97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3176

 

Introduced 2/1/2012, by Sen. David Koehler

 

SYNOPSIS AS INTRODUCED:
 
220 ILCS 5/8-104

    Amends the Public Utilities Act. Provides that customers may apply to the Department of Commerce and Economic Opportunity to be designated as a self-directing customer or exempt customer using natural gas a feedstock from which other products are made on or before the 1st day of December, 2012 (instead of the 1st day of February, 2010). Effective immediately.


LRB097 19651 CEL 64905 b

 

 

A BILL FOR

 

SB3176LRB097 19651 CEL 64905 b

1    AN ACT concerning utilities.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Section 8-104 as follows:
 
6    (220 ILCS 5/8-104)
7    Sec. 8-104. Natural gas energy efficiency programs.
8    (a) It is the policy of the State that natural gas
9utilities and the Department of Commerce and Economic
10Opportunity are required to use cost-effective energy
11efficiency to reduce direct and indirect costs to consumers. It
12serves the public interest to allow natural gas utilities to
13recover costs for reasonably and prudently incurred expenses
14for cost-effective energy efficiency measures.
15    (b) For purposes of this Section, "energy efficiency" means
16measures that reduce the amount of energy required to achieve a
17given end use and "cost-effective" means that the measures
18satisfy the total resource cost test which, for purposes of
19this Section, means a standard that is met if, for an
20investment in energy efficiency, the benefit-cost ratio is
21greater than one. The benefit-cost ratio is the ratio of the
22net present value of the total benefits of the measures to the
23net present value of the total costs as calculated over the

 

 

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1lifetime of the measures. The total resource cost test compares
2the sum of avoided natural gas utility costs, representing the
3benefits that accrue to the system and the participant in the
4delivery of those efficiency measures, as well as other
5quantifiable societal benefits, including avoided electric
6utility costs, to the sum of all incremental costs of end use
7measures (including both utility and participant
8contributions), plus costs to administer, deliver, and
9evaluate each demand-side measure, to quantify the net savings
10obtained by substituting demand-side measures for supply
11resources. In calculating avoided costs, reasonable estimates
12shall be included for financial costs likely to be imposed by
13future regulation of emissions of greenhouse gases. The
14low-income programs described in item (4) of subsection (f) of
15this Section shall not be required to meet the total resource
16cost test.
17    (c) Natural gas utilities shall implement cost-effective
18energy efficiency measures to meet at least the following
19natural gas savings requirements, which shall be based upon the
20total amount of gas delivered to retail customers, other than
21the customers described in subsection (m) of this Section,
22during calendar year 2009 multiplied by the applicable
23percentage. Natural gas utilities may comply with this Section
24by meeting the annual incremental savings goal in the
25applicable year or by showing that total savings associated
26with measures implemented after May 31, 2011 were equal to the

 

 

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1sum of each annual incremental savings requirement from May 31,
22011 through the end of the applicable year:
3        (1) 0.2% by May 31, 2012;
4        (2) an additional 0.4% by May 31, 2013, increasing
5    total savings to .6%;
6        (3) an additional 0.6% by May 31, 2014, increasing
7    total savings to 1.2%;
8        (4) an additional 0.8% by May 31, 2015, increasing
9    total savings to 2.0%;
10        (5) an additional 1% by May 31, 2016, increasing total
11    savings to 3.0%;
12        (6) an additional 1.2% by May 31, 2017, increasing
13    total savings to 4.2%;
14        (7) an additional 1.4% by May 31, 2018, increasing
15    total savings to 5.6%;
16        (8) an additional 1.5% by May 31, 2019, increasing
17    total savings to 7.1%; and
18        (9) an additional 1.5% in each 12-month period
19    thereafter.
20    (d) Notwithstanding the requirements of subsection (c) of
21this Section, a natural gas utility shall limit the amount of
22energy efficiency implemented in any 3-year reporting period
23established by subsection (f) of Section 8-104 of this Act, by
24an amount necessary to limit the estimated average increase in
25the amounts paid by retail customers in connection with natural
26gas service to no more than 2% in the applicable 3-year

 

 

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1reporting period. The energy savings requirements in
2subsection (c) of this Section may be reduced by the Commission
3for the subject plan, if the utility demonstrates by
4substantial evidence that it is highly unlikely that the
5requirements could be achieved without exceeding the
6applicable spending limits in any 3-year reporting period. No
7later than September 1, 2013, the Commission shall review the
8limitation on the amount of energy efficiency measures
9implemented pursuant to this Section and report to the General
10Assembly, in the report required by subsection (k) of this
11Section, its findings as to whether that limitation unduly
12constrains the procurement of energy efficiency measures.
13    (e) Natural gas utilities shall be responsible for
14overseeing the design, development, and filing of their
15efficiency plans with the Commission. The utility shall utilize
1675% of the available funding associated with energy efficiency
17programs approved by the Commission, and may outsource various
18aspects of program development and implementation. The
19remaining 25% of available funding shall be used by the
20Department of Commerce and Economic Opportunity to implement
21energy efficiency measures that achieve no less than 20% of the
22requirements of subsection (c) of this Section. Such measures
23shall be designed in conjunction with the utility and approved
24by the Commission. The Department may outsource development and
25implementation of energy efficiency measures. A minimum of 10%
26of the entire portfolio of cost-effective energy efficiency

 

 

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1measures shall be procured from local government, municipal
2corporations, school districts, and community college
3districts. Five percent of the entire portfolio of
4cost-effective energy efficiency measures may be granted to
5local government and municipal corporations for market
6transformation initiatives. The Department shall coordinate
7the implementation of these measures and shall integrate
8delivery of natural gas efficiency programs with electric
9efficiency programs delivered pursuant to Section 8-103 of this
10Act, unless the Department can show that integration is not
11feasible.
12    The apportionment of the dollars to cover the costs to
13implement the Department's share of the portfolio of energy
14efficiency measures shall be made to the Department once the
15Department has executed grants or contracts for energy
16efficiency measures and provided supporting documentation for
17those grants and the contracts to the utility.
18    The details of the measures implemented by the Department
19shall be submitted by the Department to the Commission in
20connection with the utility's filing regarding the energy
21efficiency measures that the utility implements.
22    A utility providing approved energy efficiency measures in
23this State shall be permitted to recover costs of those
24measures through an automatic adjustment clause tariff filed
25with and approved by the Commission. The tariff shall be
26established outside the context of a general rate case and

 

 

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1shall be applicable to the utility's customers other than the
2customers described in subsection (m) of this Section. Each
3year the Commission shall initiate a review to reconcile any
4amounts collected with the actual costs and to determine the
5required adjustment to the annual tariff factor to match annual
6expenditures.
7    Each utility shall include, in its recovery of costs, the
8costs estimated for both the utility's and the Department's
9implementation of energy efficiency measures. Costs collected
10by the utility for measures implemented by the Department shall
11be submitted to the Department pursuant to Section 605-323 of
12the Civil Administrative Code of Illinois and shall be used by
13the Department solely for the purpose of implementing these
14measures. A utility shall not be required to advance any moneys
15to the Department but only to forward such funds as it has
16collected. The Department shall report to the Commission on an
17annual basis regarding the costs actually incurred by the
18Department in the implementation of the measures. Any changes
19to the costs of energy efficiency measures as a result of plan
20modifications shall be appropriately reflected in amounts
21recovered by the utility and turned over to the Department.
22    The portfolio of measures, administered by both the
23utilities and the Department, shall, in combination, be
24designed to achieve the annual energy savings requirements set
25forth in subsection (c) of this Section, as modified by
26subsection (d) of this Section.

 

 

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1    The utility and the Department shall agree upon a
2reasonable portfolio of measures and determine the measurable
3corresponding percentage of the savings goals associated with
4measures implemented by the Department.
5    No utility shall be assessed a penalty under subsection (f)
6of this Section for failure to make a timely filing if that
7failure is the result of a lack of agreement with the
8Department with respect to the allocation of responsibilities
9or related costs or target assignments. In that case, the
10Department and the utility shall file their respective plans
11with the Commission and the Commission shall determine an
12appropriate division of measures and programs that meets the
13requirements of this Section.
14    If the Department is unable to meet performance
15requirements for the portion of the portfolio implemented by
16the Department, then the utility and the Department shall
17jointly submit a modified filing to the Commission explaining
18the performance shortfall and recommending an appropriate
19course going forward, including any program modifications that
20may be appropriate in light of the evaluations conducted under
21item (8) of subsection (f) of this Section. In this case, the
22utility obligation to collect the Department's costs and turn
23over those funds to the Department under this subsection (e)
24shall continue only if the Commission approves the
25modifications to the plan proposed by the Department.
26    (f) No later than October 1, 2010, each gas utility shall

 

 

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1file an energy efficiency plan with the Commission to meet the
2energy efficiency standards through May 31, 2014. Every 3 years
3thereafter, each utility shall file, no later than October 1,
4an energy efficiency plan with the Commission. If a utility
5does not file such a plan by October 1 of the applicable year,
6then it shall face a penalty of $100,000 per day until the plan
7is filed. Each utility's plan shall set forth the utility's
8proposals to meet the utility's portion of the energy
9efficiency standards identified in subsection (c) of this
10Section, as modified by subsection (d) of this Section, taking
11into account the unique circumstances of the utility's service
12territory. The Commission shall seek public comment on the
13utility's plan and shall issue an order approving or
14disapproving each plan. If the Commission disapproves a plan,
15the Commission shall, within 30 days, describe in detail the
16reasons for the disapproval and describe a path by which the
17utility may file a revised draft of the plan to address the
18Commission's concerns satisfactorily. If the utility does not
19refile with the Commission within 60 days after the
20disapproval, the utility shall be subject to penalties at a
21rate of $100,000 per day until the plan is filed. This process
22shall continue, and penalties shall accrue, until the utility
23has successfully filed a portfolio of energy efficiency
24measures. Penalties shall be deposited into the Energy
25Efficiency Trust Fund and the cost of any such penalties may
26not be recovered from ratepayers. In submitting proposed energy

 

 

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1efficiency plans and funding levels to meet the savings goals
2adopted by this Act the utility shall:
3        (1) Demonstrate that its proposed energy efficiency
4    measures will achieve the requirements that are identified
5    in subsection (c) of this Section, as modified by
6    subsection (d) of this Section.
7        (2) Present specific proposals to implement new
8    building and appliance standards that have been placed into
9    effect.
10        (3) Present estimates of the total amount paid for gas
11    service expressed on a per therm basis associated with the
12    proposed portfolio of measures designed to meet the
13    requirements that are identified in subsection (c) of this
14    Section, as modified by subsection (d) of this Section.
15        (4) Coordinate with the Department to present a
16    portfolio of energy efficiency measures proportionate to
17    the share of total annual utility revenues in Illinois from
18    households at or below 150% of the poverty level. Such
19    programs shall be targeted to households with incomes at or
20    below 80% of area median income.
21        (5) Demonstrate that its overall portfolio of energy
22    efficiency measures, not including programs covered by
23    item (4) of this subsection (f), are cost-effective using
24    the total resource cost test and represent a diverse cross
25    section of opportunities for customers of all rate classes
26    to participate in the programs.

 

 

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1        (6) Demonstrate that a gas utility affiliated with an
2    electric utility that is required to comply with Section
3    8-103 of this Act has integrated gas and electric
4    efficiency measures into a single program that reduces
5    program or participant costs and appropriately allocates
6    costs to gas and electric ratepayers. The Department shall
7    integrate all gas and electric programs it delivers in any
8    such utilities' service territories, unless the Department
9    can show that integration is not feasible or appropriate.
10        (7) Include a proposed cost recovery tariff mechanism
11    to fund the proposed energy efficiency measures and to
12    ensure the recovery of the prudently and reasonably
13    incurred costs of Commission-approved programs.
14        (8) Provide for quarterly status reports tracking
15    implementation of and expenditures for the utility's
16    portfolio of measures and the Department's portfolio of
17    measures, an annual independent review, and a full
18    independent evaluation of the 3-year results of the
19    performance and the cost-effectiveness of the utility's
20    and Department's portfolios of measures and broader net
21    program impacts and, to the extent practical, for
22    adjustment of the measures on a going forward basis as a
23    result of the evaluations. The resources dedicated to
24    evaluation shall not exceed 3% of portfolio resources in
25    any given 3-year period.
26    (g) No more than 3% of expenditures on energy efficiency

 

 

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1measures may be allocated for demonstration of breakthrough
2equipment and devices.
3    (h) Illinois natural gas utilities that are affiliated by
4virtue of a common parent company may, at the utilities'
5request, be considered a single natural gas utility for
6purposes of complying with this Section.
7    (i) If, after 3 years, a gas utility fails to meet the
8efficiency standard specified in subsection (c) of this Section
9as modified by subsection (d), then it shall make a
10contribution to the Low-Income Home Energy Assistance Program.
11The total liability for failure to meet the goal shall be
12assessed as follows:
13        (1) a large gas utility shall pay $600,000;
14        (2) a medium gas utility shall pay $400,000; and
15        (3) a small gas utility shall pay $200,000.
16    For purposes of this Section, (i) a "large gas utility" is
17a gas utility that on December 31, 2008, served more than
181,500,000 gas customers in Illinois; (ii) a "medium gas
19utility" is a gas utility that on December 31, 2008, served
20fewer than 1,500,000, but more than 500,000 gas customers in
21Illinois; and (iii) a "small gas utility" is a gas utility that
22on December 31, 2008, served fewer than 500,000 and more than
23100,000 gas customers in Illinois. The costs of this
24contribution may not be recovered from ratepayers.
25    If a gas utility fails to meet the efficiency standard
26specified in subsection (c) of this Section, as modified by

 

 

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1subsection (d) of this Section, in any 2 consecutive 3-year
2planning periods, then the responsibility for implementing the
3utility's energy efficiency measures shall be transferred to an
4independent program administrator selected by the Commission.
5Reasonable and prudent costs incurred by the independent
6program administrator to meet the efficiency standard
7specified in subsection (c) of this Section, as modified by
8subsection (d) of this Section, may be recovered from the
9customers of the affected gas utilities, other than customers
10described in subsection (m) of this Section. The utility shall
11provide the independent program administrator with all
12information and assistance necessary to perform the program
13administrator's duties including but not limited to customer,
14account, and energy usage data, and shall allow the program
15administrator to include inserts in customer bills. The utility
16may recover reasonable costs associated with any such
17assistance.
18    (j) No utility shall be deemed to have failed to meet the
19energy efficiency standards to the extent any such failure is
20due to a failure of the Department.
21    (k) Not later than January 1, 2012, the Commission shall
22develop and solicit public comment on a plan to foster
23statewide coordination and consistency between statutorily
24mandated natural gas and electric energy efficiency programs to
25reduce program or participant costs or to improve program
26performance. Not later than September 1, 2013, the Commission

 

 

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1shall issue a report to the General Assembly containing its
2findings and recommendations.
3    (l) This Section does not apply to a gas utility that on
4January 1, 2009, provided gas service to fewer than 100,000
5customers in Illinois.
6    (m) Subsections (a) through (k) of this Section do not
7apply to customers of a natural gas utility that have a North
8American Industry Classification System code number that is
922111 or any such code number beginning with the digits 31, 32,
10or 33 and (i) annual usage in the aggregate of 4 million therms
11or more within the service territory of the affected gas
12utility or with aggregate usage of 8 million therms or more in
13this State and complying with the provisions of item (l) of
14this subsection (m); or (ii) using natural gas as feedstock and
15meeting the usage requirements described in item (i) of this
16subsection (m), to the extent such annual feedstock usage is
17greater than that 60% of the customer's total annual usage of
18natural gas.
19        (1) Customers described in this subsection (m) of this
20    Section shall apply, on a form approved on or before
21    October 1, 2009 by the Department, to the Department to be
22    designated as a self-directing customer ("SDC") or as an
23    exempt customer using natural gas as a feedstock from which
24    other products are made, including, but not limited to,
25    feedstock for a hydrogen plant, on or before the 1st day of
26    December, 2012 February, 2010. Thereafter, application may

 

 

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1    be made not less than 6 months before the filing date of
2    the gas utility energy efficiency plan described in
3    subsection (f) of this Section; however, a new customer
4    that commences taking service from a natural gas utility
5    after February 1, 2010 may apply to become a SDC or exempt
6    customer up to 30 days after beginning service. Such
7    application shall contain the following:
8            (A) the customer's certification that, at the time
9        of its application, it qualifies to be a SDC or exempt
10        customer described in this subsection (m) of this
11        Section;
12            (B) in the case of a SDC, the customer's
13        certification that it has established or will
14        establish by the beginning of the utility's 3-year
15        planning period commencing subsequent to the
16        application, and will maintain for accounting
17        purposes, an energy efficiency reserve account and
18        that the customer will accrue funds in said account to
19        be held for the purpose of funding, in whole or in
20        part, energy efficiency measures of the customer's
21        choosing, which may include, but are not limited to,
22        projects involving combined heat and power systems
23        that use the same energy source both for the generation
24        of electrical or mechanical power and the production of
25        steam or another form of useful thermal energy or the
26        use of combustible gas produced from biomass, or both;

 

 

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1            (C) in the case of a SDC, the customer's
2        certification that annual funding levels for the
3        energy efficiency reserve account will be equal to 2%
4        of the customer's cost of natural gas, composed of the
5        customer's commodity cost and the delivery service
6        charges paid to the gas utility, or $150,000, whichever
7        is less;
8            (D) in the case of a SDC, the customer's
9        certification that the required reserve account
10        balance will be capped at 3 years' worth of accruals
11        and that the customer may, at its option, make further
12        deposits to the account to the extent such deposit
13        would increase the reserve account balance above the
14        designated cap level;
15            (E) in the case of a SDC, the customer's
16        certification that by October 1 of each year, beginning
17        no sooner than October 1, 2012, the customer will
18        report to the Department information, for the 12-month
19        period ending May 31 of the same year, on all deposits
20        and reductions, if any, to the reserve account during
21        the reporting year, and to the extent deposits to the
22        reserve account in any year are in an amount less than
23        $150,000, the basis for such reduced deposits; reserve
24        account balances by month; a description of energy
25        efficiency measures undertaken by the customer and
26        paid for in whole or in part with funds from the

 

 

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1        reserve account; an estimate of the energy saved, or to
2        be saved, by the measure; and that the report shall
3        include a verification by an officer or plant manager
4        of the customer or by a registered professional
5        engineer or certified energy efficiency trade
6        professional that the funds withdrawn from the reserve
7        account were used for the energy efficiency measures;
8            (F) in the case of an exempt customer, the
9        customer's certification of the level of gas usage as
10        feedstock in the customer's operation in a typical year
11        and that it will provide information establishing this
12        level, upon request of the Department;
13            (G) in the case of either an exempt customer or a
14        SDC, the customer's certification that it has provided
15        the gas utility or utilities serving the customer with
16        a copy of the application as filed with the Department;
17            (H) in the case of either an exempt customer or a
18        SDC, certification of the natural gas utility or
19        utilities serving the customer in Illinois including
20        the natural gas utility accounts that are the subject
21        of the application; and
22            (I) in the case of either an exempt customer or a
23        SDC, a verification signed by a plant manager or an
24        authorized corporate officer attesting to the
25        truthfulness and accuracy of the information contained
26        in the application.

 

 

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1        (2) The Department shall review the application to
2    determine that it contains the information described in
3    provisions (A) through (I) of item (1) of this subsection
4    (m), as applicable. The review shall be completed within 30
5    days after the date the application is filed with the
6    Department. Absent a determination by the Department
7    within the 30-day period, the applicant shall be considered
8    to be a SDC or exempt customer, as applicable, for all
9    subsequent 3-year planning periods, as of the date of
10    filing the application described in this subsection (m). If
11    the Department determines that the application does not
12    contain the applicable information described in provisions
13    (A) through (I) of item (1) of this subsection (m), it
14    shall notify the customer, in writing, of its determination
15    that the application does not contain the required
16    information and identify the information that is missing,
17    and the customer shall provide the missing information
18    within 15 working days after the date of receipt of the
19    Department's notification.
20        (3) The Department shall have the right to audit the
21    information provided in the customer's application and
22    annual reports to ensure continued compliance with the
23    requirements of this subsection. Based on the audit, if the
24    Department determines the customer is no longer in
25    compliance with the requirements of items (A) through (I)
26    of item (1) of this subsection (m), as applicable, the

 

 

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1    Department shall notify the customer in writing of the
2    noncompliance. The customer shall have 30 days to establish
3    its compliance, and failing to do so, may have its status
4    as a SDC or exempt customer revoked by the Department. The
5    Department shall treat all information provided by any
6    customer seeking SDC status or exemption from the
7    provisions of this Section as strictly confidential.
8        (4) Upon request, or on its own motion, the Commission
9    may open an investigation, no more than once every 3 years
10    and not before October 1, 2014, to evaluate the
11    effectiveness of the self-directing program described in
12    this subsection (m).
13    (n) The applicability of this Section to customers
14described in subsection (m) of this Section is conditioned on
15the existence of the SDC program. In no event will any
16provision of this Section apply to such customers after January
171, 2020.
18(Source: P.A. 96-33, eff. 7-10-09; revised 11-18-11.)
 
19    Section 99. Effective date. This Act takes effect upon
20becoming law.