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Full Text of SB2550  96th General Assembly

SB2550 96TH GENERAL ASSEMBLY

  
  

 


 
96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB2550

 

Introduced 1/13/2010, by Sen. Don Harmon

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 3855/1-75

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


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A BILL FOR

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         and, beginning in 2011, the utility shall include in
2         the information provided under item (1) of subsection
3         (d) of Section 16-111.5 of the Public Utilities Act the
4         amounts collected under the alternative compliance
5         payment rate or rates for the prior year ending May 31.
6         Notwithstanding any limitation on the procurement of
7         renewable energy resources imposed by item (2) of this
8         subsection (c), the Agency shall increase its spending
9         on the purchase of renewable energy resources to be
10         procured by the electric utility for the next plan year
11         by an amount equal to the amounts collected by the
12         utility under the alternative compliance payment rate
13         or rates in the prior year ending May 31.
14     (d) Clean coal portfolio standard.
15         (1) The procurement plans shall include electricity
16     generated using clean coal. Each utility shall enter into
17     one or more sourcing agreements with the initial clean coal
18     facility, as provided in paragraph (3) of this subsection
19     (d), covering electricity generated by the initial clean
20     coal facility representing at least 5% of each utility's
21     total supply to serve the load of eligible retail customers
22     in 2015 and each year thereafter, as described in paragraph
23     (3) of this subsection (d), subject to the limits specified
24     in paragraph (2) of this subsection (d). It is the goal of
25     the State that by January 1, 2025, 25% of the electricity
26     used in the State shall be generated by cost-effective

 

 

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

 

 

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1         agreement as required by this subsection (d).
2         (2) For purposes of this subsection (d), the required
3     execution of sourcing agreements with the initial clean
4     coal facility for a particular year shall be measured as a
5     percentage of the actual amount of electricity
6     (megawatt-hours) supplied by the electric utility to
7     eligible retail customers in the planning year ending
8     immediately prior to the agreement's execution. For
9     purposes of this subsection (d), the amount paid per
10     kilowatthour means the total amount paid for electric
11     service expressed on a per kilowatthour basis. For purposes
12     of this subsection (d), the total amount paid for electric
13     service includes without limitation amounts paid for
14     supply, transmission, distribution, surcharges and add-on
15     taxes.
16         Notwithstanding the requirements of this subsection
17     (d), the total amount paid under sourcing agreements with
18     clean coal facilities pursuant to the procurement plan for
19     any given year shall be reduced by an amount necessary to
20     limit the annual estimated average net increase due to the
21     costs of these resources included in the amounts paid by
22     eligible retail customers in connection with electric
23     service to:
24                 (A) in 2010, no more than 0.5% of the amount
25             paid per kilowatthour by those customers during
26             the year ending May 31, 2009;

 

 

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1                 (B) in 2011, the greater of an additional 0.5%
2             of the amount paid per kilowatthour by those
3             customers during the year ending May 31, 2010 or 1%
4             of the amount paid per kilowatthour by those
5             customers during the year ending May 31, 2009;
6                 (C) in 2012, the greater of an additional 0.5%
7             of the amount paid per kilowatthour by those
8             customers during the year ending May 31, 2011 or
9             1.5% of the amount paid per kilowatthour by those
10             customers during the year ending May 31, 2009;
11                 (D) in 2013, the greater of an additional 0.5%
12             of the amount paid per kilowatthour by those
13             customers during the year ending May 31, 2012 or 2%
14             of the amount paid per kilowatthour by those
15             customers during the year ending May 31, 2009; and
16                 (E) thereafter, the total amount paid under
17             sourcing agreements with clean coal facilities
18             pursuant to the procurement plan for any single
19             year shall be reduced by an amount necessary to
20             limit the estimated average net increase due to the
21             cost of these resources included in the amounts
22             paid by eligible retail customers in connection
23             with electric service to no more than the greater
24             of (i) 2.015% of the amount paid per kilowatthour
25             by those customers during the year ending May 31,
26             2009 or (ii) the incremental amount per

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1             amount as the utility is allowed to recover through
2             tariffs filed with the Commission, provided that
3             neither the clean coal facility nor the utility
4             waives any right to assert federal pre-emption or
5             any other argument in response to a purported
6             disallowance of recovery costs;
7                 (ix) limit the utility's or alternative retail
8             electric supplier's obligation to incur any
9             liability until such time as the facility is in
10             commercial operation and generating power and
11             energy and such power and energy is being delivered
12             to the facility busbar;
13                 (x) provide that the owner or owners of the
14             initial clean coal facility, which is the
15             counterparty to such sourcing agreement, shall
16             have the right from time to time to elect whether
17             the obligations of the utility party thereto shall
18             be governed by the power purchase provisions or the
19             contract for differences provisions;
20                 (xi) append documentation showing that the
21             formula rate and contract, insofar as they relate
22             to the power purchase provisions, have been
23             approved by the Federal Energy Regulatory
24             Commission pursuant to Section 205 of the Federal
25             Power Act;
26                 (xii) provide that any changes to the terms of

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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