97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB2071

 

Introduced 2/22/2011, by Rep. Lou Lang

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 3855/1-75

    Amends the Illinois Power Agency Act. Provides that through June 1, 2016 (instead of 2011), renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in specified provisions only if they are generated from facilities located in the State, provided that cost-effective renewable energy resources are available from those facilities. Provides that after June 1, 2016 (instead of 2011), cost-effective renewable energy resources located in Illinois and in states that adjoin Illinois may be counted towards compliance with the standards set forth in specified provisions. Effective immediately.


LRB097 08812 PJG 48942 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2071LRB097 08812 PJG 48942 b

1    AN ACT concerning utilities.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Power Agency Act is amended by
5changing Section 1-75 as follows:
 
6    (20 ILCS 3855/1-75)
7    Sec. 1-75. Planning and Procurement Bureau. The Planning
8and Procurement Bureau has the following duties and
9responsibilities:
10        (a) The Planning and Procurement Bureau shall each
11    year, beginning in 2008, develop procurement plans and
12    conduct competitive procurement processes in accordance
13    with the requirements of Section 16-111.5 of the Public
14    Utilities Act for the eligible retail customers of electric
15    utilities that on December 31, 2005 provided electric
16    service to at least 100,000 customers in Illinois. For the
17    purposes of this Section, the term "eligible retail
18    customers" has the same definition as found in Section
19    16-111.5(a) of the Public Utilities Act.
20            (1) The Agency shall each year, beginning in 2008,
21        as needed, issue a request for qualifications for
22        experts or expert consulting firms to develop the
23        procurement plans in accordance with Section 16-111.5

 

 

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1        of the Public Utilities Act. In order to qualify an
2        expert or expert consulting firm must have:
3                (A) direct previous experience assembling
4            large-scale power supply plans or portfolios for
5            end-use customers;
6                (B) an advanced degree in economics,
7            mathematics, engineering, risk management, or a
8            related area of study;
9                (C) 10 years of experience in the electricity
10            sector, including managing supply risk;
11                (D) expertise in wholesale electricity market
12            rules, including those established by the Federal
13            Energy Regulatory Commission and regional
14            transmission organizations;
15                (E) expertise in credit protocols and
16            familiarity with contract protocols;
17                (F) adequate resources to perform and fulfill
18            the required functions and responsibilities; and
19                (G) the absence of a conflict of interest and
20            inappropriate bias for or against potential
21            bidders or the affected electric utilities.
22            (2) The Agency shall each year, as needed, issue a
23        request for qualifications for a procurement
24        administrator to conduct the competitive procurement
25        processes in accordance with Section 16-111.5 of the
26        Public Utilities Act. In order to qualify an expert or

 

 

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1        expert consulting firm must have:
2                (A) direct previous experience administering a
3            large-scale competitive procurement process;
4                (B) an advanced degree in economics,
5            mathematics, engineering, or a related area of
6            study;
7                (C) 10 years of experience in the electricity
8            sector, including risk management experience;
9                (D) expertise in wholesale electricity market
10            rules, including those established by the Federal
11            Energy Regulatory Commission and regional
12            transmission organizations;
13                (E) expertise in credit and contract
14            protocols;
15                (F) adequate resources to perform and fulfill
16            the required functions and responsibilities; and
17                (G) the absence of a conflict of interest and
18            inappropriate bias for or against potential
19            bidders or the affected electric utilities.
20            (3) The Agency shall provide affected utilities
21        and other interested parties with the lists of
22        qualified experts or expert consulting firms
23        identified through the request for qualifications
24        processes that are under consideration to develop the
25        procurement plans and to serve as the procurement
26        administrator. The Agency shall also provide each

 

 

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1        qualified expert's or expert consulting firm's
2        response to the request for qualifications. All
3        information provided under this subparagraph shall
4        also be provided to the Commission. The Agency may
5        provide by rule for fees associated with supplying the
6        information to utilities and other interested parties.
7        These parties shall, within 5 business days, notify the
8        Agency in writing if they object to any experts or
9        expert consulting firms on the lists. Objections shall
10        be based on:
11                (A) failure to satisfy qualification criteria;
12                (B) identification of a conflict of interest;
13            or
14                (C) evidence of inappropriate bias for or
15            against potential bidders or the affected
16            utilities.
17            The Agency shall remove experts or expert
18        consulting firms from the lists within 10 days if there
19        is a reasonable basis for an objection and provide the
20        updated lists to the affected utilities and other
21        interested parties. If the Agency fails to remove an
22        expert or expert consulting firm from a list, an
23        objecting party may seek review by the Commission
24        within 5 days thereafter by filing a petition, and the
25        Commission shall render a ruling on the petition within
26        10 days. There is no right of appeal of the

 

 

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1        Commission's ruling.
2            (4) The Agency shall issue requests for proposals
3        to the qualified experts or expert consulting firms to
4        develop a procurement plan for the affected utilities
5        and to serve as procurement administrator.
6            (5) The Agency shall select an expert or expert
7        consulting firm to develop procurement plans based on
8        the proposals submitted and shall award one-year
9        contracts to those selected with an option for the
10        Agency for a one-year renewal.
11            (6) The Agency shall select an expert or expert
12        consulting firm, with approval of the Commission, to
13        serve as procurement administrator based on the
14        proposals submitted. If the Commission rejects, within
15        5 days, the Agency's selection, the Agency shall submit
16        another recommendation within 3 days based on the
17        proposals submitted. The Agency shall award a one-year
18        contract to the expert or expert consulting firm so
19        selected with Commission approval with an option for
20        the Agency for a one-year renewal.
21        (b) The experts or expert consulting firms retained by
22    the Agency shall, as appropriate, prepare procurement
23    plans, and conduct a competitive procurement process as
24    prescribed in Section 16-111.5 of the Public Utilities Act,
25    to ensure adequate, reliable, affordable, efficient, and
26    environmentally sustainable electric service at the lowest

 

 

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1    total cost over time, taking into account any benefits of
2    price stability, for eligible retail customers of electric
3    utilities that on December 31, 2005 provided electric
4    service to at least 100,000 customers in the State of
5    Illinois.
6        (c) Renewable portfolio standard.
7            (1) The procurement plans shall include
8        cost-effective renewable energy resources. A minimum
9        percentage of each utility's total supply to serve the
10        load of eligible retail customers, as defined in
11        Section 16-111.5(a) of the Public Utilities Act,
12        procured for each of the following years shall be
13        generated from cost-effective renewable energy
14        resources: at least 2% by June 1, 2008; at least 4% by
15        June 1, 2009; at least 5% by June 1, 2010; at least 6%
16        by June 1, 2011; at least 7% by June 1, 2012; at least
17        8% by June 1, 2013; at least 9% by June 1, 2014; at
18        least 10% by June 1, 2015; and increasing by at least
19        1.5% each year thereafter to at least 25% by June 1,
20        2025. To the extent that it is available, at least 75%
21        of the renewable energy resources used to meet these
22        standards shall come from wind generation and,
23        beginning on June 1, 2011, at least the following
24        percentages of the renewable energy resources used to
25        meet these standards shall come from photovoltaics on
26        the following schedule: 0.5% by June 1, 2012, 1.5% by

 

 

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1        June 1, 2013; 3% by June 1, 2014; and 6% by June 1,
2        2015 and thereafter. For purposes of this subsection
3        (c), "cost-effective" means that the costs of
4        procuring renewable energy resources do not cause the
5        limit stated in paragraph (2) of this subsection (c) to
6        be exceeded and do not exceed benchmarks based on
7        market prices for renewable energy resources in the
8        region, which shall be developed by the procurement
9        administrator, in consultation with the Commission
10        staff, Agency staff, and the procurement monitor and
11        shall be subject to Commission review and approval.
12            (2) For purposes of this subsection (c), the
13        required procurement of cost-effective renewable
14        energy resources for a particular year shall be
15        measured as a percentage of the actual amount of
16        electricity (megawatt-hours) supplied by the electric
17        utility to eligible retail customers in the planning
18        year ending immediately prior to the procurement. For
19        purposes of this subsection (c), the amount paid per
20        kilowatthour means the total amount paid for electric
21        service expressed on a per kilowatthour basis. For
22        purposes of this subsection (c), the total amount paid
23        for electric service includes without limitation
24        amounts paid for supply, transmission, distribution,
25        surcharges, and add-on taxes.
26            Notwithstanding the requirements of this

 

 

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1        subsection (c), the total of renewable energy
2        resources procured pursuant to the procurement plan
3        for any single year shall be reduced by an amount
4        necessary to limit the annual estimated average net
5        increase due to the costs of these resources included
6        in the amounts paid by eligible retail customers in
7        connection with electric service to:
8                (A) in 2008, no more than 0.5% of the amount
9            paid per kilowatthour by those customers during
10            the year ending May 31, 2007;
11                (B) in 2009, the greater of an additional 0.5%
12            of the amount paid per kilowatthour by those
13            customers during the year ending May 31, 2008 or 1%
14            of the amount paid per kilowatthour by those
15            customers during the year ending May 31, 2007;
16                (C) in 2010, the greater of an additional 0.5%
17            of the amount paid per kilowatthour by those
18            customers during the year ending May 31, 2009 or
19            1.5% of the amount paid per kilowatthour by those
20            customers during the year ending May 31, 2007;
21                (D) in 2011, the greater of an additional 0.5%
22            of the amount paid per kilowatthour by those
23            customers during the year ending May 31, 2010 or 2%
24            of the amount paid per kilowatthour by those
25            customers during the year ending May 31, 2007; and
26                (E) thereafter, the amount of renewable energy

 

 

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1            resources procured pursuant to the procurement
2            plan for any single year shall be reduced by an
3            amount necessary to limit the estimated average
4            net increase due to the cost of these resources
5            included in the amounts paid by eligible retail
6            customers in connection with electric service to
7            no more than the greater of 2.015% of the amount
8            paid per kilowatthour by those customers during
9            the year ending May 31, 2007 or the incremental
10            amount per kilowatthour paid for these resources
11            in 2011.
12            No later than June 30, 2011, the Commission shall
13        review the limitation on the amount of renewable energy
14        resources procured pursuant to this subsection (c) and
15        report to the General Assembly its findings as to
16        whether that limitation unduly constrains the
17        procurement of cost-effective renewable energy
18        resources.
19            (3) Through June 1, 2016 2011, renewable energy
20        resources shall be counted for the purpose of meeting
21        the renewable energy standards set forth in paragraph
22        (1) of this subsection (c) only if they are generated
23        from facilities located in the State, provided that
24        cost-effective renewable energy resources are
25        available from those facilities. If those
26        cost-effective resources are not available in

 

 

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1        Illinois, they shall be procured in states that adjoin
2        Illinois and may be counted towards compliance. If
3        those cost-effective resources are not available in
4        Illinois or in states that adjoin Illinois, they shall
5        be purchased elsewhere and shall be counted towards
6        compliance. After June 1, 2016 2011, cost-effective
7        renewable energy resources located in Illinois and in
8        states that adjoin Illinois may be counted towards
9        compliance with the standards set forth in paragraph
10        (1) of this subsection (c). If those cost-effective
11        resources are not available in Illinois or in states
12        that adjoin Illinois, they shall be purchased
13        elsewhere and shall be counted towards compliance.
14            (4) The electric utility shall retire all
15        renewable energy credits used to comply with the
16        standard.
17            (5) Beginning with the year commencing June 1,
18        2010, an electric utility subject to this subsection
19        (c) shall apply the lesser of the maximum alternative
20        compliance payment rate or the most recent estimated
21        alternative compliance payment rate for its service
22        territory for the corresponding compliance period,
23        established pursuant to subsection (d) of Section
24        16-115D of the Public Utilities Act to its retail
25        customers that take service pursuant to the electric
26        utility's hourly pricing tariff or tariffs. The

 

 

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1        electric utility shall retain all amounts collected as
2        a result of the application of the alternative
3        compliance payment rate or rates to such customers,
4        and, beginning in 2011, the utility shall include in
5        the information provided under item (1) of subsection
6        (d) of Section 16-111.5 of the Public Utilities Act the
7        amounts collected under the alternative compliance
8        payment rate or rates for the prior year ending May 31.
9        Notwithstanding any limitation on the procurement of
10        renewable energy resources imposed by item (2) of this
11        subsection (c), the Agency shall increase its spending
12        on the purchase of renewable energy resources to be
13        procured by the electric utility for the next plan year
14        by an amount equal to the amounts collected by the
15        utility under the alternative compliance payment rate
16        or rates in the prior year ending May 31.
17    (d) Clean coal portfolio standard.
18        (1) The procurement plans shall include electricity
19    generated using clean coal. Each utility shall enter into
20    one or more sourcing agreements with the initial clean coal
21    facility, as provided in paragraph (3) of this subsection
22    (d), covering electricity generated by the initial clean
23    coal facility representing at least 5% of each utility's
24    total supply to serve the load of eligible retail customers
25    in 2015 and each year thereafter, as described in paragraph
26    (3) of this subsection (d), subject to the limits specified

 

 

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1    in paragraph (2) of this subsection (d). It is the goal of
2    the State that by January 1, 2025, 25% of the electricity
3    used in the State shall be generated by cost-effective
4    clean coal facilities. For purposes of this subsection (d),
5    "cost-effective" means that the expenditures pursuant to
6    such sourcing agreements do not cause the limit stated in
7    paragraph (2) of this subsection (d) to be exceeded and do
8    not exceed cost-based benchmarks, which shall be developed
9    to assess all expenditures pursuant to such sourcing
10    agreements covering electricity generated by clean coal
11    facilities, other than the initial clean coal facility, by
12    the procurement administrator, in consultation with the
13    Commission staff, Agency staff, and the procurement
14    monitor and shall be subject to Commission review and
15    approval.
16            (A) A utility party to a sourcing agreement shall
17        immediately retire any emission credits that it
18        receives in connection with the electricity covered by
19        such agreement.
20            (B) Utilities shall maintain adequate records
21        documenting the purchases under the sourcing agreement
22        to comply with this subsection (d) and shall file an
23        accounting with the load forecast that must be filed
24        with the Agency by July 15 of each year, in accordance
25        with subsection (d) of Section 16-111.5 of the Public
26        Utilities Act.

 

 

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1            (C) A utility shall be deemed to have complied with
2        the clean coal portfolio standard specified in this
3        subsection (d) if the utility enters into a sourcing
4        agreement as required by this subsection (d).
5        (2) For purposes of this subsection (d), the required
6    execution of sourcing agreements with the initial clean
7    coal facility for a particular year shall be measured as a
8    percentage of the actual amount of electricity
9    (megawatt-hours) supplied by the electric utility to
10    eligible retail customers in the planning year ending
11    immediately prior to the agreement's execution. For
12    purposes of this subsection (d), the amount paid per
13    kilowatthour means the total amount paid for electric
14    service expressed on a per kilowatthour basis. For purposes
15    of this subsection (d), the total amount paid for electric
16    service includes without limitation amounts paid for
17    supply, transmission, distribution, surcharges and add-on
18    taxes.
19        Notwithstanding the requirements of this subsection
20    (d), the total amount paid under sourcing agreements with
21    clean coal facilities pursuant to the procurement plan for
22    any given year shall be reduced by an amount necessary to
23    limit the annual estimated average net increase due to the
24    costs of these resources included in the amounts paid by
25    eligible retail customers in connection with electric
26    service to:

 

 

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1                (A) in 2010, no more than 0.5% of the amount
2            paid per kilowatthour by those customers during
3            the year ending May 31, 2009;
4                (B) in 2011, the greater of an additional 0.5%
5            of the amount paid per kilowatthour by those
6            customers during the year ending May 31, 2010 or 1%
7            of the amount paid per kilowatthour by those
8            customers during the year ending May 31, 2009;
9                (C) in 2012, the greater of an additional 0.5%
10            of the amount paid per kilowatthour by those
11            customers during the year ending May 31, 2011 or
12            1.5% of the amount paid per kilowatthour by those
13            customers during the year ending May 31, 2009;
14                (D) in 2013, the greater of an additional 0.5%
15            of the amount paid per kilowatthour by those
16            customers during the year ending May 31, 2012 or 2%
17            of the amount paid per kilowatthour by those
18            customers during the year ending May 31, 2009; and
19                (E) thereafter, the total amount paid under
20            sourcing agreements with clean coal facilities
21            pursuant to the procurement plan for any single
22            year shall be reduced by an amount necessary to
23            limit the estimated average net increase due to the
24            cost of these resources included in the amounts
25            paid by eligible retail customers in connection
26            with electric service to no more than the greater

 

 

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1            of (i) 2.015% of the amount paid per kilowatthour
2            by those customers during the year ending May 31,
3            2009 or (ii) the incremental amount per
4            kilowatthour paid for these resources in 2013.
5            These requirements may be altered only as provided
6            by statute. No later than June 30, 2015, the
7            Commission shall review the limitation on the
8            total amount paid under sourcing agreements, if
9            any, with clean coal facilities pursuant to this
10            subsection (d) and report to the General Assembly
11            its findings as to whether that limitation unduly
12            constrains the amount of electricity generated by
13            cost-effective clean coal facilities that is
14            covered by sourcing agreements.
15        (3) Initial clean coal facility. In order to promote
16    development of clean coal facilities in Illinois, each
17    electric utility subject to this Section shall execute a
18    sourcing agreement to source electricity from a proposed
19    clean coal facility in Illinois (the "initial clean coal
20    facility") that will have a nameplate capacity of at least
21    500 MW when commercial operation commences, that has a
22    final Clean Air Act permit on the effective date of this
23    amendatory Act of the 95th General Assembly, and that will
24    meet the definition of clean coal facility in Section 1-10
25    of this Act when commercial operation commences. The
26    sourcing agreements with this initial clean coal facility

 

 

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1    shall be subject to both approval of the initial clean coal
2    facility by the General Assembly and satisfaction of the
3    requirements of paragraph (4) of this subsection (d) and
4    shall be executed within 90 days after any such approval by
5    the General Assembly. The Agency and the Commission shall
6    have authority to inspect all books and records associated
7    with the initial clean coal facility during the term of
8    such a sourcing agreement. A utility's sourcing agreement
9    for electricity produced by the initial clean coal facility
10    shall include:
11            (A) a formula contractual price (the "contract
12        price") approved pursuant to paragraph (4) of this
13        subsection (d), which shall:
14                (i) be determined using a cost of service
15            methodology employing either a level or deferred
16            capital recovery component, based on a capital
17            structure consisting of 45% equity and 55% debt,
18            and a return on equity as may be approved by the
19            Federal Energy Regulatory Commission, which in any
20            case may not exceed the lower of 11.5% or the rate
21            of return approved by the General Assembly
22            pursuant to paragraph (4) of this subsection (d);
23            and
24                (ii) provide that all miscellaneous net
25            revenue, including but not limited to net revenue
26            from the sale of emission allowances, if any,

 

 

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1            substitute natural gas, if any, grants or other
2            support provided by the State of Illinois or the
3            United States Government, firm transmission
4            rights, if any, by-products produced by the
5            facility, energy or capacity derived from the
6            facility and not covered by a sourcing agreement
7            pursuant to paragraph (3) of this subsection (d) or
8            item (5) of subsection (d) of Section 16-115 of the
9            Public Utilities Act, whether generated from the
10            synthesis gas derived from coal, from SNG, or from
11            natural gas, shall be credited against the revenue
12            requirement for this initial clean coal facility;
13            (B) power purchase provisions, which shall:
14                (i) provide that the utility party to such
15            sourcing agreement shall pay the contract price
16            for electricity delivered under such sourcing
17            agreement;
18                (ii) require delivery of electricity to the
19            regional transmission organization market of the
20            utility that is party to such sourcing agreement;
21                (iii) require the utility party to such
22            sourcing agreement to buy from the initial clean
23            coal facility in each hour an amount of energy
24            equal to all clean coal energy made available from
25            the initial clean coal facility during such hour
26            times a fraction, the numerator of which is such

 

 

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1            utility's retail market sales of electricity
2            (expressed in kilowatthours sold) in the State
3            during the prior calendar month and the
4            denominator of which is the total retail market
5            sales of electricity (expressed in kilowatthours
6            sold) in the State by utilities during such prior
7            month and the sales of electricity (expressed in
8            kilowatthours sold) in the State by alternative
9            retail electric suppliers during such prior month
10            that are subject to the requirements of this
11            subsection (d) and paragraph (5) of subsection (d)
12            of Section 16-115 of the Public Utilities Act,
13            provided that the amount purchased by the utility
14            in any year will be limited by paragraph (2) of
15            this subsection (d); and
16                (iv) be considered pre-existing contracts in
17            such utility's procurement plans for eligible
18            retail customers;
19            (C) contract for differences provisions, which
20        shall:
21                (i) require the utility party to such sourcing
22            agreement to contract with the initial clean coal
23            facility in each hour with respect to an amount of
24            energy equal to all clean coal energy made
25            available from the initial clean coal facility
26            during such hour times a fraction, the numerator of

 

 

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1            which is such utility's retail market sales of
2            electricity (expressed in kilowatthours sold) in
3            the utility's service territory in the State
4            during the prior calendar month and the
5            denominator of which is the total retail market
6            sales of electricity (expressed in kilowatthours
7            sold) in the State by utilities during such prior
8            month and the sales of electricity (expressed in
9            kilowatthours sold) in the State by alternative
10            retail electric suppliers during such prior month
11            that are subject to the requirements of this
12            subsection (d) and paragraph (5) of subsection (d)
13            of Section 16-115 of the Public Utilities Act,
14            provided that the amount paid by the utility in any
15            year will be limited by paragraph (2) of this
16            subsection (d);
17                (ii) provide that the utility's payment
18            obligation in respect of the quantity of
19            electricity determined pursuant to the preceding
20            clause (i) shall be limited to an amount equal to
21            (1) the difference between the contract price
22            determined pursuant to subparagraph (A) of
23            paragraph (3) of this subsection (d) and the
24            day-ahead price for electricity delivered to the
25            regional transmission organization market of the
26            utility that is party to such sourcing agreement

 

 

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1            (or any successor delivery point at which such
2            utility's supply obligations are financially
3            settled on an hourly basis) (the "reference
4            price") on the day preceding the day on which the
5            electricity is delivered to the initial clean coal
6            facility busbar, multiplied by (2) the quantity of
7            electricity determined pursuant to the preceding
8            clause (i); and
9                (iii) not require the utility to take physical
10            delivery of the electricity produced by the
11            facility;
12            (D) general provisions, which shall:
13                (i) specify a term of no more than 30 years,
14            commencing on the commercial operation date of the
15            facility;
16                (ii) provide that utilities shall maintain
17            adequate records documenting purchases under the
18            sourcing agreements entered into to comply with
19            this subsection (d) and shall file an accounting
20            with the load forecast that must be filed with the
21            Agency by July 15 of each year, in accordance with
22            subsection (d) of Section 16-111.5 of the Public
23            Utilities Act.
24                (iii) provide that all costs associated with
25            the initial clean coal facility will be
26            periodically reported to the Federal Energy

 

 

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1            Regulatory Commission and to purchasers in
2            accordance with applicable laws governing
3            cost-based wholesale power contracts;
4                (iv) permit the Illinois Power Agency to
5            assume ownership of the initial clean coal
6            facility, without monetary consideration and
7            otherwise on reasonable terms acceptable to the
8            Agency, if the Agency so requests no less than 3
9            years prior to the end of the stated contract term;
10                (v) require the owner of the initial clean coal
11            facility to provide documentation to the
12            Commission each year, starting in the facility's
13            first year of commercial operation, accurately
14            reporting the quantity of carbon emissions from
15            the facility that have been captured and
16            sequestered and report any quantities of carbon
17            released from the site or sites at which carbon
18            emissions were sequestered in prior years, based
19            on continuous monitoring of such sites. If, in any
20            year after the first year of commercial operation,
21            the owner of the facility fails to demonstrate that
22            the initial clean coal facility captured and
23            sequestered at least 50% of the total carbon
24            emissions that the facility would otherwise emit
25            or that sequestration of emissions from prior
26            years has failed, resulting in the release of

 

 

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1            carbon dioxide into the atmosphere, the owner of
2            the facility must offset excess emissions. Any
3            such carbon offsets must be permanent, additional,
4            verifiable, real, located within the State of
5            Illinois, and legally and practicably enforceable.
6            The cost of such offsets for the facility that are
7            not recoverable shall not exceed $15 million in any
8            given year. No costs of any such purchases of
9            carbon offsets may be recovered from a utility or
10            its customers. All carbon offsets purchased for
11            this purpose and any carbon emission credits
12            associated with sequestration of carbon from the
13            facility must be permanently retired. The initial
14            clean coal facility shall not forfeit its
15            designation as a clean coal facility if the
16            facility fails to fully comply with the applicable
17            carbon sequestration requirements in any given
18            year, provided the requisite offsets are
19            purchased. However, the Attorney General, on
20            behalf of the People of the State of Illinois, may
21            specifically enforce the facility's sequestration
22            requirement and the other terms of this contract
23            provision. Compliance with the sequestration
24            requirements and offset purchase requirements
25            specified in paragraph (3) of this subsection (d)
26            shall be reviewed annually by an independent

 

 

HB2071- 23 -LRB097 08812 PJG 48942 b

1            expert retained by the owner of the initial clean
2            coal facility, with the advance written approval
3            of the Attorney General. The Commission may, in the
4            course of the review specified in item (vii),
5            reduce the allowable return on equity for the
6            facility if the facility wilfully fails to comply
7            with the carbon capture and sequestration
8            requirements set forth in this item (v);
9                (vi) include limits on, and accordingly
10            provide for modification of, the amount the
11            utility is required to source under the sourcing
12            agreement consistent with paragraph (2) of this
13            subsection (d);
14                (vii) require Commission review: (1) to
15            determine the justness, reasonableness, and
16            prudence of the inputs to the formula referenced in
17            subparagraphs (A)(i) through (A)(iii) of paragraph
18            (3) of this subsection (d), prior to an adjustment
19            in those inputs including, without limitation, the
20            capital structure and return on equity, fuel
21            costs, and other operations and maintenance costs
22            and (2) to approve the costs to be passed through
23            to customers under the sourcing agreement by which
24            the utility satisfies its statutory obligations.
25            Commission review shall occur no less than every 3
26            years, regardless of whether any adjustments have

 

 

HB2071- 24 -LRB097 08812 PJG 48942 b

1            been proposed, and shall be completed within 9
2            months;
3                (viii) limit the utility's obligation to such
4            amount as the utility is allowed to recover through
5            tariffs filed with the Commission, provided that
6            neither the clean coal facility nor the utility
7            waives any right to assert federal pre-emption or
8            any other argument in response to a purported
9            disallowance of recovery costs;
10                (ix) limit the utility's or alternative retail
11            electric supplier's obligation to incur any
12            liability until such time as the facility is in
13            commercial operation and generating power and
14            energy and such power and energy is being delivered
15            to the facility busbar;
16                (x) provide that the owner or owners of the
17            initial clean coal facility, which is the
18            counterparty to such sourcing agreement, shall
19            have the right from time to time to elect whether
20            the obligations of the utility party thereto shall
21            be governed by the power purchase provisions or the
22            contract for differences provisions;
23                (xi) append documentation showing that the
24            formula rate and contract, insofar as they relate
25            to the power purchase provisions, have been
26            approved by the Federal Energy Regulatory

 

 

HB2071- 25 -LRB097 08812 PJG 48942 b

1            Commission pursuant to Section 205 of the Federal
2            Power Act;
3                (xii) provide that any changes to the terms of
4            the contract, insofar as such changes relate to the
5            power purchase provisions, are subject to review
6            under the public interest standard applied by the
7            Federal Energy Regulatory Commission pursuant to
8            Sections 205 and 206 of the Federal Power Act; and
9                (xiii) conform with customary lender
10            requirements in power purchase agreements used as
11            the basis for financing non-utility generators.
12        (4) Effective date of sourcing agreements with the
13    initial clean coal facility. Any proposed sourcing
14    agreement with the initial clean coal facility shall not
15    become effective unless the following reports are prepared
16    and submitted and authorizations and approvals obtained:
17                (i) Facility cost report. The owner of the
18            initial clean coal facility shall submit to the
19            Commission, the Agency, and the General Assembly a
20            front-end engineering and design study, a facility
21            cost report, method of financing (including but
22            not limited to structure and associated costs),
23            and an operating and maintenance cost quote for the
24            facility (collectively "facility cost report"),
25            which shall be prepared in accordance with the
26            requirements of this paragraph (4) of subsection

 

 

HB2071- 26 -LRB097 08812 PJG 48942 b

1            (d) of this Section, and shall provide the
2            Commission and the Agency access to the work
3            papers, relied upon documents, and any other
4            backup documentation related to the facility cost
5            report.
6                (ii) Commission report. Within 6 months
7            following receipt of the facility cost report, the
8            Commission, in consultation with the Agency, shall
9            submit a report to the General Assembly setting
10            forth its analysis of the facility cost report.
11            Such report shall include, but not be limited to, a
12            comparison of the costs associated with
13            electricity generated by the initial clean coal
14            facility to the costs associated with electricity
15            generated by other types of generation facilities,
16            an analysis of the rate impacts on residential and
17            small business customers over the life of the
18            sourcing agreements, and an analysis of the
19            likelihood that the initial clean coal facility
20            will commence commercial operation by and be
21            delivering power to the facility's busbar by 2016.
22            To assist in the preparation of its report, the
23            Commission, in consultation with the Agency, may
24            hire one or more experts or consultants, the costs
25            of which shall be paid for by the owner of the
26            initial clean coal facility. The Commission and

 

 

HB2071- 27 -LRB097 08812 PJG 48942 b

1            Agency may begin the process of selecting such
2            experts or consultants prior to receipt of the
3            facility cost report.
4                (iii) General Assembly approval. The proposed
5            sourcing agreements shall not take effect unless,
6            based on the facility cost report and the
7            Commission's report, the General Assembly enacts
8            authorizing legislation approving (A) the
9            projected price, stated in cents per kilowatthour,
10            to be charged for electricity generated by the
11            initial clean coal facility, (B) the projected
12            impact on residential and small business
13            customers' bills over the life of the sourcing
14            agreements, and (C) the maximum allowable return
15            on equity for the project; and
16                (iv) Commission review. If the General
17            Assembly enacts authorizing legislation pursuant
18            to subparagraph (iii) approving a sourcing
19            agreement, the Commission shall, within 90 days of
20            such enactment, complete a review of such sourcing
21            agreement. During such time period, the Commission
22            shall implement any directive of the General
23            Assembly, resolve any disputes between the parties
24            to the sourcing agreement concerning the terms of
25            such agreement, approve the form of such
26            agreement, and issue an order finding that the

 

 

HB2071- 28 -LRB097 08812 PJG 48942 b

1            sourcing agreement is prudent and reasonable.
2    The facility cost report shall be prepared as follows:
3            (A) The facility cost report shall be prepared by
4        duly licensed engineering and construction firms
5        detailing the estimated capital costs payable to one or
6        more contractors or suppliers for the engineering,
7        procurement and construction of the components
8        comprising the initial clean coal facility and the
9        estimated costs of operation and maintenance of the
10        facility. The facility cost report shall include:
11                (i) an estimate of the capital cost of the core
12            plant based on one or more front end engineering
13            and design studies for the gasification island and
14            related facilities. The core plant shall include
15            all civil, structural, mechanical, electrical,
16            control, and safety systems.
17                (ii) an estimate of the capital cost of the
18            balance of the plant, including any capital costs
19            associated with sequestration of carbon dioxide
20            emissions and all interconnects and interfaces
21            required to operate the facility, such as
22            transmission of electricity, construction or
23            backfeed power supply, pipelines to transport
24            substitute natural gas or carbon dioxide, potable
25            water supply, natural gas supply, water supply,
26            water discharge, landfill, access roads, and coal

 

 

HB2071- 29 -LRB097 08812 PJG 48942 b

1            delivery.
2            The quoted construction costs shall be expressed
3        in nominal dollars as of the date that the quote is
4        prepared and shall include (1) capitalized financing
5        costs during construction, (2) taxes, insurance, and
6        other owner's costs, and (3) an assumed escalation in
7        materials and labor beyond the date as of which the
8        construction cost quote is expressed.
9            (B) The front end engineering and design study for
10        the gasification island and the cost study for the
11        balance of plant shall include sufficient design work
12        to permit quantification of major categories of
13        materials, commodities and labor hours, and receipt of
14        quotes from vendors of major equipment required to
15        construct and operate the clean coal facility.
16            (C) The facility cost report shall also include an
17        operating and maintenance cost quote that will provide
18        the estimated cost of delivered fuel, personnel,
19        maintenance contracts, chemicals, catalysts,
20        consumables, spares, and other fixed and variable
21        operations and maintenance costs.
22                (a) The delivered fuel cost estimate will be
23            provided by a recognized third party expert or
24            experts in the fuel and transportation industries.
25                (b) The balance of the operating and
26            maintenance cost quote, excluding delivered fuel

 

 

HB2071- 30 -LRB097 08812 PJG 48942 b

1            costs will be developed based on the inputs
2            provided by duly licensed engineering and
3            construction firms performing the construction
4            cost quote, potential vendors under long-term
5            service agreements and plant operating agreements,
6            or recognized third party plant operator or
7            operators.
8                The operating and maintenance cost quote
9            (including the cost of the front end engineering
10            and design study) shall be expressed in nominal
11            dollars as of the date that the quote is prepared
12            and shall include (1) taxes, insurance, and other
13            owner's costs, and (2) an assumed escalation in
14            materials and labor beyond the date as of which the
15            operating and maintenance cost quote is expressed.
16            (D) The facility cost report shall also include (i)
17        an analysis of the initial clean coal facility's
18        ability to deliver power and energy into the applicable
19        regional transmission organization markets and (ii) an
20        analysis of the expected capacity factor for the
21        initial clean coal facility.
22            (E) Amounts paid to third parties unrelated to the
23        owner or owners of the initial clean coal facility to
24        prepare the core plant construction cost quote,
25        including the front end engineering and design study,
26        and the operating and maintenance cost quote will be

 

 

HB2071- 31 -LRB097 08812 PJG 48942 b

1        reimbursed through Coal Development Bonds.
2        (5) Re-powering and retrofitting coal-fired power
3    plants previously owned by Illinois utilities to qualify as
4    clean coal facilities. During the 2009 procurement
5    planning process and thereafter, the Agency and the
6    Commission shall consider sourcing agreements covering
7    electricity generated by power plants that were previously
8    owned by Illinois utilities and that have been or will be
9    converted into clean coal facilities, as defined by Section
10    1-10 of this Act. Pursuant to such procurement planning
11    process, the owners of such facilities may propose to the
12    Agency sourcing agreements with utilities and alternative
13    retail electric suppliers required to comply with
14    subsection (d) of this Section and item (5) of subsection
15    (d) of Section 16-115 of the Public Utilities Act, covering
16    electricity generated by such facilities. In the case of
17    sourcing agreements that are power purchase agreements,
18    the contract price for electricity sales shall be
19    established on a cost of service basis. In the case of
20    sourcing agreements that are contracts for differences,
21    the contract price from which the reference price is
22    subtracted shall be established on a cost of service basis.
23    The Agency and the Commission may approve any such utility
24    sourcing agreements that do not exceed cost-based
25    benchmarks developed by the procurement administrator, in
26    consultation with the Commission staff, Agency staff and

 

 

HB2071- 32 -LRB097 08812 PJG 48942 b

1    the procurement monitor, subject to Commission review and
2    approval. The Commission shall have authority to inspect
3    all books and records associated with these clean coal
4    facilities during the term of any such contract.
5        (6) Costs incurred under this subsection (d) or
6    pursuant to a contract entered into under this subsection
7    (d) shall be deemed prudently incurred and reasonable in
8    amount and the electric utility shall be entitled to full
9    cost recovery pursuant to the tariffs filed with the
10    Commission.
11        (e) The draft procurement plans are subject to public
12    comment, as required by Section 16-111.5 of the Public
13    Utilities Act.
14        (f) The Agency shall submit the final procurement plan
15    to the Commission. The Agency shall revise a procurement
16    plan if the Commission determines that it does not meet the
17    standards set forth in Section 16-111.5 of the Public
18    Utilities Act.
19        (g) The Agency shall assess fees to each affected
20    utility to recover the costs incurred in preparation of the
21    annual procurement plan for the utility.
22        (h) The Agency shall assess fees to each bidder to
23    recover the costs incurred in connection with a competitive
24    procurement process.
25(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
2696-159, eff. 8-10-09; 96-1437, eff. 8-17-10.)
 

 

 

HB2071- 33 -LRB097 08812 PJG 48942 b

1    Section 99. Effective date. This Act takes effect upon
2becoming law.