HB4573 EnrolledLRB097 16473 CEL 61640 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
5Section 9-220 as follows:
 
6    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)
7    Sec. 9-220. Rate changes based on changes in fuel costs.
8    (a) Notwithstanding the provisions of Section 9-201, the
9Commission may authorize the increase or decrease of rates and
10charges based upon changes in the cost of fuel used in the
11generation or production of electric power, changes in the cost
12of purchased power, or changes in the cost of purchased gas
13through the application of fuel adjustment clauses or purchased
14gas adjustment clauses. The Commission may also authorize the
15increase or decrease of rates and charges based upon
16expenditures or revenues resulting from the purchase or sale of
17emission allowances created under the federal Clean Air Act
18Amendments of 1990, through such fuel adjustment clauses, as a
19cost of fuel. For the purposes of this paragraph, cost of fuel
20used in the generation or production of electric power shall
21include the amount of any fees paid by the utility for the
22implementation and operation of a process for the
23desulfurization of the flue gas when burning high sulfur coal

 

 

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1at any location within the State of Illinois irrespective of
2the attainment status designation of such location; but shall
3not include transportation costs of coal (i) except to the
4extent that for contracts entered into on and after the
5effective date of this amendatory Act of 1997, the cost of the
6coal, including transportation costs, constitutes the lowest
7cost for adequate and reliable fuel supply reasonably available
8to the public utility in comparison to the cost, including
9transportation costs, of other adequate and reliable sources of
10fuel supply reasonably available to the public utility, or (ii)
11except as otherwise provided in the next 3 sentences of this
12paragraph. Such costs of fuel shall, when requested by a
13utility or at the conclusion of the utility's next general
14electric rate proceeding, whichever shall first occur, include
15transportation costs of coal purchased under existing coal
16purchase contracts. For purposes of this paragraph "existing
17coal purchase contracts" means contracts for the purchase of
18coal in effect on the effective date of this amendatory Act of
191991, as such contracts may thereafter be amended, but only to
20the extent that any such amendment does not increase the
21aggregate quantity of coal to be purchased under such contract.
22Nothing herein shall authorize an electric utility to recover
23through its fuel adjustment clause any amounts of
24transportation costs of coal that were included in the revenue
25requirement used to set base rates in its most recent general
26rate proceeding. Cost shall be based upon uniformly applied

 

 

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1accounting principles. Annually, the Commission shall initiate
2public hearings to determine whether the clauses reflect actual
3costs of fuel, gas, power, or coal transportation purchased to
4determine whether such purchases were prudent, and to reconcile
5any amounts collected with the actual costs of fuel, power,
6gas, or coal transportation prudently purchased. In each such
7proceeding, the burden of proof shall be upon the utility to
8establish the prudence of its cost of fuel, power, gas, or coal
9transportation purchases and costs. The Commission shall issue
10its final order in each such annual proceeding for an electric
11utility by December 31 of the year immediately following the
12year to which the proceeding pertains, provided, that the
13Commission shall issue its final order with respect to such
14annual proceeding for the years 1996 and earlier by December
1531, 1998.
16    (b) A public utility providing electric service, other than
17a public utility described in subsections (e) or (f) of this
18Section, may at any time during the mandatory transition period
19file with the Commission proposed tariff sheets that eliminate
20the public utility's fuel adjustment clause and adjust the
21public utility's base rate tariffs by the amount necessary for
22the base fuel component of the base rates to recover the public
23utility's average fuel and power supply costs per kilowatt-hour
24for the 2 most recent years for which the Commission has issued
25final orders in annual proceedings pursuant to subsection (a),
26where the average fuel and power supply costs per kilowatt-hour

 

 

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1shall be calculated as the sum of the public utility's prudent
2and allowable fuel and power supply costs as found by the
3Commission in the 2 proceedings divided by the public utility's
4actual jurisdictional kilowatt-hour sales for those 2 years.
5Notwithstanding any contrary or inconsistent provisions in
6Section 9-201 of this Act, in subsection (a) of this Section or
7in any rules or regulations promulgated by the Commission
8pursuant to subsection (g) of this Section, the Commission
9shall review and shall by order approve, or approve as
10modified, the proposed tariff sheets within 60 days after the
11date of the public utility's filing. The Commission may modify
12the public utility's proposed tariff sheets only to the extent
13the Commission finds necessary to achieve conformance to the
14requirements of this subsection (b). During the 5 years
15following the date of the Commission's order, but in any event
16no earlier than January 1, 2007, a public utility whose fuel
17adjustment clause has been eliminated pursuant to this
18subsection shall not file proposed tariff sheets seeking, or
19otherwise petition the Commission for, reinstatement of a fuel
20adjustment clause.
21    (c) Notwithstanding any contrary or inconsistent
22provisions in Section 9-201 of this Act, in subsection (a) of
23this Section or in any rules or regulations promulgated by the
24Commission pursuant to subsection (g) of this Section, a public
25utility providing electric service, other than a public utility
26described in subsection (e) or (f) of this Section, may at any

 

 

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1time during the mandatory transition period file with the
2Commission proposed tariff sheets that establish the rate per
3kilowatt-hour to be applied pursuant to the public utility's
4fuel adjustment clause at the average value for such rate
5during the preceding 24 months, provided that such average rate
6results in a credit to customers' bills, without making any
7revisions to the public utility's base rate tariffs. The
8proposed tariff sheets shall establish the fuel adjustment rate
9for a specific time period of at least 3 years but not more
10than 5 years, provided that the terms and conditions for any
11reinstatement earlier than 5 years shall be set forth in the
12proposed tariff sheets and subject to modification or approval
13by the Commission. The Commission shall review and shall by
14order approve the proposed tariff sheets if it finds that the
15requirements of this subsection are met. The Commission shall
16not conduct the annual hearings specified in the last 3
17sentences of subsection (a) of this Section for the utility for
18the period that the factor established pursuant to this
19subsection is in effect.
20    (d) A public utility providing electric service, or a
21public utility providing gas service may file with the
22Commission proposed tariff sheets that eliminate the public
23utility's fuel or purchased gas adjustment clause and adjust
24the public utility's base rate tariffs to provide for recovery
25of power supply costs or gas supply costs that would have been
26recovered through such clause; provided, that the provisions of

 

 

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1this subsection (d) shall not be available to a public utility
2described in subsections (e) or (f) of this Section to
3eliminate its fuel adjustment clause. Notwithstanding any
4contrary or inconsistent provisions in Section 9-201 of this
5Act, in subsection (a) of this Section, or in any rules or
6regulations promulgated by the Commission pursuant to
7subsection (g) of this Section, the Commission shall review and
8shall by order approve, or approve as modified in the
9Commission's order, the proposed tariff sheets within 240 days
10after the date of the public utility's filing. The Commission's
11order shall approve rates and charges that the Commission,
12based on information in the public utility's filing or on the
13record if a hearing is held by the Commission, finds will
14recover the reasonable, prudent and necessary jurisdictional
15power supply costs or gas supply costs incurred or to be
16incurred by the public utility during a 12 month period found
17by the Commission to be appropriate for these purposes,
18provided, that such period shall be either (i) a 12 month
19historical period occurring during the 15 months ending on the
20date of the public utility's filing, or (ii) a 12 month future
21period ending no later than 15 months following the date of the
22public utility's filing. The public utility shall include with
23its tariff filing information showing both (1) its actual
24jurisdictional power supply costs or gas supply costs for a 12
25month historical period conforming to (i) above and (2) its
26projected jurisdictional power supply costs or gas supply costs

 

 

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1for a future 12 month period conforming to (ii) above. If the
2Commission's order requires modifications in the tariff sheets
3filed by the public utility, the public utility shall have 7
4days following the date of the order to notify the Commission
5whether the public utility will implement the modified tariffs
6or elect to continue its fuel or purchased gas adjustment
7clause in force as though no order had been entered. The
8Commission's order shall provide for any reconciliation of
9power supply costs or gas supply costs, as the case may be, and
10associated revenues through the date that the public utility's
11fuel or purchased gas adjustment clause is eliminated. During
12the 5 years following the date of the Commission's order, a
13public utility whose fuel or purchased gas adjustment clause
14has been eliminated pursuant to this subsection shall not file
15proposed tariff sheets seeking, or otherwise petition the
16Commission for, reinstatement or adoption of a fuel or
17purchased gas adjustment clause. Nothing in this subsection (d)
18shall be construed as limiting the Commission's authority to
19eliminate a public utility's fuel adjustment clause or
20purchased gas adjustment clause in accordance with any other
21applicable provisions of this Act.
22    (e) Notwithstanding any contrary or inconsistent
23provisions in Section 9-201 of this Act, in subsection (a) of
24this Section, or in any rules promulgated by the Commission
25pursuant to subsection (g) of this Section, a public utility
26providing electric service to more than 1,000,000 customers in

 

 

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1this State may, within the first 6 months after the effective
2date of this amendatory Act of 1997, file with the Commission
3proposed tariff sheets that eliminate, effective January 1,
41997, the public utility's fuel adjustment clause without
5adjusting its base rates, and such tariff sheets shall be
6effective upon filing. To the extent the application of the
7fuel adjustment clause had resulted in net charges to customers
8after January 1, 1997, the utility shall also file a tariff
9sheet that provides for a refund stated on a per kilowatt-hour
10basis of such charges over a period not to exceed 6 months;
11provided however, that such refund shall not include the
12proportional amounts of taxes paid under the Use Tax Act,
13Service Use Tax Act, Service Occupation Tax Act, and Retailers'
14Occupation Tax Act on fuel used in generation. The Commission
15shall issue an order within 45 days after the date of the
16public utility's filing approving or approving as modified such
17tariff sheet. If the fuel adjustment clause is eliminated
18pursuant to this subsection, the Commission shall not conduct
19the annual hearings specified in the last 3 sentences of
20subsection (a) of this Section for the utility for any period
21after December 31, 1996 and prior to any reinstatement of such
22clause. A public utility whose fuel adjustment clause has been
23eliminated pursuant to this subsection shall not file a
24proposed tariff sheet seeking, or otherwise petition the
25Commission for, reinstatement of the fuel adjustment clause
26prior to January 1, 2007.

 

 

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1    (f) Notwithstanding any contrary or inconsistent
2provisions in Section 9-201 of this Act, in subsection (a) of
3this Section, or in any rules or regulations promulgated by the
4Commission pursuant to subsection (g) of this Section, a public
5utility providing electric service to more than 500,000
6customers but fewer than 1,000,000 customers in this State may,
7within the first 6 months after the effective date of this
8amendatory Act of 1997, file with the Commission proposed
9tariff sheets that eliminate, effective January 1, 1997, the
10public utility's fuel adjustment clause and adjust its base
11rates by the amount necessary for the base fuel component of
12the base rates to recover 91% of the public utility's average
13fuel and power supply costs for the 2 most recent years for
14which the Commission, as of January 1, 1997, has issued final
15orders in annual proceedings pursuant to subsection (a), where
16the average fuel and power supply costs per kilowatt-hour shall
17be calculated as the sum of the public utility's prudent and
18allowable fuel and power supply costs as found by the
19Commission in the 2 proceedings divided by the public utility's
20actual jurisdictional kilowatt-hour sales for those 2 years,
21provided, that such tariff sheets shall be effective upon
22filing. To the extent the application of the fuel adjustment
23clause had resulted in net charges to customers after January
241, 1997, the utility shall also file a tariff sheet that
25provides for a refund stated on a per kilowatt-hour basis of
26such charges over a period not to exceed 6 months. Provided

 

 

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1however, that such refund shall not include the proportional
2amounts of taxes paid under the Use Tax Act, Service Use Tax
3Act, Service Occupation Tax Act, and Retailers' Occupation Tax
4Act on fuel used in generation. The Commission shall issue an
5order within 45 days after the date of the public utility's
6filing approving or approving as modified such tariff sheet. If
7the fuel adjustment clause is eliminated pursuant to this
8subsection, the Commission shall not conduct the annual
9hearings specified in the last 3 sentences of subsection (a) of
10this Section for the utility for any period after December 31,
111996 and prior to any reinstatement of such clause. A public
12utility whose fuel adjustment clause has been eliminated
13pursuant to this subsection shall not file a proposed tariff
14sheet seeking, or otherwise petition the Commission for,
15reinstatement of the fuel adjustment clause prior to January 1,
162007.
17    (g) The Commission shall have authority to promulgate rules
18and regulations to carry out the provisions of this Section.
19    (h) Any Illinois gas utility may enter into a contract on
20or before September 30, 2011 for up to 10 years of supply with
21any company for the purchase of substitute natural gas (SNG)
22produced from coal through the gasification process if the
23company has commenced construction of a clean coal SNG facility
24by July 1, 2012 and commencement of construction shall mean
25that material physical site work has occurred, such as site
26clearing and excavation, water runoff prevention, water

 

 

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1retention reservoir preparation, or foundation development.
2The contract shall contain the following provisions: (i) at
3least 90% of feedstock to be used in the gasification process
4shall be coal with a high volatile bituminous rank and greater
5than 1.7 pounds of sulfur per million Btu content; (ii) at the
6time the contract term commences, the price per million Btu may
7not exceed $7.95 in 2008 dollars, adjusted annually based on
8the change in the Annual Consumer Price Index for All Urban
9Consumers for the Midwest Region as published in April by the
10United States Department of Labor, Bureau of Labor Statistics
11(or a suitable Consumer Price Index calculation if this
12Consumer Price Index is not available) for the previous
13calendar year; provided that the price per million Btu shall
14not exceed $9.95 at any time during the contract; (iii) the
15utility's supply contract for the purchase of SNG does not
16exceed 15% of the annual system supply requirements of the
17utility as of 2008; and (iv) the contract costs pursuant to
18subsection (h-10) of this Section shall not include any
19lobbying expenses, charitable contributions, advertising,
20organizational memberships, carbon dioxide pipeline or
21sequestration expenses, or marketing expenses.
22    Any gas utility that is providing service to more than
23150,000 customers on August 2, 2011 (the effective date of
24Public Act 97-239) shall either elect to enter into a contract
25on or before September 30, 2011 for 10 years of SNG supply with
26the owner of a clean coal SNG facility or to file biennial rate

 

 

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1proceedings before the Commission in the years 2012, 2014, and
22016, with such filings made after August 2, 2011 and no later
3than September 30 of the years 2012, 2014, and 2016 consistent
4with all requirements of 83 Ill. Adm. Code 255 and 285 as
5though the gas utility were filing for an increase in its
6rates, without regard to whether such filing would produce an
7increase, a decrease, or no change in the gas utility's rates,
8and the Commission shall review the gas utility's filing and
9shall issue its order in accordance with the provisions of
10Section 9-201 of this Act.
11    Within 7 days after August 2, 2011, the owner of the clean
12coal SNG facility shall submit to the Illinois Power Agency and
13each gas utility that is providing service to more than 150,000
14customers on August 2, 2011 a copy of a draft contract. Within
1530 days after the receipt of the draft contract, each such gas
16utility shall provide the Illinois Power Agency and the owner
17of the clean coal SNG facility with its comments and
18recommended revisions to the draft contract. Within 7 days
19after the receipt of the gas utility's comments and recommended
20revisions, the owner of the facility shall submit its
21responsive comments and a further revised draft of the contract
22to the Illinois Power Agency. The Illinois Power Agency shall
23review the draft contract and comments.
24    During its review of the draft contract, the Illinois Power
25Agency shall:
26        (1) review and confirm in writing that the terms stated

 

 

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1    in this subsection (h) are incorporated in the SNG
2    contract;
3        (2) review the SNG pricing formula included in the
4    contract and approve that formula if the Illinois Power
5    Agency determines that the formula, at the time the
6    contract term commences: (A) starts with a price of $6.50
7    per MMBtu adjusted by the adjusted final capitalized plant
8    cost; (B) takes into account budgeted miscellaneous net
9    revenue after cost allowance, including sale of SNG
10    produced by the clean coal SNG facility above the nameplate
11    capacity of the facility and other by-products produced by
12    the facility, as approved by the Illinois Power Agency; (C)
13    does not include carbon dioxide transportation or
14    sequestration expenses; and (D) includes all provisions
15    required under this subsection (h); if the Illinois Power
16    Agency does not approve of the SNG pricing formula, then
17    the Illinois Power Agency shall modify the formula to
18    ensure that it meets the requirements of this subsection
19    (h);
20        (3) review and approve the amount of budgeted
21    miscellaneous net revenue after cost allowance, including
22    sale of SNG produced by the clean coal SNG facility above
23    the nameplate capacity of the facility and other
24    by-products produced by the facility, to be included in the
25    pricing formula; the Illinois Power Agency shall approve
26    the amount of budgeted miscellaneous net revenue to be

 

 

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1    included in the pricing formula if it determines the
2    budgeted amount to be reasonable and accurate;
3        (4) review and confirm in writing that using the EIA
4    Annual Energy Outlook-2011 Henry Hub Spot Price, the
5    contract terms set out in subsection (h), the
6    reconciliation account terms as set out in subsection
7    (h-15), and an estimated inflation rate of 2.5% for each
8    corresponding year, that there will be no cumulative
9    estimated increase for residential customers; and
10        (5) allocate the nameplate capacity of the clean coal
11    SNG by total therms sold to ultimate customers by each gas
12    utility in 2008; provided, however, no utility shall be
13    required to purchase more than 42% of the projected annual
14    output of the facility; additionally, the Illinois Power
15    Agency shall further adjust the allocation only as required
16    to take into account (A) adverse consolidation,
17    derivative, or lease impacts to the balance sheet or income
18    statement of any gas utility or (B) the physical capacity
19    of the gas utility to accept SNG.
20    If the parties to the contract do not agree on the terms
21therein, then the Illinois Power Agency shall retain an
22independent mediator to mediate the dispute between the
23parties. If the parties are in agreement on the terms of the
24contract, then the Illinois Power Agency shall approve the
25contract. If after mediation the parties have failed to come to
26agreement, then the Illinois Power Agency shall revise the

 

 

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1draft contract as necessary to confirm that the contract
2contains only terms that are reasonable and equitable. The
3Illinois Power Agency may, in its discretion, retain an
4independent, qualified, and experienced expert to assist in its
5obligations under this subsection (h). The Illinois Power
6Agency shall adopt and make public policies detailing the
7processes for retaining a mediator and an expert under this
8subsection (h). Any mediator or expert retained under this
9subsection (h) shall be retained no later than 60 days after
10August 2, 2011.
11    The Illinois Power Agency shall complete all of its
12responsibilities under this subsection (h) within 60 days after
13August 2, 2011. The clean coal SNG facility shall pay a
14reasonable fee as required by the Illinois Power Agency for its
15services under this subsection (h) and shall pay the mediator's
16and expert's reasonable fees, if any. A gas utility and its
17customers shall have no obligation to reimburse the clean coal
18SNG facility or the Illinois Power Agency of any such costs.
19    Within 30 days after commercial production of SNG has
20begun, the Commission shall initiate a review to determine
21whether the final capitalized plant cost of the clean coal SNG
22facility reflects actual incurred costs and whether the
23incurred costs were reasonable. In determining the actual
24incurred costs included in the final capitalized plant cost and
25the reasonableness of those costs, the Commission may in its
26discretion retain independent, qualified, and experienced

 

 

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1experts to assist in its determination. The expert shall not
2own or control any direct or indirect interest in the clean
3coal SNG facility and shall have no contractual relationship
4with the clean coal SNG facility. If an expert is retained by
5the Commission, then the clean coal SNG facility shall pay the
6expert's reasonable fees. The fees shall not be passed on to a
7utility or its customers. The Commission shall adopt and make
8public a policy detailing the process for retaining experts
9under this subsection (h).
10    Within 30 days after completion of its review, the
11Commission shall initiate a formal proceeding on the final
12capitalized plant cost of the clean coal SNG facility at which
13comments and testimony may be submitted by any interested
14parties and the public. If the Commission finds that the final
15capitalized plant cost includes costs that were not actually
16incurred or costs that were unreasonably incurred, then the
17Commission shall disallow the amount of non-incurred or
18unreasonable costs from the SNG price under contracts entered
19into under this subsection (h). If the Commission disallows any
20costs, then the Commission shall adjust the SNG price using the
21price formula in the contract approved by the Illinois Power
22Agency under this subsection (h) to reflect the disallowed
23costs and shall enter an order specifying the revised price. In
24addition, the Commission's order shall direct the clean coal
25SNG facility to issue refunds of such sums as shall represent
26the difference between actual gross revenues and the gross

 

 

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1revenue that would have been obtained based upon the same
2volume, from the price revised by the Commission. Any refund
3shall include interest calculated at a rate determined by the
4Commission and shall be returned according to procedures
5prescribed by the Commission.
6    Nothing in this subsection (h) shall preclude any party
7affected by a decision of the Commission under this subsection
8(h) from seeking judicial review of the Commission's decision.
9    (h-1) Any Illinois gas utility may enter into a sourcing
10agreement for up to 30 years of supply with the clean coal SNG
11brownfield facility if the clean coal SNG brownfield facility
12has commenced construction. Any gas utility that is providing
13service to more than 150,000 customers on July 13, 2011 (the
14effective date of Public Act 97-096) shall either elect to file
15biennial rate proceedings before the Commission in the years
162012, 2014, and 2016 or enter into a sourcing agreement or
17sourcing agreements with a clean coal SNG brownfield facility
18with an initial term of 30 years for either (i) a percentage of
1943,500,000,000 cubic feet per year, such that the utilities
20entering into sourcing agreements with the clean coal SNG
21brownfield facility purchase 100%, allocated by total therms
22sold to ultimate customers by each gas utility in 2008 or (ii)
23such lesser amount as may be available from the clean coal SNG
24brownfield facility; provided that no utility shall be required
25to purchase more than 42% of the projected annual output of the
26clean coal SNG brownfield facility, with the remainder of such

 

 

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1utility's obligation to be divided proportionately between the
2other utilities, and provided that the Illinois Power Agency
3shall further adjust the allocation only as required to take
4into account adverse consolidation, derivative, or lease
5impacts to the balance sheet or income statement of any gas
6utility.
7    A gas utility electing to file biennial rate proceedings
8before the Commission must file a notice of its election with
9the Commission within 60 days after July 13, 2011 or its right
10to make the election is irrevocably waived. A gas utility
11electing to file biennial rate proceedings shall make such
12filings no later than August 1 of the years 2012, 2014, and
132016, consistent with all requirements of 83 Ill. Adm. Code 255
14and 285 as though the gas utility were filing for an increase
15in its rates, without regard to whether such filing would
16produce an increase, a decrease, or no change in the gas
17utility's rates, and notwithstanding any other provisions of
18this Act, the Commission shall fully review the gas utility's
19filing and shall issue its order in accordance with the
20provisions of Section 9-201 of this Act, regardless of whether
21the Commission has approved a formula rate for the gas utility.
22    Within 15 days after July 13, 2011, the owner of the clean
23coal SNG brownfield facility shall submit to the Illinois Power
24Agency and each gas utility that is providing service to more
25than 150,000 customers on July 13, 2011 a copy of a draft
26sourcing agreement. Within 45 days after receipt of the draft

 

 

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1sourcing agreement, each such gas utility shall provide the
2Illinois Power Agency and the owner of a clean coal SNG
3brownfield facility with its comments and recommended
4revisions to the draft sourcing agreement. Within 15 days after
5the receipt of the gas utility's comments and recommended
6revisions, the owner of the clean coal SNG brownfield facility
7shall submit its responsive comments and a further revised
8draft of the sourcing agreement to the Illinois Power Agency.
9The Illinois Power Agency shall review the draft sourcing
10agreement and comments.
11    If the parties to the sourcing agreement do not agree on
12the terms therein, then the Illinois Power Agency shall retain
13an independent mediator to mediate the dispute between the
14parties. If the parties are in agreement on the terms of the
15sourcing agreement, the Illinois Power Agency shall approve the
16final draft sourcing agreement. If after mediation the parties
17have failed to come to agreement, then the Illinois Power
18Agency shall revise the draft sourcing agreement as necessary
19to confirm that the final draft sourcing agreement contains
20only terms that are reasonable and equitable. The Illinois
21Power Agency shall adopt and make public a policy detailing the
22process for retaining a mediator under this subsection (h-1).
23Any mediator retained to assist with mediating disputes between
24the parties regarding the sourcing agreement shall be retained
25no later than 60 days after July 13, 2011.
26    Upon approval of a final draft agreement, the Illinois

 

 

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1Power Agency shall submit the final draft agreement to the
2Capital Development Board and the Commission no later than 90
3days after July 13, 2011. The gas utility and the clean coal
4SNG brownfield facility shall pay a reasonable fee as required
5by the Illinois Power Agency for its services under this
6subsection (h-1) and shall pay the mediator's reasonable fees,
7if any. The Illinois Power Agency shall adopt and make public a
8policy detailing the process for retaining a mediator under
9this Section.
10    The sourcing agreement between a gas utility and the clean
11coal SNG brownfield facility shall contain the following
12provisions:
13        (1) Any and all coal used in the gasification process
14    must be coal that has high volatile bituminous rank and
15    greater than 1.7 pounds of sulfur per million Btu content.
16        (2) Coal and petroleum coke are feedstocks for the
17    gasification process, with coal comprising at least 50% of
18    the total feedstock over the term of the sourcing agreement
19    unless the facility reasonably determines that it is
20    necessary to use additional petroleum coke to deliver net
21    consumer savings, in which case the facility shall use coal
22    for at least 35% of the total feedstock over the term of
23    any sourcing agreement and with the feedstocks to be
24    procured in accordance with requirements of Section 1-78 of
25    the Illinois Power Agency Act.
26        (3) The sourcing agreement has an initial term that

 

 

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1    once entered into terminates no more than 30 years after
2    the commencement of the commercial production of SNG at the
3    clean coal SNG brownfield facility.
4        (4) The clean coal SNG brownfield facility guarantees a
5    minimum of $100,000,000 in consumer savings to customers of
6    the utilities that have entered into sourcing agreements
7    with the clean coal SNG brownfield facility, calculated in
8    real 2010 dollars at the conclusion of the term of the
9    sourcing agreement by comparing the delivered SNG price to
10    the Chicago City-gate price on a weighted daily basis for
11    each day over the entire term of the sourcing agreement, to
12    be provided in accordance with subsection (h-2) of this
13    Section.
14        (5) Prior to the clean coal SNG brownfield facility
15    issuing a notice to proceed to construction, the clean coal
16    SNG brownfield facility shall establish a consumer
17    protection reserve account for the benefit of the customers
18    of the utilities that have entered into sourcing agreements
19    with the clean coal SNG brownfield facility pursuant to
20    this subsection (h-1), with cash principal in the amount of
21    $150,000,000. This cash principal shall only be
22    recoverable through the consumer protection reserve
23    account and not as a cost to be recovered in the delivered
24    SNG price pursuant to subsection (h-3) of this Section. The
25    consumer protection reserve account shall be maintained
26    and administered by an independent trustee that is mutually

 

 

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1    agreed upon by the clean coal SNG brownfield facility, the
2    utilities, and the Commission in an interest-bearing
3    account in accordance with subsection (h-2) of this
4    Section.
5        "Consumer protection reserve account principal maximum
6    amount" shall mean the maximum amount of principal to be
7    maintained in the consumer protection reserve account.
8    During the first 2 years of operation of the facility,
9    there shall be no consumer protection reserve account
10    maximum amount. After the first 2 years of operation of the
11    facility, the consumer protection reserve account maximum
12    amount shall be $150,000,000. After 5 years of operation,
13    and every 5 years thereafter, the trustee shall calculate
14    the 5-year average balance of the consumer protection
15    reserve account. If the trustee determines that during the
16    prior 5 years the consumer protection reserve account has
17    had an average account balance of less than $75,000,000,
18    then the consumer protection reserve account principal
19    maximum amount shall be increased by $5,000,000. If the
20    trustee determines that during the prior 5 years the
21    consumer protection reserve account has had an average
22    account balance of more than $75,000,000, then the consumer
23    protection reserve account principal maximum amount shall
24    be decreased by $5,000,000.
25        (6) The clean coal SNG brownfield facility shall
26    identify and sell economically viable by-products produced

 

 

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1    by the facility.
2        (7) Fifty percent of all additional net revenue,
3    defined as miscellaneous net revenue from products
4    produced by the facility and delivered during the month
5    after cost allowance for costs associated with additional
6    net revenue that are not otherwise recoverable pursuant to
7    subsection (h-3) of this Section, including net revenue
8    from sales of substitute natural gas derived from the
9    facility above the nameplate capacity of the facility and
10    other by-products produced by the facility, shall be
11    credited to the consumer protection reserve account
12    pursuant to subsection (h-2) of this Section.
13        (8) The delivered SNG price per million btu to be paid
14    monthly by the utility to the clean coal SNG brownfield
15    facility, which shall be based only upon the following: (A)
16    a capital recovery charge, operations and maintenance
17    costs, and sequestration costs, only to the extent approved
18    by the Commission pursuant to paragraphs (1), (2), and (3)
19    of subsection (h-3) of this Section; (B) the actual
20    delivered and processed fuel costs pursuant to paragraph
21    (4) of subsection (h-3) of this Section; (C) actual costs
22    of SNG transportation pursuant to paragraph (6) of
23    subsection (h-3) of this Section; (D) certain taxes and
24    fees imposed by the federal government, the State, or any
25    unit of local government as provided in paragraph (6) of
26    subsection (h-3) of this Section; and (E) the credit, if

 

 

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1    any, from the consumer protection reserve account pursuant
2    to subsection (h-2) of this Section. The delivered SNG
3    price per million Btu shall proportionately reflect these
4    elements over the term of the sourcing agreement.
5        (9) A formula to translate the recoverable costs and
6    charges under subsection (h-3) of this Section into the
7    delivered SNG price per million btu.
8        (10) Title to the SNG shall pass at a mutually
9    agreeable point in Illinois, and may provide that, rather
10    than the utility taking title to the SNG, a mutually agreed
11    upon third-party gas marketer pursuant to a contract
12    approved by the Illinois Power Agency or its designee may
13    take title to the SNG pursuant to an agreement between the
14    utility, the owner of the clean coal SNG brownfield
15    facility, and the third-party gas marketer.
16        (11) A utility may exit the sourcing agreement without
17    penalty if the clean coal SNG brownfield facility does not
18    commence construction by July 1, 2015.
19        (12) A utility is responsible to pay only the
20    Commission determined unit price cost of SNG that is
21    purchased by the utility. Nothing in the sourcing agreement
22    will obligate a utility to invest capital in a clean coal
23    SNG brownfield facility.
24        (13) The quality of SNG must, at a minimum, be
25    equivalent to the quality required for interstate pipeline
26    gas before a utility is required to accept and pay for SNG

 

 

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1    gas.
2        (14) Nothing in the sourcing agreement will require a
3    utility to construct any facilities to accept delivery of
4    SNG. Provided, however, if a utility is required by law or
5    otherwise elects to connect the clean coal SNG brownfield
6    facility to an interstate pipeline, then the utility shall
7    be entitled to recover pursuant to its tariffs all just and
8    reasonable costs that are prudently incurred. Any costs
9    incurred by the utility to receive, deliver, manage, or
10    otherwise accommodate purchases under the SNG sourcing
11    agreement will be fully recoverable through a utility's
12    purchased gas adjustment clause rider mechanism in
13    conjunction with a SNG brownfield facility rider
14    mechanism. The SNG brownfield facility rider mechanism (A)
15    shall be applicable to all customers who receive
16    transportation service from the utility, (B) shall be
17    designed to have an equal percent impact on the
18    transportation services rates of each class of the
19    utility's customers, and (C) shall accurately reflect the
20    net consumer savings, if any, and above-market costs, if
21    any, associated with the utility receiving, delivering,
22    managing, or otherwise accommodating purchases under the
23    SNG sourcing agreement.
24        (15) Remedies for the clean coal SNG brownfield
25    facility's failure to deliver a designated amount for a
26    designated period.

 

 

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1        (16) The clean coal SNG brownfield facility shall make
2    a good faith effort to ensure that an amount equal to not
3    less than 15% of the value of its prime construction
4    contract for the facility shall be established as a goal to
5    be awarded to minority owned businesses, female owned
6    businesses, and businesses owned by a person with a
7    disability; provided that at least 75% of the amount of
8    such total goal shall be for minority owned businesses.
9    "Minority owned business", "female owned business", and
10    "business owned by a person with a disability" shall have
11    the meanings ascribed to them in Section 2 of the Business
12    Enterprise for Minorities, Females and Persons with
13    Disabilities Act.
14        (17) Prior to the clean coal SNG brownfield facility
15    issuing a notice to proceed to construction, the clean coal
16    SNG brownfield facility shall file with the Commission a
17    certificate from an independent engineer that the clean
18    coal SNG brownfield facility has (A) obtained all
19    applicable State and federal environmental permits
20    required for construction; (B) obtained approval from the
21    Commission of a carbon capture and sequestration plan; and
22    (C) obtained all necessary permits required for
23    construction for the transportation and sequestration of
24    carbon dioxide as set forth in the Commission-approved
25    carbon capture and sequestration plan.
26    (h-2) Consumer protection reserve account. The clean coal

 

 

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1SNG brownfield facility shall guarantee a minimum of
2$100,000,000 in consumer savings to customers of the utilities
3that have entered into sourcing agreements with the clean coal
4SNG brownfield facility, calculated in real 2010 dollars at the
5conclusion of the term of the sourcing agreement by comparing
6the delivered SNG price to the Chicago City-gate price on a
7weighted daily basis for each day over the entire term of the
8sourcing agreement. Prior to the clean coal SNG brownfield
9facility issuing a notice to proceed to construction, the clean
10coal SNG brownfield facility shall establish a consumer
11protection reserve account for the benefit of the retail
12customers of the utilities that have entered into sourcing
13agreements with the clean coal SNG brownfield facility pursuant
14to subsection (h-1), with cash principal in the amount of
15$150,000,000. Such cash principal shall only be recovered
16through the consumer protection reserve account and not as a
17cost to be recovered in the delivered SNG price pursuant to
18subsection (h-3) of this Section. The consumer protection
19reserve account shall be maintained and administered by an
20independent trustee that is mutually agreed upon by the clean
21coal SNG brownfield facility, the utilities, and the Commission
22in an interest-bearing account in accordance with the
23following:
24        (1) The clean coal SNG brownfield facility monthly
25    shall calculate (A) the difference between the monthly
26    delivered SNG price and the Chicago City-gate price, by

 

 

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1    comparing the delivered SNG price, which shall include the
2    cost of transportation to the delivery point, if any, to
3    the Chicago City-gate price on a weighted daily basis for
4    each day of the prior month based upon a mutually agreed
5    upon published index and (B) the overage amount, if any, by
6    calculating the annualized incremental additional cost, if
7    any, of the delivered SNG in excess of 2.015% of the
8    average annual inflation-adjusted amounts paid by all gas
9    distribution customers in connection with natural gas
10    service during the 5 years ending May 31, 2010.
11        (2) During the first 2 years of operation of the
12    facility:
13            (A) to the extent there is an overage amount, the
14        consumer protection reserve account shall be used to
15        provide a credit to reduce the SNG price by an amount
16        equal to the overage amount; and
17            (B) to the extent the monthly delivered SNG price
18        is less than or equal to the Chicago City-gate price,
19        the utility shall credit the difference between the
20        monthly delivered SNG price and the monthly Chicago
21        City-gate price, if any, to the consumer protection
22        reserve account. Such credit issued pursuant to this
23        paragraph (B) shall be deemed prudent and reasonable
24        and not subject to a Commission prudence review;
25        (3) After 2 years of operation of the facility, and
26    monthly, on an on-going basis, thereafter:

 

 

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1            (A) to the extent that the monthly delivered SNG
2        price is less than or equal to the Chicago City-gate
3        price, calculated using the weighted average of the
4        daily Chicago City-gate price on a daily basis over the
5        entire month, the utility shall credit the difference,
6        if any, to the consumer protection reserve account.
7        Such credit issued pursuant to this subparagraph (A)
8        shall be deemed prudent and reasonable and not subject
9        to a Commission prudence review;
10            (B) any amounts in the consumer protection reserve
11        account in excess of the consumer protection reserve
12        account principal maximum amount shall be distributed
13        as follows: (i) if retail customers have not realized
14        net consumer savings, calculated by comparing the
15        delivered SNG price to the weighted average of the
16        daily Chicago City-gate price on a daily basis over the
17        entire term of the sourcing agreement to date, then 50%
18        of any amounts in the consumer protection reserve
19        account in excess of the consumer protection reserve
20        account principal maximum shall be distributed to the
21        clean coal SNG brownfield facility, with the remaining
22        50% of any such additional amounts being credited to
23        retail customers, and (ii) if retail customers have
24        realized net consumer savings, then 100% of any amounts
25        in the consumer protection reserve account in excess of
26        the consumer protection reserve account principal

 

 

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1        maximum shall be distributed to the clean coal SNG
2        brownfield facility; provided, however, that under no
3        circumstances shall the total cumulative amount
4        distributed to the clean coal SNG brownfield facility
5        under this subparagraph (B) exceed $150,000,000;
6            (C) to the extent there is an overage amount, after
7        distributing the amounts pursuant to subparagraph (B)
8        of this paragraph (3), if any, the consumer protection
9        reserve account shall be used to provide a credit to
10        reduce the SNG price by an amount equal to the overage
11        amount;
12            (D) if retail customers have realized net consumer
13        savings, calculated by comparing the delivered SNG
14        price to the weighted average of the daily Chicago
15        City-gate price on a daily basis over the entire term
16        of the sourcing agreement to date, then after
17        distributing the amounts pursuant to subparagraphs (B)
18        and (C) of this paragraph (3), 50% of any additional
19        amounts in the consumer protection reserve account in
20        excess of the consumer protection reserve account
21        principal maximum shall be distributed to the clean
22        coal SNG brownfield facility, with the remaining 50% of
23        any such additional amounts being credited to retail
24        customers; provided, however, that if retail customers
25        have not realized such net consumer savings, no such
26        distribution shall be made to the clean coal SNG

 

 

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1        brownfield facility, and 100% of such additional
2        amounts shall be credited to the retail customers to
3        the extent the consumer protection reserve account
4        exceeds the consumer protection reserve account
5        principal maximum amount.
6        (4) Fifty percent of all additional net revenue,
7    defined as miscellaneous net revenue after cost allowance
8    for costs associated with additional net revenue that are
9    not otherwise recoverable pursuant to subsection (h-3) of
10    this Section, including net revenue from sales of
11    substitute natural gas derived from the facility above the
12    nameplate capacity of the facility and other by-products
13    produced by the facility, shall be credited to the consumer
14    protection reserve account.
15        (5) At the conclusion of the term of the sourcing
16    agreement, to the extent retail customers have not saved
17    the minimum of $100,000,000 in consumer savings as
18    guaranteed in this subsection (h-2), amounts in the
19    consumer protection reserve account shall be credited to
20    retail customers to the extent the retail customers have
21    saved the minimum of $100,000,000; 50% of any additional
22    amounts in the consumer protection reserve account shall be
23    distributed to the company, and the remaining 50% shall be
24    distributed to retail customers.
25        (6) If, at the conclusion of the term of the sourcing
26    agreement, the customers have not saved the minimum

 

 

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1    $100,000,000 in savings as guaranteed in this subsection
2    (h-2) and the consumer protection reserve account has been
3    depleted, then the clean coal SNG brownfield facility shall
4    be liable for any remaining amount owed to the retail
5    customers to the extent that the customers are provided
6    with the $100,000,000 in savings as guaranteed in this
7    subsection (h-2). The retail customers shall have first
8    priority in recovering that debt above any creditors,
9    except the original senior secured lender to the extent
10    that the original senior secured lender has any senior
11    secured debt outstanding, including any clean coal SNG
12    brownfield facility parent companies or affiliates.
13        (7) The clean coal SNG brownfield facility, the
14    utilities, and the trustee shall work together to take
15    commercially reasonable steps to minimize the tax impact of
16    these transactions, while preserving the consumer
17    benefits.
18        (8) The clean coal SNG brownfield facility shall each
19    month, starting in the facility's first year of commercial
20    operation, file with the Commission, in such form as the
21    Commission shall require, a report as to the consumer
22    protection reserve account. The monthly report must
23    contain the following information:
24            (A) the extent the monthly delivered SNG price is
25        greater than, less than, or equal to the Chicago
26        City-gate price;

 

 

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1            (B) the amount credited or debited to the consumer
2        protection reserve account during the month;
3            (C) the amounts credited to consumers and
4        distributed to the clean coal SNG brownfield facility
5        during the month;
6            (D) the total amount of the consumer protection
7        reserve account at the beginning and end of the month;
8            (E) the total amount of consumer savings to date;
9            (F) a confidential summary of the inputs used to
10        calculate the additional net revenue; and
11            (G) any other additional information the
12        Commission shall require.
13        When any report is erroneous or defective or appears to
14    the Commission to be erroneous or defective, the Commission
15    may notify the clean coal SNG brownfield facility to amend
16    the report within 30 days, and, before or after the
17    termination of the 30-day period, the Commission may
18    examine the trustee of the consumer protection reserve
19    account or the officers, agents, employees, books,
20    records, or accounts of the clean coal SNG brownfield
21    facility and correct such items in the report as upon such
22    examination the Commission may find defective or
23    erroneous. All reports shall be under oath.
24        All reports made to the Commission by the clean coal
25    SNG brownfield facility and the contents of the reports
26    shall be open to public inspection and shall be deemed a

 

 

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1    public record under the Freedom of Information Act. Such
2    reports shall be preserved in the office of the Commission.
3    The Commission shall publish an annual summary of the
4    reports prior to February 1 of the following year. The
5    annual summary shall be made available to the public on the
6    Commission's website and shall be submitted to the General
7    Assembly.
8        Any facility that fails to file a report required under
9    this paragraph (8) to the Commission within the time
10    specified or to make specific answer to any question
11    propounded by the Commission within 30 days from the time
12    it is lawfully required to do so, or within such further
13    time not to exceed 90 days as may in its discretion be
14    allowed by the Commission, shall pay a penalty of $500 to
15    the Commission for each day it is in default.
16        Any person who willfully makes any false report to the
17    Commission or to any member, officer, or employee thereof,
18    any person who willfully in a report withholds or fails to
19    provide material information to which the Commission is
20    entitled under this paragraph (8) and which information is
21    either required to be filed by statute, rule, regulation,
22    order, or decision of the Commission or has been requested
23    by the Commission, and any person who willfully aids or
24    abets such person shall be guilty of a Class A misdemeanor.
25    (h-3) Recoverable costs and revenue by the clean coal SNG
26brownfield facility.

 

 

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1        (1) A capital recovery charge approved by the
2    Commission shall be recoverable by the clean coal SNG
3    brownfield facility under a sourcing agreement. The
4    capital recovery charge shall be comprised of capital costs
5    and a reasonable rate of return. "Capital costs" means
6    costs to be incurred in connection with the construction
7    and development of a facility, as defined in Section 1-10
8    of the Illinois Power Agency Act, and such other costs as
9    the Capital Development Board deems appropriate to be
10    recovered in the capital recovery charge.
11            (A) Capital costs. The Capital Development Board
12        shall calculate a range of capital costs that it
13        believes would be reasonable for the clean coal SNG
14        brownfield facility to recover under the sourcing
15        agreement. In making this determination, the Capital
16        Development Board shall review the facility cost
17        report, if any, of the clean coal SNG brownfield
18        facility, adjusting the results based on the change in
19        the Annual Consumer Price Index for All Urban Consumers
20        for the Midwest Region as published in April by the
21        United States Department of Labor, Bureau of Labor
22        Statistics, the final draft of the sourcing agreement,
23        and the rate of return approved by the Commission. In
24        addition, the Capital Development Board may consult as
25        much as it deems necessary with the clean coal SNG
26        brownfield facility and conduct whatever research and

 

 

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1        investigation it deems necessary.
2            The Capital Development Board shall retain an
3        engineering expert to assist in determining both the
4        range of capital costs and the range of operations and
5        maintenance costs that it believes would be reasonable
6        for the clean coal SNG brownfield facility to recover
7        under the sourcing agreement. Provided, however, that
8        such expert shall: (i) not have been involved in the
9        clean coal SNG brownfield facility's facility cost
10        report, if any, (ii) not own or control any direct or
11        indirect interest in the initial clean coal facility,
12        and (iii) have no contractual relationship with the
13        clean coal SNG brownfield facility. In order to qualify
14        as an independent expert, a person or company must
15        have:
16                (i) direct previous experience conducting
17            front-end engineering and design studies for
18            large-scale energy facilities and administering
19            large-scale energy operations and maintenance
20            contracts, which may be particularized to the
21            specific type of financing associated with the
22            clean coal SNG brownfield facility;
23                (ii) an advanced degree in economics,
24            mathematics, engineering, or a related area of
25            study;
26                (iii) ten years of experience in the energy

 

 

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1            sector, including construction and risk management
2            experience;
3                (iv) expertise in assisting companies with
4            obtaining financing for large-scale energy
5            projects, which may be particularized to the
6            specific type of financing associated with the
7            clean coal SNG brownfield facility;
8                (v) expertise in operations and maintenance
9            which may be particularized to the specific type of
10            operations and maintenance associated with the
11            clean coal SNG brownfield facility;
12                (vi) expertise in credit and contract
13            protocols;
14                (vii) adequate resources to perform and
15            fulfill the required functions and
16            responsibilities; and
17                (viii) the absence of a conflict of interest
18            and inappropriate bias for or against an affected
19            gas utility or the clean coal SNG brownfield
20            facility.
21            The clean coal SNG brownfield facility and the
22        Illinois Power Agency shall cooperate with the Capital
23        Development Board in any investigation it deems
24        necessary. The Capital Development Board shall make
25        its final determination of the range of capital costs
26        confidentially and shall submit that range to the

 

 

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1        Commission in a confidential filing within 120 days
2        after July 13, 2011 (the effective date of Public Act
3        97-096). The clean coal SNG brownfield facility shall
4        submit to the Commission its estimate of the capital
5        costs to be recovered under the sourcing agreement.
6        Only after the clean coal SNG brownfield facility has
7        submitted this estimate shall the Commission publicly
8        announce the range of capital costs submitted by the
9        Capital Development Board.
10            In the event that the estimate submitted by the
11        clean coal SNG brownfield facility is within or below
12        the range submitted by the Capital Development Board,
13        the clean coal SNG brownfield facility's estimate
14        shall be approved by the Commission as the amount of
15        capital costs to be recovered under the sourcing
16        agreement. In the event that the estimate submitted by
17        the clean coal SNG brownfield facility is above the
18        range submitted by the Capital Development Board, the
19        amount of capital costs at the lowest end of the range
20        submitted by the Capital Development Board shall be
21        approved by the Commission as the amount of capital
22        costs to be recovered under the sourcing agreement.
23        Within 15 days after the Capital Development Board has
24        submitted its range and the clean coal SNG brownfield
25        facility has submitted its estimate, the Commission
26        shall approve the capital costs for the clean coal SNG

 

 

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1        brownfield facility.
2            The Capital Development Board shall monitor the
3        construction of the clean coal SNG brownfield facility
4        for the full duration of construction to assess
5        potential cost overruns. The Capital Development
6        Board, in its discretion, may retain an expert to
7        facilitate such monitoring. The clean coal SNG
8        brownfield facility shall pay a reasonable fee as
9        required by the Capital Development Board for the
10        Capital Development Board's services under this
11        subsection (h-3) to be deposited into the Capital
12        Development Board Revolving Fund, and such fee shall
13        not be passed through to a utility or its customers. If
14        an expert is retained by the Capital Development Board
15        for monitoring of construction, then the clean coal SNG
16        brownfield facility must pay for the expert's
17        reasonable fees and such costs shall not be passed
18        through to a utility or its customers.
19            (B) Rate of Return. No later than 30 days after the
20        date on which the Illinois Power Agency submits a final
21        draft sourcing agreement, the Commission shall hold a
22        public hearing to determine the rate of return to be
23        recovered under the sourcing agreement. Rate of return
24        shall be comprised of the clean coal SNG brownfield
25        facility's actual cost of debt, including
26        mortgage-style amortization, and a reasonable return

 

 

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1        on equity. The Commission shall post notice of the
2        hearing on its website no later than 10 days prior to
3        the date of the hearing. The Commission shall provide
4        the public and all interested parties, including the
5        gas utilities, the Attorney General, and the Illinois
6        Power Agency, an opportunity to be heard.
7            In determining the return on equity, the
8        Commission shall select a commercially reasonable
9        return on equity taking into account the return on
10        equity being received by developers of similar
11        facilities in or outside of Illinois, the need to
12        balance an incentive for clean-coal technology with
13        the need to protect ratepayers from high gas prices,
14        the risks being borne by the clean coal SNG brownfield
15        facility in the final draft sourcing agreement, and any
16        other information that the Commission may deem
17        relevant. The Commission may establish a return on
18        equity that varies with the amount of savings, if any,
19        to customers during the term of the sourcing agreement,
20        comparing the delivered SNG price to a daily weighted
21        average price of natural gas, based upon an index. The
22        Illinois Power Agency shall recommend a return on
23        equity to the Commission using the same criteria.
24        Within 60 days after receiving the final draft sourcing
25        agreement from the Illinois Power Agency, the
26        Commission shall approve the rate of return for the

 

 

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1        clean coal brownfield facility. Within 30 days after
2        obtaining debt financing for the clean coal SNG
3        brownfield facility, the clean coal SNG brownfield
4        facility shall file a notice with the Commission
5        identifying the actual cost of debt.
6        (2) Operations and maintenance costs approved by the
7    Commission shall be recoverable by the clean coal SNG
8    brownfield facility under the sourcing agreement. The
9    operations and maintenance costs mean costs that have been
10    incurred for the administration, supervision, operation,
11    maintenance, preservation, and protection of the clean
12    coal SNG brownfield facility's physical plant.
13        The Capital Development Board shall calculate a range
14    of operations and maintenance costs that it believes would
15    be reasonable for the clean coal SNG brownfield facility to
16    recover under the sourcing agreement, incorporating an
17    inflation index or combination of inflation indices to most
18    accurately reflect the actual costs of operating the clean
19    coal SNG brownfield facility. In making this
20    determination, the Capital Development Board shall review
21    the facility cost report, if any, of the clean coal SNG
22    brownfield facility, adjusting the results for inflation
23    based on the change in the Annual Consumer Price Index for
24    All Urban Consumers for the Midwest Region as published in
25    April by the United States Department of Labor, Bureau of
26    Labor Statistics, the final draft of the sourcing

 

 

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1    agreement, and the rate of return approved by the
2    Commission. In addition, the Capital Development Board may
3    consult as much as it deems necessary with the clean coal
4    SNG brownfield facility and conduct whatever research and
5    investigation it deems necessary. As set forth in
6    subparagraph (A) of paragraph (1) of this subsection (h-3),
7    the Capital Development Board shall retain an independent
8    engineering expert to assist in determining both the range
9    of operations and maintenance costs that it believes would
10    be reasonable for the clean coal SNG brownfield facility to
11    recover under the sourcing agreement. The clean coal SNG
12    brownfield facility and the Illinois Power Agency shall
13    cooperate with the Capital Development Board in any
14    investigation it deems necessary. The Capital Development
15    Board shall make its final determination of the range of
16    operations and maintenance costs confidentially and shall
17    submit that range to the Commission in a confidential
18    filing within 120 days after July 13, 2011.
19        The clean coal SNG brownfield facility shall submit to
20    the Commission its estimate of the operations and
21    maintenance costs to be recovered under the sourcing
22    agreement. Only after the clean coal SNG brownfield
23    facility has submitted this estimate shall the Commission
24    publicly announce the range of operations and maintenance
25    costs submitted by the Capital Development Board. In the
26    event that the estimate submitted by the clean coal SNG

 

 

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1    brownfield facility is within or below the range submitted
2    by the Capital Development Board, the clean coal SNG
3    brownfield facility's estimate shall be approved by the
4    Commission as the amount of operations and maintenance
5    costs to be recovered under the sourcing agreement. In the
6    event that the estimate submitted by the clean coal SNG
7    brownfield facility is above the range submitted by the
8    Capital Development Board, the amount of operations and
9    maintenance costs at the lowest end of the range submitted
10    by the Capital Development Board shall be approved by the
11    Commission as the amount of operations and maintenance
12    costs to be recovered under the sourcing agreement. Within
13    15 days after the Capital Development Board has submitted
14    its range and the clean coal SNG brownfield facility has
15    submitted its estimate, the Commission shall approve the
16    operations and maintenance costs for the clean coal SNG
17    brownfield facility.
18        The clean coal SNG brownfield facility shall pay for
19    the independent engineering expert's reasonable fees and
20    such costs shall not be passed through to a utility or its
21    customers. The clean coal SNG brownfield facility shall pay
22    a reasonable fee as required by the Capital Development
23    Board for the Capital Development Board's services under
24    this subsection (h-3) to be deposited into the Capital
25    Development Board Revolving Fund, and such fee shall not be
26    passed through to a utility or its customers.

 

 

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1        (3) Sequestration costs approved by the Commission
2    shall be recoverable by the clean coal SNG brownfield
3    facility. "Sequestration costs" means costs to be incurred
4    by the clean coal SNG brownfield facility in accordance
5    with its Commission-approved carbon capture and
6    sequestration plan to:
7            (A) capture carbon dioxide;
8            (B) build, operate, and maintain a sequestration
9        site in which carbon dioxide may be injected;
10            (C) build, operate, and maintain a carbon dioxide
11        pipeline; and
12            (D) transport the carbon dioxide to the
13        sequestration site or a pipeline.
14        The Commission shall assess the prudency of the
15    sequestration costs for the clean coal SNG brownfield
16    facility before construction commences at the
17    sequestration site or pipeline. Any revenues the clean coal
18    SNG brownfield facility receives as a result of the
19    capture, transportation, or sequestration of carbon
20    dioxide shall be first credited against all sequestration
21    costs, with the positive balance, if any, treated as
22    additional net revenue.
23        The Commission may, in its discretion, retain an expert
24    to assist in its review of sequestration costs. The clean
25    coal SNG brownfield facility shall pay for the expert's
26    reasonable fees if an expert is retained by the Commission,

 

 

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1    and such costs shall not be passed through to a utility or
2    its customers. Once made, the Commission's determination
3    of the amount of recoverable sequestration costs shall not
4    be increased unless the clean coal SNG brownfield facility
5    can show by clear and convincing evidence that (i) the
6    costs were not reasonably foreseeable; (ii) the costs were
7    due to circumstances beyond the clean coal SNG brownfield
8    facility's control; and (iii) the clean coal SNG brownfield
9    facility took all reasonable steps to mitigate the costs.
10    If the Commission determines that sequestration costs may
11    be increased, the Commission shall provide for notice and a
12    public hearing for approval of the increased sequestration
13    costs.
14        (4) Actual delivered and processed fuel costs shall be
15    set by the Illinois Power Agency through a SNG feedstock
16    procurement, pursuant to Sections 1-20, 1-77, and 1-78 of
17    the Illinois Power Agency Act, to be performed at least
18    every 5 years and purchased by the clean coal SNG
19    brownfield facility pursuant to feedstock procurement
20    contracts developed by the Illinois Power Agency, with coal
21    comprising at least 50% of the total feedstock over the
22    term of the sourcing agreement and petroleum coke
23    comprising the remainder of the SNG feedstock. If the
24    Commission fails to approve a feedstock procurement plan or
25    fails to approve the results of a feedstock procurement
26    event, then the fuel shall be purchased by the company

 

 

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1    month-by-month on the spot market and those actual
2    delivered and processed fuel costs shall be recoverable
3    under the sourcing agreement. If a supplier defaults under
4    the terms of a procurement contract, then the Illinois
5    Power Agency shall immediately initiate a feedstock
6    procurement process to obtain a replacement supply, and,
7    prior to the conclusion of that process, fuel shall be
8    purchased by the company month-by-month on the spot market
9    and those actual delivered and processed fuel costs shall
10    be recoverable under the sourcing agreement.
11        (5) Taxes and fees imposed by the federal government,
12    the State, or any unit of local government applicable to
13    the clean coal SNG brownfield facility, excluding income
14    tax, shall be recoverable by the clean coal SNG brownfield
15    facility under the sourcing agreement to the extent such
16    taxes and fees were not applicable to the facility on July
17    13, 2011.
18        (6) The actual transportation costs, in accordance
19    with the applicable utility's tariffs, and third-party
20    marketer costs incurred by the company, if any, associated
21    with transporting the SNG from the clean coal SNG
22    brownfield facility to the Chicago City-gate to sell such
23    SNG into the natural gas markets shall be recoverable under
24    the sourcing agreement.
25        (7) Unless otherwise provided, within 30 days after a
26    decision of the Commission on recoverable costs under this

 

 

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1    Section, any interested party to the Commission's decision
2    may apply for a rehearing with respect to the decision. The
3    Commission shall receive and consider the application for
4    rehearing and shall grant or deny the application in whole
5    or in part within 20 days after the date of the receipt of
6    the application by the Commission. If no rehearing is
7    applied for within the required 30 days or an application
8    for rehearing is denied, then the Commission decision shall
9    be final. If an application for rehearing is granted, then
10    the Commission shall hold a rehearing within 30 days after
11    granting the application. The decision of the Commission
12    upon rehearing shall be final.
13        Any person affected by a decision of the Commission
14    under this subsection (h-3) may have the decision reviewed
15    only under and in accordance with the Administrative Review
16    Law. Unless otherwise provided, the provisions of the
17    Administrative Review Law, all amendments and
18    modifications to that Law, and the rules adopted pursuant
19    to that Law shall apply to and govern all proceedings for
20    the judicial review of final administrative decisions of
21    the Commission under this subsection (h-3). The term
22    "administrative decision" is defined as in Section 3-101 of
23    the Code of Civil Procedure.
24        (8) The Capital Development Board shall adopt and make
25    public a policy detailing the process for retaining experts
26    under this Section. Any experts retained to assist with

 

 

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1    calculating the range of capital costs or operations and
2    maintenance costs shall be retained no later than 45 days
3    after July 13, 2011.
4    (h-4) No later than 90 days after the Illinois Power Agency
5submits the final draft sourcing agreement pursuant to
6subsection (h-1), the Commission shall approve a sourcing
7agreement containing (i) the capital costs, rate of return, and
8operations and maintenance costs established pursuant to
9subsection (h-3) and (ii) all other terms and conditions,
10rights, provisions, exceptions, and limitations contained in
11the final draft sourcing agreement; provided, however, the
12Commission shall correct typographical and scrivener's errors
13and modify the contract only as necessary to provide that the
14gas utility does not have the right to terminate the sourcing
15agreement due to any future events that may occur other than
16the clean coal SNG brownfield facility's failure to timely meet
17milestones, uncured default, extended force majeure, or
18abandonment. Once the sourcing agreement is approved, then the
19gas utility subject to that sourcing agreement shall have 45
20days after the date of the Commission's approval to enter into
21the sourcing agreement.
22    (h-5) Sequestration enforcement.
23        (A) All contracts entered into under subsection (h) of
24    this Section and all sourcing agreements under subsection
25    (h-1) of this Section, regardless of duration, shall
26    require the owner of any facility supplying SNG under the

 

 

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1    contract or sourcing agreement to provide certified
2    documentation to the Commission each year, starting in the
3    facility's first year of commercial operation, accurately
4    reporting the quantity of carbon dioxide emissions from the
5    facility that have been captured and sequestered and
6    reporting any quantities of carbon dioxide released from
7    the site or sites at which carbon dioxide emissions were
8    sequestered in prior years, based on continuous monitoring
9    of those sites.
10        (B) If, in any year, the owner of the clean coal SNG
11    facility fails to demonstrate that the SNG facility
12    captured and sequestered at least 90% of the total carbon
13    dioxide emissions that the facility would otherwise emit or
14    that sequestration of emissions from prior years has
15    failed, resulting in the release of carbon dioxide into the
16    atmosphere, then the owner of the clean coal SNG facility
17    must pay a penalty of $20 per ton of excess carbon dioxide
18    emissions not to exceed $40,000,000, in any given year
19    which shall be deposited into the Energy Efficiency Trust
20    Fund and distributed pursuant to subsection (b) of Section
21    6-6 of the Renewable Energy, Energy Efficiency, and Coal
22    Resources Development Law of 1997. On or before the 5-year
23    anniversary of the execution of the contract and every 5
24    years thereafter, an expert hired by the owner of the
25    facility with the approval of the Attorney General shall
26    conduct an analysis to determine the cost of sequestration

 

 

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1    of at least 90% of the total carbon dioxide emissions the
2    plant would otherwise emit. If the analysis shows that the
3    actual annual cost is greater than the penalty, then the
4    penalty shall be increased to equal the actual cost.
5    Provided, however, to the extent that the owner of the
6    facility described in subsection (h) of this Section can
7    demonstrate that the failure was as a result of acts of God
8    (including fire, flood, earthquake, tornado, lightning,
9    hurricane, or other natural disaster); any amendment,
10    modification, or abrogation of any applicable law or
11    regulation that would prevent performance; war; invasion;
12    act of foreign enemies; hostilities (regardless of whether
13    war is declared); civil war; rebellion; revolution;
14    insurrection; military or usurped power or confiscation;
15    terrorist activities; civil disturbance; riots;
16    nationalization; sabotage; blockage; or embargo, the owner
17    of the facility described in subsection (h) of this Section
18    shall not be subject to a penalty if and only if (i) it
19    promptly provides notice of its failure to the Commission;
20    (ii) as soon as practicable and consistent with any order
21    or direction from the Commission, it submits to the
22    Commission proposed modifications to its carbon capture
23    and sequestration plan; and (iii) it carries out its
24    proposed modifications in the manner and time directed by
25    the Commission.
26        If the Commission finds that the facility has not

 

 

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1    satisfied each of these requirements, then the facility
2    shall be subject to the penalty. If the owner of the clean
3    coal SNG facility captured and sequestered more than 90% of
4    the total carbon dioxide emissions that the facility would
5    otherwise emit, then the owner of the facility may credit
6    such additional amounts to reduce the amount of any future
7    penalty to be paid. The penalty resulting from the failure
8    to capture and sequester at least the minimum amount of
9    carbon dioxide shall not be passed on to a utility or its
10    customers.
11        If the clean coal SNG facility fails to meet the
12    requirements specified in this subsection (h-5), then the
13    Attorney General, on behalf of the People of the State of
14    Illinois, shall bring an action to enforce the obligations
15    related to the facility set forth in this subsection (h-5),
16    including any penalty payments owed, but not including the
17    physical obligation to capture and sequester at least 90%
18    of the total carbon dioxide emissions that the facility
19    would otherwise emit. Such action may be filed in any
20    circuit court in Illinois. By entering into a contract
21    pursuant to subsection (h) of this Section, the clean coal
22    SNG facility agrees to waive any objections to venue or to
23    the jurisdiction of the court with regard to the Attorney
24    General's action under this subsection (h-5).
25        Compliance with the sequestration requirements and any
26    penalty requirements specified in this subsection (h-5)

 

 

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1    for the clean coal SNG facility shall be assessed annually
2    by the Commission, which may in its discretion retain an
3    expert to facilitate its assessment. If any expert is
4    retained by the Commission, then the clean coal SNG
5    facility shall pay for the expert's reasonable fees, and
6    such costs shall not be passed through to the utility or
7    its customers.
8        In addition, carbon dioxide emission credits received
9    by the clean coal SNG facility in connection with
10    sequestration of carbon dioxide from the facility must be
11    sold in a timely fashion with any revenue, less applicable
12    fees and expenses and any expenses required to be paid by
13    facility for carbon dioxide transportation or
14    sequestration, deposited into the reconciliation account
15    within 30 days after receipt of such funds by the owner of
16    the clean coal SNG facility.
17        The clean coal SNG facility is prohibited from
18    transporting or sequestering carbon dioxide unless the
19    owner of the carbon dioxide pipeline that transfers the
20    carbon dioxide from the facility and the owner of the
21    sequestration site where the carbon dioxide captured by the
22    facility is stored has acquired all applicable permits
23    under applicable State and federal laws, statutes, rules,
24    or regulations prior to the transfer or sequestration of
25    carbon dioxide. The responsibility for compliance with the
26    sequestration requirements specified in this subsection

 

 

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1    (h-5) for the clean coal SNG facility shall reside solely
2    with the clean coal SNG facility, regardless of whether the
3    facility has contracted with another party to capture,
4    transport, or sequester carbon dioxide.
5        (C) If, in any year, the owner of a clean coal SNG
6    brownfield facility fails to demonstrate that the clean
7    coal SNG brownfield facility captured and sequestered at
8    least 85% of the total carbon dioxide emissions that the
9    facility would otherwise emit, then the owner of the clean
10    coal SNG brownfield facility must pay a penalty of $20 per
11    ton of excess carbon emissions up to $20,000,000, which
12    shall be deposited into the Energy Efficiency Trust Fund
13    and distributed pursuant to subsection (b) of Section 6-6
14    of the Renewable Energy, Energy Efficiency, and Coal
15    Resources Development Law of 1997. Provided, however, to
16    the extent that the owner of the clean coal SNG brownfield
17    facility can demonstrate that the failure was as a result
18    of acts of God (including fire, flood, earthquake, tornado,
19    lightning, hurricane, or other natural disaster); any
20    amendment, modification, or abrogation of any applicable
21    law or regulation that would prevent performance; war;
22    invasion; act of foreign enemies; hostilities (regardless
23    of whether war is declared); civil war; rebellion;
24    revolution; insurrection; military or usurped power or
25    confiscation; terrorist activities; civil disturbances;
26    riots; nationalization; sabotage; blockage; or embargo,

 

 

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1    the owner of the clean coal SNG brownfield facility shall
2    not be subject to a penalty if and only if (i) it promptly
3    provides notice of its failure to the Commission; (ii) as
4    soon as practicable and consistent with any order or
5    direction from the Commission, it submits to the Commission
6    proposed modifications to its carbon capture and
7    sequestration plan; and (iii) it carries out its proposed
8    modifications in the manner and time directed by the
9    Commission. If the Commission finds that the facility has
10    not satisfied each of these requirements, then the facility
11    shall be subject to the penalty. If the owner of a clean
12    coal SNG brownfield facility demonstrates that the clean
13    coal SNG brownfield facility captured and sequestered more
14    than 85% of the total carbon emissions that the facility
15    would otherwise emit, the owner of the clean coal SNG
16    brownfield facility may credit such additional amounts to
17    reduce the amount of any future penalty to be paid. The
18    penalty resulting from the failure to capture and sequester
19    at least the minimum amount of carbon dioxide shall not be
20    passed on to a utility or its customers.
21        In addition to any penalty for the clean coal SNG
22    brownfield facility's failure to capture and sequester at
23    least its minimum sequestration requirement, the Attorney
24    General, on behalf of the People of the State of Illinois,
25    shall bring an action for specific performance of this
26    subsection (h-5). Such action may be filed in any circuit

 

 

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1    court in Illinois. By entering into a sourcing agreement
2    pursuant to subsection (h-1) of this Section, the clean
3    coal SNG brownfield facility agrees to waive any objections
4    to venue or to the jurisdiction of the court with regard to
5    the Attorney General's action for specific performance
6    under this subsection (h-5).
7        Compliance with the sequestration requirements and
8    penalty requirements specified in this subsection (h-5)
9    for the clean coal SNG brownfield facility shall be
10    assessed annually by the Commission, which may in its
11    discretion retain an expert to facilitate its assessment.
12    If an expert is retained by the Commission, then the clean
13    coal SNG brownfield facility shall pay for the expert's
14    reasonable fees, and such costs shall not be passed through
15    to a utility or its customers.
16        Responsibility for compliance with the sequestration
17    requirements specified in this subsection (h-5) for the
18    clean coal SNG brownfield facility shall reside solely with
19    the clean coal SNG brownfield facility regardless of
20    whether the facility has contracted with another party to
21    capture, transport, or sequester carbon dioxide.
22    (h-7) Sequestration permitting, oversight, and
23investigations.
24        (1) No clean coal facility or clean coal SNG brownfield
25    facility may transport or sequester carbon dioxide unless
26    the Commission approves the method of carbon dioxide

 

 

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1    transportation or sequestration. Such approval shall be
2    required regardless of whether the facility has contracted
3    with another to transport or sequester the carbon dioxide.
4    Nothing in this subsection (h-7) shall release the owner or
5    operator of a carbon dioxide sequestration site or carbon
6    dioxide pipeline from any other permitting requirements
7    under applicable State and federal laws, statutes, rules,
8    or regulations.
9        (2) The Commission shall review carbon dioxide
10    transportation and sequestration methods proposed by a
11    clean coal facility or a clean coal SNG brownfield facility
12    and shall approve those methods it deems reasonable and
13    cost-effective. For purposes of this review,
14    "cost-effective" means a commercially reasonable price for
15    similar carbon dioxide transportation or sequestration
16    techniques. In determining whether sequestration is
17    reasonable and cost-effective, the Commission may consult
18    with the Illinois State Geological Survey and retain third
19    parties to assist in its determination, provided that such
20    third parties shall not own or control any direct or
21    indirect interest in the facility that is proposing the
22    carbon dioxide transportation or the carbon dioxide
23    sequestration method and shall have no contractual
24    relationship with that facility. If a third party is
25    retained by the Commission, then the facility proposing the
26    carbon dioxide transportation or sequestration method

 

 

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1    shall pay for the expert's reasonable fees, and these costs
2    shall not be passed through to a utility or its customers.
3        No later than 6 months prior to the date upon which the
4    owner intends to commence construction of a clean coal
5    facility or the clean coal SNG brownfield facility, the
6    owner of the facility shall file with the Commission a
7    carbon dioxide transportation or sequestration plan. The
8    Commission shall hold a public hearing within 30 days after
9    receipt of the facility's carbon dioxide transportation or
10    sequestration plan. The Commission shall post notice of the
11    review on its website upon submission of a carbon dioxide
12    transportation or sequestration method and shall accept
13    written public comments. The Commission shall take the
14    comments into account when making its decision.
15        The Commission may not approve a carbon dioxide
16    sequestration method if the owner or operator of the
17    sequestration site has not received (i) an Underground
18    Injection Control permit from the Illinois Environmental
19    Protection Agency pursuant to the Environmental Protection
20    Act; (ii) an Underground Injection Control permit from the
21    Illinois Department of Natural Resources pursuant to the
22    Illinois Oil and Gas Act; or (iii) a permit similar to
23    items (i) or (ii) from the state in which the sequestration
24    site is located if the sequestration will take place
25    outside of Illinois. The Commission shall approve or deny
26    the carbon dioxide transportation or sequestration method

 

 

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1    within 90 days after the receipt of all required
2    information.
3        (3) At least annually, the Illinois Environmental
4    Protection Agency shall inspect all carbon dioxide
5    sequestration sites in Illinois. The Illinois
6    Environmental Protection Agency may, as often as deemed
7    necessary, monitor and conduct investigations of those
8    sites. The owner or operator of the sequestration site must
9    cooperate with the Illinois Environmental Protection
10    Agency investigations of carbon dioxide sequestration
11    sites.
12        If the Illinois Environmental Protection Agency
13    determines at any time a site creates conditions that
14    warrant the issuance of a seal order under Section 34 of
15    the Environmental Protection Act, then the Illinois
16    Environmental Protection Agency shall seal the site
17    pursuant to the Environmental Protection Act. If the
18    Illinois Environmental Protection Agency determines at any
19    time a carbon dioxide sequestration site creates
20    conditions that warrant the institution of a civil action
21    for an injunction under Section 43 of the Environmental
22    Protection Act, then the Illinois Environmental Protection
23    Agency shall request the State's Attorney or the Attorney
24    General institute such action. The Illinois Environmental
25    Protection Agency shall provide notice of any such actions
26    as soon as possible on its website. The SNG facility shall

 

 

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1    incur all reasonable costs associated with any such
2    inspection or monitoring of the sequestration sites, and
3    these costs shall not be recoverable from utilities or
4    their customers.
5        (4) (Blank). At least annually, the Commission shall
6    inspect all carbon dioxide pipelines in Illinois that
7    transport carbon dioxide to ensure the safety and
8    feasibility of those pipelines. The Commission may, as
9    often as deemed necessary, monitor and conduct
10    investigations of those pipelines. The owner or operator of
11    the pipeline must cooperate with the Commission
12    investigations of the carbon dioxide pipelines.
13        In circumstances whereby a carbon dioxide pipeline
14    creates a substantial danger to the environment or to the
15    public health of persons or to the welfare of persons where
16    such danger is to the livelihood of such persons, the
17    State's Attorney or Attorney General, upon the request of
18    the Commission or on his or her own motion, may institute a
19    civil action for an immediate injunction to halt any
20    discharge or other activity causing or contributing to the
21    danger or to require such other action as may be necessary.
22    The court may issue an ex parte order and shall schedule a
23    hearing on the matter not later than 3 working days after
24    the date of injunction. The Commission shall provide notice
25    of any such actions as soon as possible on its website. The
26    SNG facility shall incur all reasonable costs associated

 

 

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1    with any such inspection or monitoring of the sequestration
2    sites, and these costs shall not be recoverable from a
3    utility or its customers.
4    (h-9) The clean coal SNG brownfield facility shall have the
5right to recover prudently incurred increased costs or reduced
6revenue resulting from any new or amendatory legislation or
7other action. The State of Illinois pledges that the State will
8not enact any law or take any action to:
9        (1) break, or repeal the authority for, sourcing
10    agreements approved by the Commission and entered into
11    between public utilities and the clean coal SNG brownfield
12    facility;
13        (2) deny public utilities full cost recovery for their
14    costs incurred under those sourcing agreements; or
15        (3) deny the clean coal SNG brownfield facility full
16    cost and revenue recovery as provided under those sourcing
17    agreements that are recoverable pursuant to subsection
18    (h-3) of this Section.
19    These pledges are for the benefit of the parties to those
20sourcing agreements and the issuers and holders of bonds or
21other obligations issued or incurred to finance or refinance
22the clean coal SNG brownfield facility. The clean coal SNG
23brownfield facility is authorized to include and refer to these
24pledges in any financing agreement into which it may enter in
25regard to those sourcing agreements.
26    The State of Illinois retains and reserves all other rights

 

 

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1to enact new or amendatory legislation or take any other
2action, without impairment of the right of the clean coal SNG
3brownfield facility to recover prudently incurred increased
4costs or reduced revenue resulting from the new or amendatory
5legislation or other action, including, but not limited to,
6such legislation or other action that would (i) directly or
7indirectly raise the costs the clean coal SNG brownfield
8facility must incur; (ii) directly or indirectly place
9additional restrictions, regulations, or requirements on the
10clean coal SNG brownfield facility; (iii) prohibit
11sequestration in general or prohibit a specific sequestration
12method or project; or (iv) increase minimum sequestration
13requirements for the clean coal SNG brownfield facility to the
14extent technically feasible. The clean coal SNG brownfield
15facility shall have the right to recover prudently incurred
16increased costs or reduced revenue resulting from the new or
17amendatory legislation or other action as described in this
18subsection (h-9).
19    (h-10) Contract costs for SNG incurred by an Illinois gas
20utility are reasonable and prudent and recoverable through the
21purchased gas adjustment clause and are not subject to review
22or disallowance by the Commission. Contract costs are costs
23incurred by the utility under the terms of a contract that
24incorporates the terms stated in subsection (h) of this Section
25as confirmed in writing by the Illinois Power Agency as set
26forth in subsection (h) of this Section, which confirmation

 

 

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1shall be deemed conclusive, or as a consequence of or condition
2to its performance under the contract, including (i) amounts
3paid for SNG under the SNG contract and (ii) costs of
4transportation and storage services of SNG purchased from
5interstate pipelines under federally approved tariffs. The
6Illinois gas utility shall initiate a clean coal SNG facility
7rider mechanism that (A) shall be applicable to all customers
8who receive transportation service from the utility, (B) shall
9be designed to have an equal percentage impact on the
10transportation services rates of each class of the utility's
11total customers, and (C) shall accurately reflect the net
12customer savings, if any, and above market costs, if any, under
13the SNG contract. Any contract, the terms of which have been
14confirmed in writing by the Illinois Power Agency as set forth
15in subsection (h) of this Section and the performance of the
16parties under such contract cannot be grounds for challenging
17prudence or cost recovery by the utility through the purchased
18gas adjustment clause, and in such cases, the Commission is
19directed not to consider, and has no authority to consider, any
20attempted challenges.
21    The contracts entered into by Illinois gas utilities
22pursuant to subsection (h) of this Section shall provide that
23the utility retains the right to terminate the contract without
24further obligation or liability to any party if the contract
25has been impaired as a result of any legislative,
26administrative, judicial, or other governmental action that is

 

 

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1taken that eliminates all or part of the prudence protection of
2this subsection (h-10) or denies the recoverability of all or
3part of the contract costs through the purchased gas adjustment
4clause. Should any Illinois gas utility exercise its right
5under this subsection (h-10) to terminate the contract, all
6contract costs incurred prior to termination are and will be
7deemed reasonable, prudent, and recoverable as and when
8incurred and not subject to review or disallowance by the
9Commission. Any order, issued by the State requiring or
10authorizing the discontinuation of the merchant function,
11defined as the purchase and sale of natural gas by an Illinois
12gas utility for the ultimate consumer in its service territory
13shall include provisions necessary to prevent the impairment of
14the value of any contract hereunder over its full term.
15    (h-11) All costs incurred by an Illinois gas utility in
16procuring SNG from a clean coal SNG brownfield facility
17pursuant to subsection (h-1) or a third-party marketer pursuant
18to subsection (h-1) are reasonable and prudent and recoverable
19through the purchased gas adjustment clause in conjunction with
20a SNG brownfield facility rider mechanism and are not subject
21to review or disallowance by the Commission; provided that if a
22utility is required by law or otherwise elects to connect the
23clean coal SNG brownfield facility to an interstate pipeline,
24then the utility shall be entitled to recover pursuant to its
25tariffs all just and reasonable costs that are prudently
26incurred. Sourcing agreement costs are costs incurred by the

 

 

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1utility under the terms of a sourcing agreement that
2incorporates the terms stated in subsection (h-1) of this
3Section as approved by the Commission as set forth in
4subsection (h-4) of this Section, which approval shall be
5deemed conclusive, or as a consequence of or condition to its
6performance under the contract, including (i) amounts paid for
7SNG under the SNG contract and (ii) costs of transportation and
8storage services of SNG purchased from interstate pipelines
9under federally approved tariffs. Any sourcing agreement, the
10terms of which have been approved by the Commission as set
11forth in subsection (h-4) of this Section, and the performance
12of the parties under the sourcing agreement cannot be grounds
13for challenging prudence or cost recovery by the utility, and
14in these cases, the Commission is directed not to consider, and
15has no authority to consider, any attempted challenges.
16    (h-15) Reconciliation account. The clean coal SNG facility
17shall establish a reconciliation account for the benefit of the
18retail customers of the utilities that have entered into
19contracts with the clean coal SNG facility pursuant to
20subsection (h). The reconciliation account shall be maintained
21and administered by an independent trustee that is mutually
22agreed upon by the owners of the clean coal SNG facility, the
23utilities, and the Commission in an interest-bearing account in
24accordance with the following:
25        (1) The clean coal SNG facility shall conduct an
26    analysis annually within 60 days after receiving the

 

 

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1    necessary cost information, which shall be provided by the
2    gas utility within 6 months after the end of the preceding
3    calendar year, to determine (i) the average annual contract
4    SNG cost, which shall be calculated as the total amount
5    paid for SNG purchased from the clean coal SNG facility
6    over the preceding 12 months, plus the cost to the utility
7    of the required transportation and storage services of SNG,
8    divided by the total number of MMBtus of SNG actually
9    purchased from the clean coal SNG facility in the preceding
10    12 months under the utility contract; (ii) the average
11    annual natural gas purchase cost, which shall be calculated
12    as the total annual supply costs paid for baseload natural
13    gas (excluding any SNG) purchased by such utility over the
14    preceding 12 months plus the costs of transportation and
15    storage services of such natural gas (excluding such costs
16    for SNG), divided by the total number of MMbtus of baseload
17    natural gas (excluding SNG) actually purchased by the
18    utility during the year; (iii) the cost differential, which
19    shall be the difference between the average annual contract
20    SNG cost and the average annual natural gas purchase cost;
21    and (iv) the revenue share target which shall be the cost
22    differential multiplied by the total amount of SNG
23    purchased over the preceding 12 months under such utility
24    contract.
25            (A) To the extent the annual average contract SNG
26        cost is less than the annual average natural gas

 

 

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1        purchase cost, the utility shall credit an amount equal
2        to the revenue share target to the reconciliation
3        account. Such credit payment shall be made monthly
4        starting within 30 days after the completed analysis in
5        this subsection (h-15) and based on collections from
6        all customers via a line item charge in all customer
7        bills designed to have an equal percentage impact on
8        the transportation services of each class of
9        customers. Credit payments made pursuant to this
10        subparagraph (A) shall be deemed prudent and
11        reasonable and not subject to Commission prudence
12        review.
13            (B) To the extent the annual average contract SNG
14        cost is greater than the annual average natural gas
15        purchase cost, the reconciliation account shall be
16        used to provide a credit equal to the revenue share
17        target to the utilities to be used to reduce the
18        utility's natural gas costs through the purchased gas
19        adjustment clause. Such payment shall be made within 30
20        days after the completed analysis pursuant to this
21        subsection (h-15), but only to the extent that the
22        reconciliation account has a positive balance.
23        (2) At the conclusion of the term of the SNG contracts
24    pursuant to subsection (h) and the completion of the final
25    annual analysis pursuant to this subsection (h-15), to the
26    extent the facility owes any amount to retail customers,

 

 

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1    amounts in the account shall be credited to retail
2    customers to the extent the owed amount is repaid; 50% of
3    any additional amount in the reconciliation account shall
4    be distributed to the utilities to be used to reduce the
5    utilities' natural gas costs through the purchase gas
6    adjustment clause with the remaining amount distributed to
7    the clean coal SNG facility. Such payment shall be made
8    within 30 days after the last completed analysis pursuant
9    to this subsection (h-15). If the facility has repaid all
10    owed amounts, if any, to retail customers and has
11    distributed 50% of any additional amount in the account to
12    the utilities, then the owners of the clean coal SNG
13    facility shall have no further obligation to the utility or
14    the retail customers.
15        If, at the conclusion of the term of the contracts
16    pursuant to subsection (h) and the completion of the final
17    annual analysis pursuant to this subsection (h-15), the
18    facility owes any amount to retail customers and the
19    account has been depleted, then the clean coal SNG facility
20    shall be liable for any remaining amount owed to the retail
21    customers. The clean coal SNG facility shall market the
22    daily production of SNG and distribute on a monthly basis
23    5% of the amounts collected with respect to such future
24    sales to the utilities in proportion to each utility's SNG
25    contract to be used to reduce the utility's natural gas
26    costs through the purchase gas adjustment clause; such

 

 

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1    payments to the utility shall continue until either 15
2    years after the conclusion of the contract or such time as
3    the sum of such payments equals the remaining amount owed
4    to the retail customers at the end of the contract,
5    whichever is earlier. If the debt to the retail customers
6    is not repaid within 15 years after the conclusion of the
7    contract, then the owner of the clean coal SNG facility
8    must sell the facility, and all proceeds from that sale
9    must be used to repay any amount owed to the retail
10    customers under this subsection (h-15).
11        The retail customers shall have first priority in
12    recovering that debt above any creditors, except the
13    secured lenders to the extent that the secured lenders have
14    any secured debt outstanding, including any parent
15    companies or affiliates of the clean coal SNG facility.
16        (3) 50% of all additional net revenue, defined as
17    miscellaneous net revenue after cost allowance and above
18    the budgeted estimate established for revenue pursuant to
19    subsection (h), including sale of substitute natural gas
20    derived from the clean coal SNG facility above the
21    nameplate capacity of the facility and other by-products
22    produced by the facility, shall be credited to the
23    reconciliation account on an annual basis with such payment
24    made within 30 days after the end of each calendar year
25    during the term of the contract.
26        (4) The clean coal SNG facility shall each year,

 

 

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1    starting in the facility's first year of commercial
2    operation, file with the Commission, in such form as the
3    Commission shall require, a report as to the reconciliation
4    account. The annual report must contain the following
5    information:
6            (A) the revenue share target amount;
7            (B) the amount credited or debited to the
8        reconciliation account during the year;
9            (C) the amount credited to the utilities to be used
10        to reduce the utilities natural gas costs though the
11        purchase gas adjustment clause;
12            (D) the total amount of reconciliation account at
13        the beginning and end of the year;
14            (E) the total amount of consumer savings to date;
15        and
16            (F) any additional information the Commission may
17        require.
18    When any report is erroneous or defective or appears to the
19Commission to be erroneous or defective, the Commission may
20notify the clean coal SNG facility to amend the report within
2130 days; before or after the termination of the 30-day period,
22the Commission may examine the trustee of the reconciliation
23account or the officers, agents, employees, books, records, or
24accounts of the clean coal SNG facility and correct such items
25in the report as upon such examination the Commission may find
26defective or erroneous. All reports shall be under oath.

 

 

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1    All reports made to the Commission by the clean coal SNG
2facility and the contents of the reports shall be open to
3public inspection and shall be deemed a public record under the
4Freedom of Information Act. Such reports shall be preserved in
5the office of the Commission. The Commission shall publish an
6annual summary of the reports prior to February 1 of the
7following year. The annual summary shall be made available to
8the public on the Commission's website and shall be submitted
9to the General Assembly.
10    Any facility that fails to file the report required under
11this paragraph (4) to the Commission within the time specified
12or to make specific answer to any question propounded by the
13Commission within 30 days after the time it is lawfully
14required to do so, or within such further time not to exceed 90
15days as may be allowed by the Commission in its discretion,
16shall pay a penalty of $500 to the Commission for each day it
17is in default.
18    Any person who willfully makes any false report to the
19Commission or to any member, officer, or employee thereof, any
20person who willfully in a report withholds or fails to provide
21material information to which the Commission is entitled under
22this paragraph (4) and which information is either required to
23be filed by statute, rule, regulation, order, or decision of
24the Commission or has been requested by the Commission, and any
25person who willfully aids or abets such person shall be guilty
26of a Class A misdemeanor.

 

 

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1    (h-20) The General Assembly authorizes the Illinois
2Finance Authority to issue bonds to the maximum extent
3permitted to finance coal gasification facilities described in
4this Section, which constitute both "industrial projects"
5under Article 801 of the Illinois Finance Authority Act and
6"clean coal and energy projects" under Sections 825-65 through
7825-75 of the Illinois Finance Authority Act.
8    Administrative costs incurred by the Illinois Finance
9Authority in performance of this subsection (h-20) shall be
10subject to reimbursement by the clean coal SNG facility on
11terms as the Illinois Finance Authority and the clean coal SNG
12facility may agree. The utility and its customers shall have no
13obligation to reimburse the clean coal SNG facility or the
14Illinois Finance Authority for any such costs.
15    (h-25) The State of Illinois pledges that the State may not
16enact any law or take any action to (1) break or repeal the
17authority for SNG purchase contracts entered into between
18public gas utilities and the clean coal SNG facility pursuant
19to subsection (h) of this Section or (2) deny public gas
20utilities their full cost recovery for contract costs, as
21defined in subsection (h-10), that are incurred under such SNG
22purchase contracts. These pledges are for the benefit of the
23parties to such SNG purchase contracts and the issuers and
24holders of bonds or other obligations issued or incurred to
25finance or refinance the clean coal SNG facility. The
26beneficiaries are authorized to include and refer to these

 

 

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1pledges in any finance agreement into which they may enter in
2regard to such contracts.
3    (h-30) The State of Illinois retains and reserves all other
4rights to enact new or amendatory legislation or take any other
5action, including, but not limited to, such legislation or
6other action that would (1) directly or indirectly raise the
7costs that the clean coal SNG facility must incur; (2) directly
8or indirectly place additional restrictions, regulations, or
9requirements on the clean coal SNG facility; (3) prohibit
10sequestration in general or prohibit a specific sequestration
11method or project; or (4) increase minimum sequestration
12requirements.
13    (i) If a gas utility or an affiliate of a gas utility has
14an ownership interest in any entity that produces or sells
15synthetic natural gas, Article VII of this Act shall apply.
16(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;
1797-239, eff. 8-2-11; 97-630, eff. 12-8-11.)
 
18    Section 10. The Illinois Gas Pipeline Safety Act is amended
19by changing Sections 2.02, 2.03, 2.04, and 3 as follows:
 
20    (220 ILCS 20/2.02)  (from Ch. 111 2/3, par. 552.2)
21    Sec. 2.02. "Gas" means natural gas, flammable gas or gas
22which is toxic or corrosive. "Gas" also means carbon dioxide in
23any physical form, whenever transported by pipeline for the
24purpose of sequestration.

 

 

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1(Source: P.A. 97-96, eff. 7-13-11; 97-239, eff. 8-2-11.)
 
2    (220 ILCS 20/2.03)  (from Ch. 111 2/3, par. 552.3)
3    Sec. 2.03. "Transportation of gas" means the gathering,
4transmission, or distribution of gas by pipeline or its
5storage, within this State and not subject to the jurisdiction
6of the Federal Energy Regulatory Commission under the Natural
7Gas Act, except that it includes the transmission of gas
8through pipeline facilities within this State that transport
9gas from an interstate gas pipeline to a direct sales customer
10within this State purchasing gas for its own consumption.
11"Transportation of gas" also includes the conveyance of gas
12from a gas main through the primary fuel line to the outside
13wall of residential premises. If the gas meter is placed within
143 feet of the structure, the utility's responsibility shall end
15at the outlet side of the meter. "Transportation of gas" also
16includes the conveyance of carbon dioxide in any physical form
17for the purpose of sequestration.
18(Source: P.A. 97-96, eff. 7-13-11; 97-239, eff. 8-2-11.)
 
19    (220 ILCS 20/2.04)  (from Ch. 111 2/3, par. 552.4)
20    Sec. 2.04. "Pipeline facilities" includes new and existing
21pipe rights-of-way and any equipment, facility, or building
22used in the transportation of gas or the treatment of gas
23during the course of transportation and includes facilities
24within this State that transport gas from an interstate gas

 

 

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1pipeline to a direct sales customer within this State
2purchasing gas for its own consumption, but "rights-of-way" as
3used in this Act does not authorize the Commission to
4prescribe, under this Act, the location or routing of any
5pipeline facility. "Pipeline facilities" also includes new and
6existing pipes and lines and any other equipment, facility, or
7structure, except customer-owned branch lines connected to the
8primary fuel lines, used to convey gas from a gas main to the
9outside wall of residential premises, and any person who
10provides gas service directly to its residential customer
11through these facilities shall be deemed to operate such
12pipeline facilities for purposes of this Act irrespective of
13the ownership of the facilities or the location of the
14facilities with respect to the meter, except that a person who
15provides gas service to a "master meter system", as that term
16is defined at 49 C.F.R. Section 191.3, shall not be deemed to
17operate any facilities downstream of the master meter.
18"Pipeline facilities" also includes new and existing pipe
19rights-of-way and any equipment, facility, or building used in
20the transportation of carbon dioxide in any physical form for
21the purpose of sequestration.
22(Source: P.A. 97-96, eff. 7-13-11; 97-239, eff. 8-2-11.)
 
23    (220 ILCS 20/3)  (from Ch. 111 2/3, par. 553)
24    Sec. 3. (a) As soon as practicable, but not later than 3
25months after the effective date of this Act, the Commission

 

 

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1shall adopt rules establishing minimum safety standards for the
2transportation of gas and for pipeline facilities. Such rules
3shall be at least as inclusive, as stringent, and compatible
4with, the minimum safety standards adopted by the Secretary of
5Transportation under the Federal Act. Thereafter, the
6Commission shall maintain such rules so that the rules are at
7least as inclusive, as stringent, and compatible with, the
8minimum standards from time to time in effect under the Federal
9Act. The Commission shall also adopt rules establishing minimum
10safety standards for the transportation of carbon dioxide in
11any physical form for the purpose of sequestration and for
12pipeline facilities used for that function.
13    (b) Standards established under this Act may apply to the
14design, installation, inspection, testing, construction,
15extension, operation, replacement, and maintenance of pipeline
16facilities. Standards affecting the design, installation,
17construction, initial inspection and initial testing are not
18applicable to pipeline facilities in existence on the date such
19standards are adopted. Whenever the Commission finds a
20particular facility to be hazardous to life or property, it may
21require the person operating such facility to take the steps
22necessary to remove the hazard.
23    (c) Standards established by the Commission under this Act
24shall, subject to paragraphs (a) and (b) of this Section 3, be
25practicable and designed to meet the need for pipeline safety.
26In prescribing such standards, the Commission shall consider:

 

 

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1similar standards established in other states; relevant
2available pipeline safety data; whether such standards are
3appropriate for the particular type of pipeline
4transportation; the reasonableness of any proposed standards;
5and the extent to which such standards will contribute to
6public safety.
7    Rules adopted under this Act are subject to "The Illinois
8Administrative Procedure Act", approved September 22, 1975, as
9amended.
10(Source: P.A. 97-96, eff. 7-13-11; 97-239, eff. 8-2-11.)
 
11    Section 15. The Carbon Dioxide Transportation and
12Sequestration Act is amended by changing Section 30 as follows:
 
13    (220 ILCS 75/30)
14    Sec. 30. Safety. Inasmuch as the regulation of the
15construction, maintenance, and operation of pipelines
16transporting carbon dioxide, whether interstate or intrastate,
17falls within the statutory and regulatory jurisdiction of the
18Pipeline and Hazardous Material Safety Administration of the
19federal Department of Transportation, each A carbon dioxide
20pipeline owner shall construct, maintain, and operate all of
21its pipelines, related facilities, and equipment in this State
22in a manner that complies fully with all federal laws and
23regulations governing the construction, maintenance, and
24operation of pipelines transporting carbon dioxide, as from

 

 

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1time to time amended, and which otherwise poses no undue risk
2to its employees or the public. This Section shall not be
3interpreted to act in derogation of any such federal laws or
4regulations. The Commission shall not issue any certificates or
5permits allowing the construction of a carbon dioxide pipeline
6until it has adopted federal safety regulations governing the
7construction, maintenance, and operations of carbon dioxide
8pipelines, related facilities, and equipment to ensure the
9safety of pipeline employees and the public.
10(Source: P.A. 97-534, eff. 8-23-11.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.