Full Text of SB1608 97th General Assembly
SB1608sam001 97TH GENERAL ASSEMBLY | Sen. Mike Jacobs Filed: 3/15/2011
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| 1 | | AMENDMENT TO SENATE BILL 1608
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 1608 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Public Utilities Act is amended by changing | 5 | | Section 16-111.5 as follows: | 6 | | (220 ILCS 5/16-111.5) | 7 | | Sec. 16-111.5. Provisions relating to procurement. | 8 | | (a) An electric utility that on December 31, 2005 served at | 9 | | least 100,000 customers in Illinois shall procure power and | 10 | | energy for its eligible retail customers in accordance with the | 11 | | applicable provisions set forth in Section 1-75 of the Illinois | 12 | | Power Agency Act and this Section. "Eligible retail customers" | 13 | | for the purposes of this Section means those retail customers | 14 | | that purchase power and energy from the electric utility under | 15 | | fixed-price bundled service tariffs, other than those retail | 16 | | customers whose service is declared or deemed competitive under |
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| 1 | | Section 16-113 and those other customer groups specified in | 2 | | this Section, including self-generating customers, customers | 3 | | electing hourly pricing, or those customers who are otherwise | 4 | | ineligible for fixed-price bundled tariff service. Those | 5 | | customers that are excluded from the definition of "eligible | 6 | | retail customers" shall not be included in the procurement plan | 7 | | load requirements, and the utility shall procure any supply | 8 | | requirements, including capacity, ancillary services, and | 9 | | hourly priced energy, in the applicable markets as needed to | 10 | | serve those customers, provided that the utility may include in | 11 | | its procurement plan load requirements for the load that is | 12 | | associated with those retail customers whose service has been | 13 | | declared or deemed competitive pursuant to Section 16-113 of | 14 | | this Act to the extent that those customers are purchasing | 15 | | power and energy during one of the transition periods | 16 | | identified in subsection (b) of Section 16-113 of this Act. | 17 | | (b) A procurement plan shall be prepared for each electric | 18 | | utility consistent with the applicable requirements of the | 19 | | Illinois Power Agency Act and this Section. For purposes of | 20 | | this Section, Illinois electric utilities that are affiliated | 21 | | by virtue of a common parent company are considered to be a | 22 | | single electric utility. Each procurement plan shall analyze | 23 | | the projected balance of supply and demand for eligible retail | 24 | | customers over a 5-year period with the first planning year | 25 | | beginning on June 1 of the year following the year in which the | 26 | | plan is filed. The plan shall specifically identify the |
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| 1 | | wholesale products to be procured following plan approval, and | 2 | | shall follow all the requirements set forth in the Public | 3 | | Utilities Act and all applicable State and federal laws, | 4 | | statutes, rules, or regulations, as well as Commission orders. | 5 | | Nothing in this Section precludes consideration of contracts | 6 | | longer than 5 years and related forecast data. Unless specified | 7 | | otherwise in this Section, in the procurement plan or in the | 8 | | implementing tariff, any procurement occurring in accordance | 9 | | with this plan shall be competitively bid through a request for | 10 | | proposals process. Approval and implementation of the | 11 | | procurement plan shall be subject to review and approval by the | 12 | | Commission according to the provisions set forth in this | 13 | | Section. A procurement plan shall include each of the following | 14 | | components: | 15 | | (1) Hourly load analysis. This analysis shall include: | 16 | | (i) multi-year historical analysis of hourly | 17 | | loads; | 18 | | (ii) switching trends and competitive retail | 19 | | market analysis; | 20 | | (iii) known or projected changes to future loads; | 21 | | and | 22 | | (iv) growth forecasts by customer class. | 23 | | (2) Analysis of the impact of any demand side and | 24 | | renewable energy initiatives. This analysis shall include: | 25 | | (i) the impact of demand response programs, both | 26 | | current and projected; |
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| 1 | | (ii) supply side needs that are projected to be | 2 | | offset by purchases of renewable energy resources, if | 3 | | any; and | 4 | | (iii) the impact of energy efficiency programs, | 5 | | both current and projected. | 6 | | (3) A plan for meeting the expected load requirements | 7 | | that will not be met through preexisting contracts. This | 8 | | plan shall include: | 9 | | (i) definitions of the different retail customer | 10 | | classes for which supply is being purchased; | 11 | | (ii) the proposed mix of demand-response products | 12 | | for which contracts will be executed during the next | 13 | | year. The cost-effective demand-response measures | 14 | | shall be procured whenever the cost is lower than | 15 | | procuring comparable capacity products, provided that | 16 | | such products shall: | 17 | | (A) be procured by a demand-response provider | 18 | | from eligible retail customers; | 19 | | (B) at least satisfy the demand-response | 20 | | requirements of the regional transmission | 21 | | organization market in which the utility's service | 22 | | territory is located, including, but not limited | 23 | | to, any applicable capacity or dispatch | 24 | | requirements; | 25 | | (C) provide for customers' participation in | 26 | | the stream of benefits produced by the |
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| 1 | | demand-response products; | 2 | | (D) provide for reimbursement by the | 3 | | demand-response provider of the utility for any | 4 | | costs incurred as a result of the failure of the | 5 | | supplier of such products to perform its | 6 | | obligations thereunder; and | 7 | | (E) meet the same credit requirements as apply | 8 | | to suppliers of capacity, in the applicable | 9 | | regional transmission organization market; | 10 | | (iii) monthly forecasted system supply | 11 | | requirements, including expected minimum, maximum, and | 12 | | average values for the planning period; | 13 | | (iv) the proposed mix and selection of standard | 14 | | wholesale products for which contracts will be | 15 | | executed during the next year, separately or in | 16 | | combination, to meet that portion of its load | 17 | | requirements not met through pre-existing contracts, | 18 | | including but not limited to monthly 5 x 16 peak period | 19 | | block energy, monthly off-peak wrap energy, monthly 7 x | 20 | | 24 energy, annual 5 x 16 energy, annual off-peak wrap | 21 | | energy, annual 7 x 24 energy, monthly capacity, annual | 22 | | capacity, peak load capacity obligations, capacity | 23 | | purchase plan, and ancillary services; | 24 | | (v) proposed term structures for each wholesale | 25 | | product type included in the proposed procurement plan | 26 | | portfolio of products; and |
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| 1 | | (vi) an assessment of the price risk, load | 2 | | uncertainty, and other factors that are associated | 3 | | with the proposed procurement plan; this assessment, | 4 | | to the extent possible, shall include an analysis of | 5 | | the following factors: contract terms, time frames for | 6 | | securing products or services, fuel costs, weather | 7 | | patterns, transmission costs, market conditions, and | 8 | | the governmental regulatory environment; the proposed | 9 | | procurement plan shall also identify alternatives for | 10 | | those portfolio measures that are identified as having | 11 | | significant price risk. | 12 | | (4) Proposed procedures for balancing loads. The | 13 | | procurement plan shall include, for load requirements | 14 | | included in the procurement plan, the process for (i) | 15 | | hourly balancing of supply and demand and (ii) the criteria | 16 | | for portfolio re-balancing in the event of significant | 17 | | shifts in load. | 18 | | (c) The procurement process set forth in Section 1-75 of | 19 | | the Illinois Power Agency Act and subsection (e) of this | 20 | | Section shall be administered by a procurement administrator | 21 | | and monitored by a procurement monitor. | 22 | | (1) The procurement administrator shall: | 23 | | (i) design the final procurement process in | 24 | | accordance with Section 1-75 of the Illinois Power | 25 | | Agency Act and subsection (e) of this Section following | 26 | | Commission approval of the procurement plan; |
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| 1 | | (ii) develop benchmarks in accordance with | 2 | | subsection (e)(3) to be used to evaluate bids; these | 3 | | benchmarks shall be submitted to the Commission for | 4 | | review and approval on a confidential basis prior to | 5 | | the procurement event; | 6 | | (iii) serve as the interface between the electric | 7 | | utility and suppliers; | 8 | | (iv) manage the bidder pre-qualification and | 9 | | registration process; | 10 | | (v) obtain the electric utilities' agreement to | 11 | | the final form of all supply contracts and credit | 12 | | collateral agreements; | 13 | | (vi) administer the request for proposals process; | 14 | | (vii) have the discretion to negotiate to | 15 | | determine whether bidders are willing to lower the | 16 | | price of bids that meet the benchmarks approved by the | 17 | | Commission; any post-bid negotiations with bidders | 18 | | shall be limited to price only and shall be completed | 19 | | within 24 hours after opening the sealed bids and shall | 20 | | be conducted in a fair and unbiased manner; in | 21 | | conducting the negotiations, there shall be no | 22 | | disclosure of any information derived from proposals | 23 | | submitted by competing bidders; if information is | 24 | | disclosed to any bidder, it shall be provided to all | 25 | | competing bidders; | 26 | | (viii) maintain confidentiality of supplier and |
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| 1 | | bidding information in a manner consistent with all | 2 | | applicable laws, rules, regulations, and tariffs; | 3 | | (ix) submit a confidential report to the | 4 | | Commission recommending acceptance or rejection of | 5 | | bids; | 6 | | (x) notify the utility of contract counterparties | 7 | | and contract specifics; and | 8 | | (xi) administer related contingency procurement | 9 | | events. | 10 | | (2) The procurement monitor, who shall be retained by | 11 | | the Commission, shall: | 12 | | (i) monitor interactions among the procurement | 13 | | administrator, suppliers, and utility; | 14 | | (ii) monitor and report to the Commission on the | 15 | | progress of the procurement process; | 16 | | (iii) provide an independent confidential report | 17 | | to the Commission regarding the results of the | 18 | | procurement event; | 19 | | (iv) assess compliance with the procurement plans | 20 | | approved by the Commission for each utility that on | 21 | | December 31, 2005 provided electric service to a least | 22 | | 100,000 customers in Illinois; | 23 | | (v) preserve the confidentiality of supplier and | 24 | | bidding information in a manner consistent with all | 25 | | applicable laws, rules, regulations, and tariffs; | 26 | | (vi) provide expert advice to the Commission and |
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| 1 | | consult with the procurement administrator regarding | 2 | | issues related to procurement process design, rules, | 3 | | protocols, and policy-related matters; and | 4 | | (vii) consult with the procurement administrator | 5 | | regarding the development and use of benchmark | 6 | | criteria, standard form contracts, credit policies, | 7 | | and bid documents. | 8 | | (d) Except as provided in subsection (j), the planning | 9 | | process shall be conducted as follows: | 10 | | (1) Beginning in 2008, each Illinois utility procuring | 11 | | power pursuant to this Section shall annually provide a | 12 | | range of load forecasts to the Illinois Power Agency by | 13 | | July 15 of each year, or such other date as may be required | 14 | | by the Commission or Agency. The load forecasts shall cover | 15 | | the 5-year procurement planning period for the next | 16 | | procurement plan and shall include hourly data | 17 | | representing a high-load, low-load and expected-load | 18 | | scenario for the load of the eligible retail customers. The | 19 | | utility shall provide supporting data and assumptions for | 20 | | each of the scenarios.
| 21 | | (2) Beginning in 2011 2008 , the Illinois Power Agency | 22 | | shall prepare a draft procurement plan by August 15th of | 23 | | each year, or such other date as may be required by the | 24 | | Commission. The procurement plan shall identify the | 25 | | portfolio of demand-response and power and energy products | 26 | | to be procured. The draft procurement plan shall also |
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| 1 | | indicate, in legislative style, the specific changes to the | 2 | | most recent Commission-approved procurement plan. | 3 | | Cost-effective demand-response measures shall be procured | 4 | | as set forth in item (iii) of subsection (b) of this | 5 | | Section. Copies of the draft procurement plan shall be | 6 | | posted and made publicly available on the Agency's and | 7 | | Commission's websites, and copies shall also be provided to | 8 | | each affected electric utility. An affected utility shall | 9 | | have 30 days following the date of posting to provide | 10 | | comment to the Agency on the draft procurement plan. Other | 11 | | interested entities also may comment on the procurement | 12 | | plan within the timeframe outlined in this Section . All | 13 | | comments submitted to the Agency shall be specific, | 14 | | supported by data or other detailed analyses, and, if | 15 | | objecting to all or a portion of the draft procurement | 16 | | plan, accompanied by specific alternative wording or | 17 | | proposals. All comments shall be posted on the Agency's and | 18 | | Commission's websites. During this 30-day comment period, | 19 | | the Agency shall hold at least one public hearing within | 20 | | each utility's service area for the purpose of receiving | 21 | | public comment on the draft procurement plan. Within 14 | 22 | | days following the end of the 30-day review period, the | 23 | | Agency shall revise the draft procurement plan as necessary | 24 | | based on the comments received and file the agency's final | 25 | | version of the procurement plan with the Commission and | 26 | | post the Agency's final version of the procurement plan on |
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| 1 | | the websites. The Agency shall identify any revisions to | 2 | | the draft procurement plan by documenting such revisions in | 3 | | legislative style. | 4 | | (3) Within 10 5 days after the filing of the Agency's | 5 | | final version of the procurement plan, any person objecting | 6 | | to the procurement plan shall file an objection with the | 7 | | Commission. Within 15 10 days after the filing, the | 8 | | Commission shall determine whether a hearing is necessary. | 9 | | The Commission shall enter its order confirming or | 10 | | modifying the final procurement plan within 90 days after | 11 | | the filing of the final procurement plan , including all | 12 | | modifications and additions, by the Illinois Power Agency. | 13 | | (4) The Commission shall approve the procurement plan, | 14 | | including expressly the forecast used in the procurement | 15 | | plan, if the Commission determines that it will ensure | 16 | | adequate, reliable, affordable, efficient, and | 17 | | environmentally sustainable electric service at the lowest | 18 | | total cost over time, taking into account any benefits of | 19 | | price stability. | 20 | | (e) The procurement process shall include each of the | 21 | | following components: | 22 | | (1) Solicitation, pre-qualification, and registration | 23 | | of bidders. The procurement administrator shall | 24 | | disseminate information to potential bidders to promote a | 25 | | procurement event, notify potential bidders that the | 26 | | procurement administrator may enter into a post-bid price |
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| 1 | | negotiation with bidders that meet the applicable | 2 | | benchmarks, provide supply requirements, and otherwise | 3 | | explain the competitive procurement process. In addition | 4 | | to such other publication as the procurement administrator | 5 | | determines is appropriate, this information shall be | 6 | | posted on the Illinois Power Agency's and the Commission's | 7 | | websites. The procurement administrator shall also | 8 | | administer the prequalification process, including | 9 | | evaluation of credit worthiness, compliance with | 10 | | procurement rules, and agreement to the standard form | 11 | | contract developed pursuant to paragraph (2) of this | 12 | | subsection (e). The procurement administrator shall then | 13 | | identify and register bidders to participate in the | 14 | | procurement event. | 15 | | (2) Standard contract forms and credit terms and | 16 | | instruments. The procurement administrator, in | 17 | | consultation with the utilities, the Commission, and other | 18 | | interested parties and subject to Commission oversight, | 19 | | shall develop and provide standard contract forms for the | 20 | | supplier contracts that meet generally accepted industry | 21 | | practices. Standard credit terms and instruments that meet | 22 | | generally accepted industry practices shall be similarly | 23 | | developed. The procurement administrator shall make | 24 | | available to the Commission all written comments it | 25 | | receives on the contract forms, credit terms, or | 26 | | instruments. If the procurement administrator cannot reach |
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| 1 | | agreement with the applicable electric utility as to the | 2 | | contract terms and conditions, the procurement | 3 | | administrator must notify the Commission of any disputed | 4 | | terms and the Commission shall resolve the dispute. The | 5 | | terms of the contracts shall not be subject to negotiation | 6 | | by winning bidders, and the bidders must agree to the terms | 7 | | of the contract in advance so that winning bids are | 8 | | selected solely on the basis of price. | 9 | | (3) Establishment of a market-based price benchmark. | 10 | | As part of the development of the procurement process, the | 11 | | procurement administrator, in consultation with the | 12 | | Commission staff, Agency staff, and the procurement | 13 | | monitor, shall establish benchmarks for evaluating the | 14 | | final prices in the contracts for each of the products that | 15 | | will be procured through the procurement process. The | 16 | | benchmarks shall be based on price data for similar | 17 | | products for the same delivery period and same delivery | 18 | | hub, or other delivery hubs after adjusting for that | 19 | | difference. The price benchmarks may also be adjusted to | 20 | | take into account differences between the information | 21 | | reflected in the underlying data sources and the specific | 22 | | products and procurement process being used to procure | 23 | | power for the Illinois utilities. The benchmarks shall be | 24 | | confidential but shall be provided to, and will be subject | 25 | | to Commission review and approval, prior to a procurement | 26 | | event. |
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| 1 | | (4) Request for proposals competitive procurement | 2 | | process. The procurement administrator shall design and | 3 | | issue a request for proposals to supply electricity in | 4 | | accordance with each utility's procurement plan, as | 5 | | approved by the Commission. The request for proposals shall | 6 | | set forth a procedure for sealed, binding commitment | 7 | | bidding with pay-as-bid settlement, and provision for | 8 | | selection of bids on the basis of price. | 9 | | (5) A plan for implementing contingencies in the event | 10 | | of supplier default or failure of the procurement process | 11 | | to fully meet the expected load requirement due to | 12 | | insufficient supplier participation, Commission rejection | 13 | | of results, or any other cause. | 14 | | (i) Event of supplier default: In the event of | 15 | | supplier default, the utility shall review the | 16 | | contract of the defaulting supplier to determine if the | 17 | | amount of supply is 200 megawatts or greater, and if | 18 | | there are more than 60 days remaining of the contract | 19 | | term. If both of these conditions are met, and the | 20 | | default results in termination of the contract, the | 21 | | utility shall immediately notify the Illinois Power | 22 | | Agency that a request for proposals must be issued to | 23 | | procure replacement power, and the procurement | 24 | | administrator shall run an additional procurement | 25 | | event. If the contracted supply of the defaulting | 26 | | supplier is less than 200 megawatts or there are less |
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| 1 | | than 60 days remaining of the contract term, the | 2 | | utility shall procure power and energy from the | 3 | | applicable regional transmission organization market, | 4 | | including ancillary services, capacity, and day-ahead | 5 | | or real time energy, or both, for the duration of the | 6 | | contract term to replace the contracted supply; | 7 | | provided, however, that if a needed product is not | 8 | | available through the regional transmission | 9 | | organization market it shall be purchased from the | 10 | | wholesale market. | 11 | | (ii) Failure of the procurement process to fully | 12 | | meet the expected load requirement: If the procurement | 13 | | process fails to fully meet the expected load | 14 | | requirement due to insufficient supplier participation | 15 | | or due to a Commission rejection of the procurement | 16 | | results, the procurement administrator, the | 17 | | procurement monitor, and the Commission staff shall | 18 | | meet within 10 days to analyze potential causes of low | 19 | | supplier interest or causes for the Commission | 20 | | decision. If changes are identified that would likely | 21 | | result in increased supplier participation, or that | 22 | | would address concerns causing the Commission to | 23 | | reject the results of the prior procurement event, the | 24 | | procurement administrator may implement those changes | 25 | | and rerun the request for proposals process according | 26 | | to a schedule determined by those parties and |
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| 1 | | consistent with Section 1-75 of the Illinois Power | 2 | | Agency Act and this subsection. In any event, a new | 3 | | request for proposals process shall be implemented by | 4 | | the procurement administrator within 90 days after the | 5 | | determination that the procurement process has failed | 6 | | to fully meet the expected load requirement. | 7 | | (iii) In all cases where there is insufficient | 8 | | supply provided under contracts awarded through the | 9 | | procurement process to fully meet the electric | 10 | | utility's load requirement, the utility shall meet the | 11 | | load requirement by procuring power and energy from the | 12 | | applicable regional transmission organization market, | 13 | | including ancillary services, capacity, and day-ahead | 14 | | or real time energy or both; provided, however, that if | 15 | | a needed product is not available through the regional | 16 | | transmission organization market it shall be purchased | 17 | | from the wholesale market. | 18 | | (6) The procurement process described in this | 19 | | subsection is exempt from the requirements of the Illinois | 20 | | Procurement Code, pursuant to Section 20-10 of that Code. | 21 | | (f) Within 2 business days after opening the sealed bids, | 22 | | the procurement administrator shall submit a confidential | 23 | | report to the Commission. The report shall contain the results | 24 | | of the bidding for each of the products along with the | 25 | | procurement administrator's recommendation for the acceptance | 26 | | and rejection of bids based on the price benchmark criteria and |
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| 1 | | other factors observed in the process. The procurement monitor | 2 | | also shall submit a confidential report to the Commission | 3 | | within 2 business days after opening the sealed bids. The | 4 | | report shall contain the procurement monitor's assessment of | 5 | | bidder behavior in the process as well as an assessment of the | 6 | | procurement administrator's compliance with the procurement | 7 | | process and rules. The Commission shall review the confidential | 8 | | reports submitted by the procurement administrator and | 9 | | procurement monitor, and shall accept or reject the | 10 | | recommendations of the procurement administrator within 2 | 11 | | business days after receipt of the reports. | 12 | | (g) Within 3 business days after the Commission decision | 13 | | approving the results of a procurement event, the utility shall | 14 | | enter into binding contractual arrangements with the winning | 15 | | suppliers using the standard form contracts; except that the | 16 | | utility shall not be required either directly or indirectly to | 17 | | execute the contracts if a tariff that is consistent with | 18 | | subsection (l) of this Section has not been approved and placed | 19 | | into effect for that utility. | 20 | | (h) The names of the successful bidders and the load | 21 | | weighted average of the winning bid prices for each contract | 22 | | type and for each contract term shall be made available to the | 23 | | public at the time of Commission approval of a procurement | 24 | | event. The Commission, the procurement monitor, the | 25 | | procurement administrator, the Illinois Power Agency, and all | 26 | | participants in the procurement process shall maintain the |
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| 1 | | confidentiality of all other supplier and bidding information | 2 | | in a manner consistent with all applicable laws, rules, | 3 | | regulations, and tariffs. Confidential information, including | 4 | | the confidential reports submitted by the procurement | 5 | | administrator and procurement monitor pursuant to subsection | 6 | | (f) of this Section, shall not be made publicly available and | 7 | | shall not be discoverable by any party in any proceeding, | 8 | | absent a compelling demonstration of need, nor shall those | 9 | | reports be admissible in any proceeding other than one for law | 10 | | enforcement purposes. | 11 | | (i) Within 2 business days after a Commission decision | 12 | | approving the results of a procurement event or such other date | 13 | | as may be required by the Commission from time to time, the | 14 | | utility shall file for informational purposes with the | 15 | | Commission its actual or estimated retail supply charges, as | 16 | | applicable, by customer supply group reflecting the costs | 17 | | associated with the procurement and computed in accordance with | 18 | | the tariffs filed pursuant to subsection (l) of this Section | 19 | | and approved by the Commission. | 20 | | (j) Within 60 days following the effective date of this | 21 | | amendatory Act, each electric utility that on December 31, 2005 | 22 | | provided electric service to at least 100,000 customers in | 23 | | Illinois shall prepare and file with the Commission an initial | 24 | | procurement plan, which shall conform in all material respects | 25 | | to the requirements of the procurement plan set forth in | 26 | | subsection (b); provided, however, that the Illinois Power |
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| 1 | | Agency Act shall not apply to the initial procurement plan | 2 | | prepared pursuant to this subsection. The initial procurement | 3 | | plan shall identify the portfolio of power and energy products | 4 | | to be procured and delivered for the period June 2008 through | 5 | | May 2009, and shall identify the proposed procurement | 6 | | administrator, who shall have the same experience and expertise | 7 | | as is required of a procurement administrator hired pursuant to | 8 | | Section 1-75 of the Illinois Power Agency Act. Copies of the | 9 | | procurement plan shall be posted and made publicly available on | 10 | | the Commission's website. The initial procurement plan may | 11 | | include contracts for renewable resources that extend beyond | 12 | | May 2009. | 13 | | (i) Within 14 days following filing of the initial | 14 | | procurement plan, any person may file a detailed objection | 15 | | with the Commission contesting the procurement plan | 16 | | submitted by the electric utility. All objections to the | 17 | | electric utility's plan shall be specific, supported by | 18 | | data or other detailed analyses. The electric utility may | 19 | | file a response to any objections to its procurement plan | 20 | | within 7 days after the date objections are due to be | 21 | | filed. Within 7 days after the date the utility's response | 22 | | is due, the Commission shall determine whether a hearing is | 23 | | necessary. If it determines that a hearing is necessary, it | 24 | | shall require the hearing to be completed and issue an | 25 | | order on the procurement plan within 60 days after the | 26 | | filing of the procurement plan by the electric utility. |
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| 1 | | (ii) The order shall approve or modify the procurement | 2 | | plan, approve an independent procurement administrator, | 3 | | and approve or modify the electric utility's tariffs that | 4 | | are proposed with the initial procurement plan. The | 5 | | Commission shall approve the procurement plan if the | 6 | | Commission determines that it will ensure adequate, | 7 | | reliable, affordable, efficient, and environmentally | 8 | | sustainable electric service at the lowest total cost over | 9 | | time, taking into account any benefits of price stability. | 10 | | (k) In order to promote price stability for residential and | 11 | | small commercial customers during the transition to | 12 | | competition in Illinois, and notwithstanding any other | 13 | | provision of this Act, each electric utility subject to this | 14 | | Section shall enter into one or more multi-year financial swap | 15 | | contracts that become effective on the effective date of this | 16 | | amendatory Act. These contracts may be executed with generators | 17 | | and power marketers, including affiliated interests of the | 18 | | electric utility. These contracts shall be for a term of no | 19 | | more than 5 years and shall, for each respective utility or for | 20 | | any Illinois electric utilities that are affiliated by virtue | 21 | | of a common parent company and that are thereby considered a | 22 | | single electric utility for purposes of this subsection (k), | 23 | | not exceed in the aggregate 3,000 megawatts for any hour of the | 24 | | year. The contracts shall be financial contracts and not energy | 25 | | sales contracts. The contracts shall be executed as | 26 | | transactions under a negotiated master agreement based on the |
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| 1 | | form of master agreement for financial swap contracts sponsored | 2 | | by the International Swaps and Derivatives Association, Inc. | 3 | | and shall be considered pre-existing contracts in the | 4 | | utilities' procurement plans for residential and small | 5 | | commercial customers. Costs incurred pursuant to a contract | 6 | | authorized by this subsection (k) shall be deemed prudently | 7 | | incurred and reasonable in amount and the electric utility | 8 | | shall be entitled to full cost recovery pursuant to the tariffs | 9 | | filed with the Commission. | 10 | | (l) An electric utility shall recover its costs incurred | 11 | | under this Section, including, but not limited to, the costs of | 12 | | procuring power and energy demand-response resources under | 13 | | this Section. The utility shall file with the initial | 14 | | procurement plan its proposed tariffs through which its costs | 15 | | of procuring power that are incurred pursuant to a | 16 | | Commission-approved procurement plan and those other costs | 17 | | identified in this subsection (l), will be recovered. The | 18 | | tariffs shall include a formula rate or charge designed to pass | 19 | | through both the costs incurred by the utility in procuring a | 20 | | supply of electric power and energy for the applicable customer | 21 | | classes with no mark-up or return on the price paid by the | 22 | | utility for that supply, plus any just and reasonable costs | 23 | | that the utility incurs in arranging and providing for the | 24 | | supply of electric power and energy. The formula rate or charge | 25 | | shall also contain provisions that ensure that its application | 26 | | does not result in over or under recovery due to changes in |
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| 1 | | customer usage and demand patterns, and that provide for the | 2 | | correction, on at least an annual basis, of any accounting | 3 | | errors that may occur. A utility shall recover through the | 4 | | tariff all reasonable costs incurred to implement or comply | 5 | | with any procurement plan that is developed and put into effect | 6 | | pursuant to Section 1-75 of the Illinois Power Agency Act and | 7 | | this Section, including any fees assessed by the Illinois Power | 8 | | Agency, costs associated with load balancing, and contingency | 9 | | plan costs. The electric utility shall also recover its full | 10 | | costs of procuring electric supply for which it contracted | 11 | | before the effective date of this Section in conjunction with | 12 | | the provision of full requirements service under fixed-price | 13 | | bundled service tariffs subsequent to December 31, 2006. All | 14 | | such costs shall be deemed to have been prudently incurred. The | 15 | | pass-through tariffs that are filed and approved pursuant to | 16 | | this Section shall not be subject to review under, or in any | 17 | | way limited by, Section 16-111(i) of this Act. | 18 | | (m) The Commission has the authority to adopt rules to | 19 | | carry out the provisions of this Section. For the public | 20 | | interest, safety, and welfare, the Commission also has | 21 | | authority to adopt rules to carry out the provisions of this | 22 | | Section on an emergency basis immediately following the | 23 | | effective date of this amendatory Act. | 24 | | (n) Notwithstanding any other provision of this Act, any | 25 | | affiliated electric utilities that submit a single procurement | 26 | | plan covering their combined needs may procure for those |
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| 1 | | combined needs in conjunction with that plan, and may enter | 2 | | jointly into power supply contracts, purchases, and other | 3 | | procurement arrangements, and allocate capacity and energy and | 4 | | cost responsibility therefor among themselves in proportion to | 5 | | their requirements. | 6 | | (o) On or before June 1 of each year, the Commission shall | 7 | | hold an informal hearing for the purpose of receiving comments | 8 | | on the prior year's procurement process and any recommendations | 9 | | for change.
| 10 | | (p) An electric utility subject to this Section may propose | 11 | | to invest, lease, own, or operate an electric generation | 12 | | facility as part of its procurement plan, provided the utility | 13 | | demonstrates that such facility is the least-cost option to | 14 | | provide electric service to eligible retail customers. If the | 15 | | facility is shown to be the least-cost option and is included | 16 | | in a procurement plan prepared in accordance with Section 1-75 | 17 | | of the Illinois Power Agency Act and this Section, then the | 18 | | electric utility shall make a filing pursuant to Section 8-406 | 19 | | of the Act, and may request of the Commission any statutory | 20 | | relief required thereunder. If the Commission grants all of the | 21 | | necessary approvals for the proposed facility, such supply | 22 | | shall thereafter be considered as a pre-existing contract under | 23 | | subsection (b) of this Section. The Commission shall in any | 24 | | order approving a proposal under this subsection specify how | 25 | | the utility will recover the prudently incurred costs of | 26 | | investing in, leasing, owning, or operating such generation |
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| 1 | | facility through just and reasonable rates charged to eligible | 2 | | retail customers. Cost recovery for facilities included in the | 3 | | utility's procurement plan pursuant to this subsection shall | 4 | | not be subject to review under or in any way limited by the | 5 | | provisions of Section 16-111(i) of this Act. Nothing in this | 6 | | Section is intended to prohibit a utility from filing for a | 7 | | fuel adjustment clause as is otherwise permitted under Section | 8 | | 9-220 of this Act.
| 9 | | (Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09 .)
| 10 | | Section 99. Effective date. This Act takes effect upon | 11 | | becoming law.".
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