until it shall have obtained a certificate from the Commission
19that public convenience and necessity require the transaction
20of such business.
21    (b) No public utility shall begin the construction of any
22new plant, equipment, property or facility which is not in
23substitution of any existing plant, equipment, property or

 

 

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1facility or any extension or alteration thereof or in addition
2thereto, unless and until it shall have obtained from the
3Commission a certificate that public convenience and necessity
4require such construction. Whenever after a hearing the
5Commission determines that any new construction or the
6transaction of any business by a public utility will promote
7the public convenience and is necessary thereto, it shall have
8the power to issue certificates of public convenience and
9necessity. The Commission shall determine that proposed
10construction will promote the public convenience and necessity
11only if the utility demonstrates: (1) that the proposed
12construction is necessary to provide adequate, reliable, and
13efficient service to its customers and is the least-cost means
14of satisfying the service needs of its customers or that the
15proposed construction will promote the development of an
16effectively competitive electricity market that operates
17efficiently, is equitable to all customers, and is the least
18cost means of satisfying those objectives; (2) that the utility
19is capable of efficiently managing and supervising the
20construction process and has taken sufficient action to ensure
21adequate and efficient construction and supervision thereof;
22and (3) that the utility is capable of financing the proposed
23construction without significant adverse financial
24consequences for the utility or its customers; and (4) that
25existing customers will not subsidize the cost of new
26facilities beyond that provided for in rules adopted by the

 

 

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1Commission and in excess of any refundable or nonrefundable
2payments by customers to be served by the new facilities.
3    (c) After the effective date of this amendatory Act of
41987, no construction shall commence on any new nuclear power
5plant to be located within this State, and no certificate of
6public convenience and necessity or other authorization shall
7be issued therefor by the Commission, until the Director of the
8Illinois Environmental Protection Agency finds that the United
9States Government, through its authorized agency, has
10identified and approved a demonstrable technology or means for
11the disposal of high level nuclear waste, or until such
12construction has been specifically approved by a statute
13enacted by the General Assembly.
14    As used in this Section, "high level nuclear waste" means
15those aqueous wastes resulting from the operation of the first
16cycle of the solvent extraction system or equivalent and the
17concentrated wastes of the subsequent extraction cycles or
18equivalent in a facility for reprocessing irradiated reactor
19fuel and shall include spent fuel assemblies prior to fuel
20reprocessing.
21    (d) In making its determination, the Commission shall
22attach primary weight to the cost or cost savings to the
23customers of the utility. The Commission may consider any or
24all factors which will or may affect such cost or cost savings,
25including the public utility's engineering judgment regarding
26the materials used for construction. The Commission shall

 

 

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1explicitly address cost and cost savings to customers in its
2order. For construction under subsection (b) serving one or
3more customers in a discrete group, the Commission shall also
4evaluate and explicitly address in its order the period by
5which the construction investment will be considered
6economical from the customer perspective.
7    (e) The Commission may issue a temporary certificate which
8shall remain in force not to exceed one year in cases of
9emergency, to assure maintenance of adequate service or to
10serve particular customers, without notice or hearing, pending
11the determination of an application for a certificate, and may
12by regulation exempt from the requirements of this Section
13temporary acts or operations for which the issuance of a
14certificate will not be required in the public interest.
15    A public utility shall not be required to obtain but may
16apply for and obtain a certificate of public convenience and
17necessity pursuant to this Section with respect to any matter
18as to which it has received the authorization or order of the
19Commission under the Electric Supplier Act, and any such
20authorization or order granted a public utility by the
21Commission under that Act shall as between public utilities be
22deemed to be, and shall have except as provided in that Act the
23same force and effect as, a certificate of public convenience
24and necessity issued pursuant to this Section.
25    No electric cooperative shall be made or shall become a
26party to or shall be entitled to be heard or to otherwise

 

 

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1appear or participate in any proceeding initiated under this
2Section for authorization of power plant construction and as to
3matters as to which a remedy is available under The Electric
4Supplier Act.
5    (f) Such certificates may be altered or modified by the
6Commission, upon its own motion or upon application by the
7person or corporation affected. Unless exercised within a
8period of 2 years from the grant thereof authority conferred by
9a certificate of convenience and necessity issued by the
10Commission shall be null and void.
11    No certificate of public convenience and necessity shall be
12construed as granting a monopoly or an exclusive privilege,
13immunity or franchise.
14    (g) A public utility that undertakes any of the actions
15described in items (1) through (3) of this subsection (g) or
16that has obtained approval pursuant to Section 8-406.1 of this
17Act shall not be required to comply with the requirements of
18this Section to the extent such requirements otherwise would
19apply. For purposes of this Section and Section 8-406.1 of this
20Act, "high voltage electric service line" means an electric
21line having a design voltage of 100,000 or more. For purposes
22of this subsection (g), a public utility may do any of the
23following:
24        (1) replace or upgrade any existing high voltage
25    electric service line and related facilities,
26    notwithstanding its length;

 

 

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1        (2) relocate any existing high voltage electric
2    service line and related facilities, notwithstanding its
3    length, to accommodate construction or expansion of a
4    roadway or other transportation infrastructure; or
5        (3) construct a high voltage electric service line and
6    related facilities that is constructed solely to serve a
7    single customer's premises or to provide a generator
8    interconnection to the public utility's transmission
9    system and that will pass under or over the premises owned
10    by the customer or generator to be served or under or over
11    premises for which the customer or generator has secured
12    the necessary right of way.
13    (h) A public utility seeking to construct a high-voltage
14electric service line and related facilities (Project) must
15show that the utility has held a minimum of 2 pre-filing public
16meetings to receive public comment concerning the Project in
17each county where the Project is to be located, no earlier than
186 months prior to filing an application for a certificate of
19public convenience and necessity from the Commission. Notice of
20the public meeting shall be published in a newspaper of general
21circulation within the affected county once a week for 3
22consecutive weeks, beginning no earlier than one month prior to
23the first public meeting. If the Project traverses 2 contiguous
24counties and where in one county the transmission line mileage
25and number of landowners over whose property the proposed route
26traverses is one-fifth or less of the transmission line mileage

 

 

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1and number of such landowners of the other county, then the
2utility may combine the 2 pre-filing meetings in the county
3with the greater transmission line mileage and affected
4landowners. All other requirements regarding pre-filing
5meetings shall apply in both counties. Notice of the public
6meeting, including a description of the Project, must be
7provided in writing to the clerk of each county where the
8Project is to be located. A representative of the Commission
9shall be invited to each pre-filing public meeting.
10    (i) For applications filed after the effective date of this
11amendatory Act of the 99th General Assembly, the Commission
12shall by registered mail notify each owner of record of land,
13as identified in the records of the relevant county tax
14assessor, included in the right-of-way over which the utility
15seeks in its application to construct a high-voltage electric
16line of the time and place scheduled for the initial hearing on
17the public utility's application. The utility shall reimburse
18the Commission for the cost of the postage and supplies
19incurred for mailing the notice.
20(Source: P.A. 99-399, eff. 8-18-15.)
 
21    (220 ILCS 5/9-220.3)
22    (Section scheduled to be repealed on December 31, 2023)
23    Sec. 9-220.3. Natural gas surcharges authorized.
24    (a) Tariff.
25        (1) Pursuant to Section 9-201 of this Act, a natural

 

 

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1    gas utility serving more than 700,000 customers may file a
2    tariff for a surcharge which adjusts rates and charges to
3    provide for recovery of costs associated with investments
4    in qualifying infrastructure plant, independent of any
5    other matters related to the utility's revenue
6    requirement.
7        (2) Within 30 days after the effective date of this
8    amendatory Act of the 98th General Assembly, the Commission
9    shall adopt emergency rules to implement the provisions of
10    this amendatory Act of the 98th General Assembly. The
11    utility may file with the Commission tariffs implementing
12    the provisions of this amendatory Act of the 98th General
13    Assembly after the effective date of the emergency rules
14    authorized by subsection (i).
15        (3) The Commission shall issue an order approving, or
16    approving with modification to ensure compliance with this
17    Section, the tariff no later than 120 days after such
18    filing of the tariffs filed pursuant to this Section. The
19    utility shall have 7 days following the date of service of
20    the order to notify the Commission in writing whether it
21    will accept any modifications so identified in the order or
22    whether it has elected not to proceed with the tariff. If
23    the order includes no modifications or if the utility
24    notifies the Commission that it will accept such
25    modifications, the tariff shall take effect on the first
26    day of the calendar year in which the Commission issues the

 

 

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1    order, subject to petitions for rehearing and appellate
2    procedures. After the tariff takes effect, the utility may,
3    upon 10 days' notice to the Commission, file to withdraw
4    the tariff at any time, and the Commission shall approve
5    such filing without suspension or hearing, subject to a
6    final reconciliation as provided in subsection (e) of this
7    Section.
8        (4) When a natural gas utility withdraws the surcharge
9    tariff, the utility shall not recover any additional
10    charges through the surcharge approved pursuant to this
11    Section, subject to the resolution of the final
12    reconciliation pursuant to subsection (e) of this Section.
13    The utility's qualifying infrastructure investment net of
14    accumulated depreciation may be transferred to the natural
15    gas utility's rate base in the utility's next general rate
16    case. The utility's delivery base rates in effect upon
17    withdrawal of the surcharge tariff shall not be adjusted at
18    the time the surcharge tariff is withdrawn.
19        (5) A natural gas utility that is subject to its
20    delivery base rates being fixed at their current rates
21    pursuant to a Commission order entered in Docket No.
22    11-0046, notwithstanding the effective date of its tariff
23    authorized pursuant to this Section, shall reflect in a
24    tariff surcharge only those projects placed in service
25    after the fixed rate period of the merger agreement has
26    expired by its terms.

 

 

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1    (b) For purposes of this Section, "qualifying
2infrastructure plant" includes only plant additions placed in
3service not reflected in the rate base used to establish the
4utility's delivery base rates. "Costs associated with
5investments in qualifying infrastructure plant" shall include
6a return on qualifying infrastructure plant and recovery of
7depreciation and amortization expense on qualifying
8infrastructure plant, net of the depreciation included in the
9utility's base rates on any plant retired in conjunction with
10the installation of the qualifying infrastructure plant.
11Collectively the "qualifying infrastructure plant" and "costs
12associated with investments in qualifying infrastructure
13plant" are referred to as the "qualifying infrastructure
14investment" and that are related to one or more of the
15following:
16        (1) the installation of facilities to retire and
17    replace underground natural gas facilities, including
18    facilities appurtenant to facilities constructed of those
19    materials such as meters, regulators, and services, and
20    that are constructed of cast iron, wrought iron, ductile
21    iron, unprotected coated steel, unprotected bare steel,
22    mechanically coupled steel, copper, Cellulose Acetate
23    Butyrate (CAB) plastic, pre-1973 DuPont Aldyl "A"
24    polyethylene, PVC, or other types of materials identified
25    by a State or federal governmental agency as being prone to
26    leakage;

 

 

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1        (2) the relocation of meters from inside customers'
2    facilities to outside;
3        (3) the upgrading of the gas distribution system from a
4    low pressure to a medium pressure system, including
5    installation of high-pressure facilities to support the
6    upgrade;
7        (4) modernization investments by a combination
8    utility, as defined in subsection (b) of Section 16-108.5
9    of this Act, to install:
10            (A) advanced gas meters in connection with the
11        installation of advanced electric meters pursuant to
12        Sections 16-108.5 and 16-108.6 of this Act; and
13            (B) the communications hardware and software and
14        associated system software that creates a network
15        between advanced gas meters and utility business
16        systems and allows the collection and distribution of
17        gas-related information to customers and other parties
18        in addition to providing information to the utility
19        itself;
20        (5) replacing high-pressure transmission pipelines and
21    associated facilities identified as having a higher risk of
22    leakage or failure or installing or replacing
23    high-pressure transmission pipelines and associated
24    facilities to establish records and maximum allowable
25    operating pressures;
26        (6) replacing difficult to locate mains and service

 

 

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1    pipes and associated facilities; and
2        (7) replacing or installing transmission and
3    distribution regulator stations, regulators, valves, and
4    associated facilities to establish over-pressure
5    protection.
6    With respect to the installation of the facilities
7identified in paragraph (1) of subsection (b) of this Section,
8the natural gas utility shall determine priorities for such
9installation with consideration of projects either: (i)
10integral to a general government public facilities improvement
11program or (ii) ranked in the highest risk categories in the
12utility's most recent Distribution Integrity Management Plan
13where removal or replacement is the remedial measure.
14    (c) Qualifying infrastructure investment, defined in
15subsection (b) of this Section, recoverable through a tariff
16authorized by subsection (a) of this Section, shall not include
17costs or expenses incurred in the ordinary course of business
18for the ongoing or routine operations of the utility,
19including, but not limited to:
20        (1) operating and maintenance costs; and
21        (2) costs of facilities that are revenue-producing,
22    which means facilities that are constructed or installed
23    for the purpose of serving new customers.
24    (d) Gas utility commitments. A natural gas utility that has
25in effect a natural gas surcharge tariff pursuant to this
26Section shall:

 

 

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1        (1) recognize that the General Assembly identifies
2    improved public safety and reliability of natural gas
3    facilities as the cornerstone upon which this Section is
4    designed, and qualifying projects should be encouraged,
5    selected, and prioritized based on these factors; and
6        (2) provide information to the Commission as requested
7    to demonstrate that (i) the projects included in the tariff
8    are indeed qualifying projects and (ii) the projects are
9    selected and prioritized taking into account improved
10    public safety and reliability.
11        (3) The amount of qualifying infrastructure investment
12    eligible for recovery under the tariff in the applicable
13    calendar year is limited to the lesser of (i) the actual
14    qualifying infrastructure plant placed in service in the
15    applicable calendar year and (ii) the difference by which
16    total plant additions in the applicable calendar year
17    exceed the baseline amount, and subject to the limitation
18    in subsection (g) of this Section. A natural gas utility
19    can recover the costs of qualifying infrastructure
20    investments through an approved surcharge tariff from the
21    beginning of each calendar year subject to the
22    reconciliation initiated under paragraph (2) of subsection
23    (e) of this Section, during which the Commission may make
24    adjustments to ensure that the limits defined in this
25    paragraph are not exceeded. Further, if total plant
26    additions in a calendar year do not exceed the baseline

 

 

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1    amount in the applicable calendar year, the Commission,
2    during the reconciliation initiated under paragraph (2) of
3    subsection (e) of this Section for the applicable calendar
4    year, shall adjust the amount of qualifying infrastructure
5    investment eligible for recovery under the tariff to zero.
6        (4) For purposes of this Section, "baseline amount"
7    means an amount equal to the utility's average of total
8    depreciation expense, as reported on page 336, column (b)
9    of the utility's ILCC Form 21, for the calendar years 2006
10    through 2010.
11    (e) Review of investment.
12        (1) The amount of qualifying infrastructure investment
13    shall be shown on an Information Sheet supplemental to the
14    surcharge tariff and filed with the Commission monthly or
15    some other time period at the option of the utility. The
16    Information Sheet shall be accompanied by data showing the
17    calculation of the qualifying infrastructure investment
18    adjustment. Unless otherwise ordered by the Commission,
19    each qualifying infrastructure investment adjustment shown
20    on an Information Sheet shall become effective pursuant to
21    the utility's approved tariffs.
22        (2) For each calendar year in which a surcharge tariff
23    is in effect, the natural gas utility shall file a petition
24    with the Commission to initiate hearings to reconcile
25    amounts billed under each surcharge authorized pursuant to
26    this Section with the actual prudently incurred costs

 

 

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1    recoverable under this tariff in the preceding year. The
2    petition filed by the natural gas utility shall include
3    testimony and schedules that support the accuracy and the
4    prudence of the qualifying infrastructure investment for
5    the calendar year being reconciled. The petition filed
6    shall also include the number of jobs attributable to the
7    natural gas surcharge tariff as required by rule. The
8    review of the utility's investment shall include
9    identification and review of all plant that was ranked
10    within the highest risk categories in that utility's most
11    recent Distribution Integrity Management Plan.
12    (f) The rate of return applied shall be the overall rate of
13return authorized by the Commission in the utility's last gas
14rate case.
15    (g) The cumulative amount of increases billed under the
16surcharge, since the utility's most recent delivery service
17rate order, shall not exceed an annual average 4% of the
18utility's delivery base rate revenues, but shall not exceed
195.5% in any given year. On the effective date of new delivery
20base rates, the surcharge shall be reduced to zero with respect
21to qualifying infrastructure investment that is transferred to
22the rate base used to establish the utility's delivery base
23rates, provided that the utility may continue to charge or
24refund any reconciliation adjustment determined pursuant to
25subsection (e) of this Section.
26    (h) If a gas utility obtains a surcharge tariff under this

 

 

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1Section 9-220.3, then it and its affiliates are excused from
2the rate case filing requirements contained in Sections
39-220(h) and 9-220(h-1). In the event a natural gas utility,
4prior to the effective date of this amendatory Act of the 98th
5General Assembly, made a rate case filing that is still pending
6on the effective date of this amendatory Act of the 98th
7General Assembly, the natural gas utility may, at the time it
8files its surcharge tariff with the Commission, also file a
9notice with the Commission to withdraw its rate case filing.
10Any affiliate of such natural gas utility may also file to
11withdraw its rate case filing. Upon receipt of such notice, the
12Commission shall dismiss the rate case filing with prejudice
13and such tariffs and the record related thereto shall not be
14the subject of any further hearing, investigation, or
15proceeding of any kind related to rates for gas delivery
16services. Notwithstanding the foregoing, a natural gas utility
17shall not be permitted to withdraw a rate case filing for which
18a proposed order recommending a rate reduction is pending. A
19natural gas utility shall not be permitted to withdraw the gas
20delivery services tariffs that are the subject of Commission
21Docket Nos. 12-0511/12-0512 (cons.). None of the costs incurred
22for the withdrawn rate case are recoverable from ratepayers.
23    (i) The Commission shall promulgate rules and regulations
24to carry out the provisions of this Section under the emergency
25rulemaking provisions set forth in Section 5-45 of the Illinois
26Administrative Procedure Act, and such emergency rules shall be

 

 

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1effective no later than 30 days after the effective date of
2this amendatory Act of the 98th General Assembly.
3    (i-5) For each natural gas utility with a tariff effective
4under this Section in a calendar year, the Commission shall
5annually report to the General Assembly the following:
6        (1) the gas utility's projects described under
7    subsection (b) of this Section;
8        (2) the projected timeline for the replacement of the
9    cast iron and bare and vintage steel in each utility's
10    system; and
11        (3) whether that timeline is adequate to address public
12    safety concerns and the reliability of natural gas
13    facilities.
14    The report shall be submitted no later than December 1 for
15the prior calendar year. The first report will be due December
161, 2018.
17    (j) This Section is repealed December 31, 2023.
18(Source: P.A. 98-57, eff. 7-5-13.)
 
19    (220 ILCS 5/9-228 new)
20    Sec. 9-228. Consideration of gas main extension costs.
21Whenever a gas public utility connects an applicant to its gas
22distribution system, any costs associated with investments in
23plant addition beyond that provided for in rules adopted by the
24Commission and in excess of any refundable payment or
25nonrefundable payment by the applicant at the time of

 

 

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1connection shall be excluded from a cost-recovery mechanism
2that allocates the excess cost among existing customers.
 
3    (220 ILCS 5/9-235 new)
4    Sec. 9-235. Tariffed gas main extension provisions. No
5later than 60 days after the effective date of this amendatory
6Act of the 100th General Assembly, the Commission shall
7initiate a docketed investigation reviewing each gas public
8utility tariff that provides for gas main extensions without
9additional charge to new customers in excess of the default
10extensions without charge as specified in 83 Ill. Adm. Code
11501. While the primary focus of the investigations shall be to
12determine whether existing customers are subsidizing the
13connection of new customers to the gas distribution system, the
14Commission is not restricted in considering other issues
15related to gas main extensions. To the extent that
16subsidization by existing customers is occurring beyond that
17provided for in rules adopted by the Commission, the Commission
18shall appropriately modify or cancel the tariff to eliminate
19any future subsidization. If the Commission modifies a gas
20utility's gas main extension tariff, the utility shall either
21accept or reject the modifications through an appropriate
22filing with the Commission within 10 days after the
23Commission's order. If the utility rejects the modifications,
24the Commission shall cancel the tariff and the Commission's gas
25main extension rules in 83 Ill. Adm. Code 501 govern gas main

 

 

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1extensions for that utility. During the investigation under
2this Section, the relevant provisions of the gas utility's gas
3main extension tariff shall be suspended and the Commission's
4gas main extension rules in 83 Ill. Adm. Code 501 govern until
5the conclusion of the investigation.
 
6    (220 ILCS 5/9-237 new)
7    Sec. 9-237. Gas main extension rulemaking. No later than 60
8days after the effective date of this amendatory Act of the
9100th General Assembly, the Commission shall initiate a
10rulemaking proceeding providing for rules to establish a
11uniform method by which a natural gas public utility determines
12the value of a gas main extension provided to new customers
13without additional charge.