Sen. Don Harmon

Filed: 5/5/2010

 

 


 

 


 
09600HB6202sam002 LRB096 18131 JDS 41272 a

1
AMENDMENT TO HOUSE BILL 6202

2     AMENDMENT NO. ______. Amend House Bill 6202 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Power Agency Act is amended by
5 changing Sections 1-56 and 1-75 as follows:
 
6     (20 ILCS 3855/1-56)
7     Sec. 1-56. Illinois Power Agency Renewable Energy
8 Resources Fund.
9     (a) The Illinois Power Agency Renewable Energy Resources
10 Fund is created as a special fund in the State treasury.
11     (b) The Illinois Power Agency Renewable Energy Resources
12 Fund shall be administered by the Agency to procure renewable
13 energy resources. Prior to June 1, 2011, resources procured
14 pursuant to this Section shall be procured from facilities
15 located in Illinois, provided the resources are available from
16 those facilities. If resources are not available in Illinois,

 

 

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1 then they shall be procured in states that adjoin Illinois. If
2 resources are not available in Illinois or in states that
3 adjoin Illinois, then they may be purchased elsewhere.
4 Beginning June 1, 2011, resources procured pursuant to this
5 Section shall be procured from facilities located in Illinois
6 or states that adjoin Illinois. If resources are not available
7 in Illinois or in states that adjoin Illinois, then they may be
8 procured elsewhere. To the extent available, at least 75% of
9 these renewable energy resources shall come from wind
10 generation. Of the renewable energy resources procured
11 pursuant to this Section at least the following specified
12 percentages shall come from photovoltaics on the following
13 schedule: 0.5% by June 1, 2012; 1.5% by June 1, 2013; 3% by
14 June 1, 2014; and 6% by June 1, 2015 and thereafter and,
15 starting June 1, 2015, at least 6% of the renewable energy
16 resources used to meet these standards shall come from solar
17 photovoltaics.
18     (c) The Agency shall procure renewable energy resources at
19 least once each year in conjunction with a procurement event
20 for electric utilities required to comply with Section 1-75 of
21 the Act and shall, whenever possible, enter into long-term
22 contracts.
23     (d) The price paid to procure renewable energy credits
24 using monies from the Illinois Power Agency Renewable Energy
25 Resources Fund shall not exceed the winning bid prices paid for
26 like resources procured for electric utilities required to

 

 

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1 comply with Section 1-75 of this Act.
2     (e) All renewable energy credits procured using monies from
3 the Illinois Power Agency Renewable Energy Resources Fund shall
4 be permanently retired.
5     (f) The procurement process described in this Section is
6 exempt from the requirements of the Illinois Procurement Code,
7 pursuant to Section 20-10 of that Code.
8     (g) All disbursements from the Illinois Power Agency
9 Renewable Energy Resources Fund shall be made only upon
10 warrants of the Comptroller drawn upon the Treasurer as
11 custodian of the Fund upon vouchers signed by the Director or
12 by the person or persons designated by the Director for that
13 purpose. The Comptroller is authorized to draw the warrant upon
14 vouchers so signed. The Treasurer shall accept all warrants so
15 signed and shall be released from liability for all payments
16 made on those warrants.
17     (h) The Illinois Power Agency Renewable Energy Resources
18 Fund shall not be subject to sweeps, administrative charges, or
19 chargebacks, including, but not limited to, those authorized
20 under Section 8h of the State Finance Act, that would in any
21 way result in the transfer of any funds from this Fund to any
22 other fund of this State or in having any such funds utilized
23 for any purpose other than the express purposes set forth in
24 this Section.
25 (Source: P.A. 96-159, eff. 8-10-09.)
 

 

 

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1     (20 ILCS 3855/1-75)
2     Sec. 1-75. Planning and Procurement Bureau. The Planning
3 and Procurement Bureau has the following duties and
4 responsibilities:
5         (a) The Planning and Procurement Bureau shall each
6     year, beginning in 2008, develop procurement plans and
7     conduct competitive procurement processes in accordance
8     with the requirements of Section 16-111.5 of the Public
9     Utilities Act for the eligible retail customers of electric
10     utilities that on December 31, 2005 provided electric
11     service to at least 100,000 customers in Illinois. For the
12     purposes of this Section, the term "eligible retail
13     customers" has the same definition as found in Section
14     16-111.5(a) of the Public Utilities Act.
15             (1) The Agency shall each year, beginning in 2008,
16         as needed, issue a request for qualifications for
17         experts or expert consulting firms to develop the
18         procurement plans in accordance with Section 16-111.5
19         of the Public Utilities Act. In order to qualify an
20         expert or expert consulting firm must have:
21                 (A) direct previous experience assembling
22             large-scale power supply plans or portfolios for
23             end-use customers;
24                 (B) an advanced degree in economics,
25             mathematics, engineering, risk management, or a
26             related area of study;

 

 

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

 

 

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1                 (D) expertise in wholesale electricity market
2             rules, including those established by the Federal
3             Energy Regulatory Commission and regional
4             transmission organizations;
5                 (E) expertise in credit and contract
6             protocols;
7                 (F) adequate resources to perform and fulfill
8             the required functions and responsibilities; and
9                 (G) the absence of a conflict of interest and
10             inappropriate bias for or against potential
11             bidders or the affected electric utilities.
12             (3) The Agency shall provide affected utilities
13         and other interested parties with the lists of
14         qualified experts or expert consulting firms
15         identified through the request for qualifications
16         processes that are under consideration to develop the
17         procurement plans and to serve as the procurement
18         administrator. The Agency shall also provide each
19         qualified expert's or expert consulting firm's
20         response to the request for qualifications. All
21         information provided under this subparagraph shall
22         also be provided to the Commission. The Agency may
23         provide by rule for fees associated with supplying the
24         information to utilities and other interested parties.
25         These parties shall, within 5 business days, notify the
26         Agency in writing if they object to any experts or

 

 

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1         expert consulting firms on the lists. Objections shall
2         be based on:
3                 (A) failure to satisfy qualification criteria;
4                 (B) identification of a conflict of interest;
5             or
6                 (C) evidence of inappropriate bias for or
7             against potential bidders or the affected
8             utilities.
9             The Agency shall remove experts or expert
10         consulting firms from the lists within 10 days if there
11         is a reasonable basis for an objection and provide the
12         updated lists to the affected utilities and other
13         interested parties. If the Agency fails to remove an
14         expert or expert consulting firm from a list, an
15         objecting party may seek review by the Commission
16         within 5 days thereafter by filing a petition, and the
17         Commission shall render a ruling on the petition within
18         10 days. There is no right of appeal of the
19         Commission's ruling.
20             (4) The Agency shall issue requests for proposals
21         to the qualified experts or expert consulting firms to
22         develop a procurement plan for the affected utilities
23         and to serve as procurement administrator.
24             (5) The Agency shall select an expert or expert
25         consulting firm to develop procurement plans based on
26         the proposals submitted and shall award one-year

 

 

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1         contracts to those selected with an option for the
2         Agency for a one-year renewal.
3             (6) The Agency shall select an expert or expert
4         consulting firm, with approval of the Commission, to
5         serve as procurement administrator based on the
6         proposals submitted. If the Commission rejects, within
7         5 days, the Agency's selection, the Agency shall submit
8         another recommendation within 3 days based on the
9         proposals submitted. The Agency shall award a one-year
10         contract to the expert or expert consulting firm so
11         selected with Commission approval with an option for
12         the Agency for a one-year renewal.
13         (b) The experts or expert consulting firms retained by
14     the Agency shall, as appropriate, prepare procurement
15     plans, and conduct a competitive procurement process as
16     prescribed in Section 16-111.5 of the Public Utilities Act,
17     to ensure adequate, reliable, affordable, efficient, and
18     environmentally sustainable electric service at the lowest
19     total cost over time, taking into account any benefits of
20     price stability, for eligible retail customers of electric
21     utilities that on December 31, 2005 provided electric
22     service to at least 100,000 customers in the State of
23     Illinois.
24         (c) Renewable portfolio standard.
25             (1) The procurement plans shall include
26         cost-effective renewable energy resources. A minimum

 

 

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1         percentage of each utility's total supply to serve the
2         load of eligible retail customers, as defined in
3         Section 16-111.5(a) of the Public Utilities Act,
4         procured for each of the following years shall be
5         generated from cost-effective renewable energy
6         resources: at least 2% by June 1, 2008; at least 4% by
7         June 1, 2009; at least 5% by June 1, 2010; at least 6%
8         by June 1, 2011; at least 7% by June 1, 2012; at least
9         8% by June 1, 2013; at least 9% by June 1, 2014; at
10         least 10% by June 1, 2015; and increasing by at least
11         1.5% each year thereafter to at least 25% by June 1,
12         2025. To the extent that it is available, at least 75%
13         of the renewable energy resources used to meet these
14         standards shall come from wind generation and,
15         beginning on June 1, 2011 2015, at least the following
16         percentages 6% of the renewable energy resources used
17         to meet these standards shall come from photovoltaics
18         on the following schedule: 0.5% by June 1, 2012, 1.5%
19         by June 1, 2013; 3% by June 1, 2014; and 6% by June 1,
20         2015 and thereafter. For purposes of this subsection
21         (c), "cost-effective" means that the costs of
22         procuring renewable energy resources do not cause the
23         limit stated in paragraph (2) of this subsection (c) to
24         be exceeded and do not exceed benchmarks based on
25         market prices for renewable energy resources in the
26         region, which shall be developed by the procurement

 

 

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1         administrator, in consultation with the Commission
2         staff, Agency staff, and the procurement monitor and
3         shall be subject to Commission review and approval.
4             (2) For purposes of this subsection (c), the
5         required procurement of cost-effective renewable
6         energy resources for a particular year shall be
7         measured as a percentage of the actual amount of
8         electricity (megawatt-hours) supplied by the electric
9         utility to eligible retail customers in the planning
10         year ending immediately prior to the procurement. For
11         purposes of this subsection (c), the amount paid per
12         kilowatthour means the total amount paid for electric
13         service expressed on a per kilowatthour basis. For
14         purposes of this subsection (c), the total amount paid
15         for electric service includes without limitation
16         amounts paid for supply, transmission, distribution,
17         surcharges, and add-on taxes.
18             Notwithstanding the requirements of this
19         subsection (c), the total of renewable energy
20         resources procured pursuant to the procurement plan
21         for any single year shall be reduced by an amount
22         necessary to limit the annual estimated average net
23         increase due to the costs of these resources included
24         in the amounts paid by eligible retail customers in
25         connection with electric service to:
26                 (A) in 2008, no more than 0.5% of the amount

 

 

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1             paid per kilowatthour by those customers during
2             the year ending May 31, 2007;
3                 (B) in 2009, the greater of an additional 0.5%
4             of the amount paid per kilowatthour by those
5             customers during the year ending May 31, 2008 or 1%
6             of the amount paid per kilowatthour by those
7             customers during the year ending May 31, 2007;
8                 (C) in 2010, the greater of an additional 0.5%
9             of the amount paid per kilowatthour by those
10             customers during the year ending May 31, 2009 or
11             1.5% of the amount paid per kilowatthour by those
12             customers during the year ending May 31, 2007;
13                 (D) in 2011, the greater of an additional 0.5%
14             of the amount paid per kilowatthour by those
15             customers during the year ending May 31, 2010 or 2%
16             of the amount paid per kilowatthour by those
17             customers during the year ending May 31, 2007; and
18                 (E) thereafter, the amount of renewable energy
19             resources procured pursuant to the procurement
20             plan for any single year shall be reduced by an
21             amount necessary to limit the estimated average
22             net increase due to the cost of these resources
23             included in the amounts paid by eligible retail
24             customers in connection with electric service to
25             no more than the greater of 2.015% of the amount
26             paid per kilowatthour by those customers during

 

 

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

 

 

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1         compliance with the standards set forth in paragraph
2         (1) of this subsection (c). If those cost-effective
3         resources are not available in Illinois or in states
4         that adjoin Illinois, they shall be purchased
5         elsewhere and shall be counted towards compliance.
6             (4) The electric utility shall retire all
7         renewable energy credits used to comply with the
8         standard.
9             (5) Beginning with the year commencing June 1,
10         2010, an electric utility subject to this subsection
11         (c) shall apply the lesser of the maximum alternative
12         compliance payment rate or the most recent estimated
13         alternative compliance payment rate for its service
14         territory for the corresponding compliance period,
15         established pursuant to subsection (d) of Section
16         16-115D of the Public Utilities Act to its retail
17         customers that take service pursuant to the electric
18         utility's hourly pricing tariff or tariffs. The
19         electric utility shall retain all amounts collected as
20         a result of the application of the alternative
21         compliance payment rate or rates to such customers,
22         and, beginning in 2011, the utility shall include in
23         the information provided under item (1) of subsection
24         (d) of Section 16-111.5 of the Public Utilities Act the
25         amounts collected under the alternative compliance
26         payment rate or rates for the prior year ending May 31.

 

 

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1         Notwithstanding any limitation on the procurement of
2         renewable energy resources imposed by item (2) of this
3         subsection (c), the Agency shall increase its spending
4         on the purchase of renewable energy resources to be
5         procured by the electric utility for the next plan year
6         by an amount equal to the amounts collected by the
7         utility under the alternative compliance payment rate
8         or rates in the prior year ending May 31.
9     (d) Clean coal portfolio standard.
10         (1) The procurement plans shall include electricity
11     generated using clean coal. Each utility shall enter into
12     one or more sourcing agreements with the initial clean coal
13     facility, as provided in paragraph (3) of this subsection
14     (d), covering electricity generated by the initial clean
15     coal facility representing at least 5% of each utility's
16     total supply to serve the load of eligible retail customers
17     in 2015 and each year thereafter, as described in paragraph
18     (3) of this subsection (d), subject to the limits specified
19     in paragraph (2) of this subsection (d). It is the goal of
20     the State that by January 1, 2025, 25% of the electricity
21     used in the State shall be generated by cost-effective
22     clean coal facilities. For purposes of this subsection (d),
23     "cost-effective" means that the expenditures pursuant to
24     such sourcing agreements do not cause the limit stated in
25     paragraph (2) of this subsection (d) to be exceeded and do
26     not exceed cost-based benchmarks, which shall be developed

 

 

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1     to assess all expenditures pursuant to such sourcing
2     agreements covering electricity generated by clean coal
3     facilities, other than the initial clean coal facility, by
4     the procurement administrator, in consultation with the
5     Commission staff, Agency staff, and the procurement
6     monitor and shall be subject to Commission review and
7     approval.
8             (A) A utility party to a sourcing agreement shall
9         immediately retire any emission credits that it
10         receives in connection with the electricity covered by
11         such agreement.
12             (B) Utilities shall maintain adequate records
13         documenting the purchases under the sourcing agreement
14         to comply with this subsection (d) and shall file an
15         accounting with the load forecast that must be filed
16         with the Agency by July 15 of each year, in accordance
17         with subsection (d) of Section 16-111.5 of the Public
18         Utilities Act.
19             (C) A utility shall be deemed to have complied with
20         the clean coal portfolio standard specified in this
21         subsection (d) if the utility enters into a sourcing
22         agreement as required by this subsection (d).
23         (2) For purposes of this subsection (d), the required
24     execution of sourcing agreements with the initial clean
25     coal facility for a particular year shall be measured as a
26     percentage of the actual amount of electricity

 

 

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1     (megawatt-hours) supplied by the electric utility to
2     eligible retail customers in the planning year ending
3     immediately prior to the agreement's execution. For
4     purposes of this subsection (d), the amount paid per
5     kilowatthour means the total amount paid for electric
6     service expressed on a per kilowatthour basis. For purposes
7     of this subsection (d), the total amount paid for electric
8     service includes without limitation amounts paid for
9     supply, transmission, distribution, surcharges and add-on
10     taxes.
11         Notwithstanding the requirements of this subsection
12     (d), the total amount paid under sourcing agreements with
13     clean coal facilities pursuant to the procurement plan for
14     any given year shall be reduced by an amount necessary to
15     limit the annual estimated average net increase due to the
16     costs of these resources included in the amounts paid by
17     eligible retail customers in connection with electric
18     service to:
19                 (A) in 2010, no more than 0.5% of the amount
20             paid per kilowatthour by those customers during
21             the year ending May 31, 2009;
22                 (B) in 2011, the greater of an additional 0.5%
23             of the amount paid per kilowatthour by those
24             customers during the year ending May 31, 2010 or 1%
25             of the amount paid per kilowatthour by those
26             customers during the year ending May 31, 2009;

 

 

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1                 (C) in 2012, the greater of an additional 0.5%
2             of the amount paid per kilowatthour by those
3             customers during the year ending May 31, 2011 or
4             1.5% of the amount paid per kilowatthour by those
5             customers during the year ending May 31, 2009;
6                 (D) in 2013, the greater of an additional 0.5%
7             of the amount paid per kilowatthour by those
8             customers during the year ending May 31, 2012 or 2%
9             of the amount paid per kilowatthour by those
10             customers during the year ending May 31, 2009; and
11                 (E) thereafter, the total amount paid under
12             sourcing agreements with clean coal facilities
13             pursuant to the procurement plan for any single
14             year shall be reduced by an amount necessary to
15             limit the estimated average net increase due to the
16             cost of these resources included in the amounts
17             paid by eligible retail customers in connection
18             with electric service to no more than the greater
19             of (i) 2.015% of the amount paid per kilowatthour
20             by those customers during the year ending May 31,
21             2009 or (ii) the incremental amount per
22             kilowatthour paid for these resources in 2013.
23             These requirements may be altered only as provided
24             by statute. No later than June 30, 2015, the
25             Commission shall review the limitation on the
26             total amount paid under sourcing agreements, if

 

 

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1             any, with clean coal facilities pursuant to this
2             subsection (d) and report to the General Assembly
3             its findings as to whether that limitation unduly
4             constrains the amount of electricity generated by
5             cost-effective clean coal facilities that is
6             covered by sourcing agreements.
7         (3) Initial clean coal facility. In order to promote
8     development of clean coal facilities in Illinois, each
9     electric utility subject to this Section shall execute a
10     sourcing agreement to source electricity from a proposed
11     clean coal facility in Illinois (the "initial clean coal
12     facility") that will have a nameplate capacity of at least
13     500 MW when commercial operation commences, that has a
14     final Clean Air Act permit on the effective date of this
15     amendatory Act of the 95th General Assembly, and that will
16     meet the definition of clean coal facility in Section 1-10
17     of this Act when commercial operation commences. The
18     sourcing agreements with this initial clean coal facility
19     shall be subject to both approval of the initial clean coal
20     facility by the General Assembly and satisfaction of the
21     requirements of paragraph (4) of this subsection (d) and
22     shall be executed within 90 days after any such approval by
23     the General Assembly. The Agency and the Commission shall
24     have authority to inspect all books and records associated
25     with the initial clean coal facility during the term of
26     such a sourcing agreement. A utility's sourcing agreement

 

 

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1     for electricity produced by the initial clean coal facility
2     shall include:
3             (A) a formula contractual price (the "contract
4         price") approved pursuant to paragraph (4) of this
5         subsection (d), which shall:
6                 (i) be determined using a cost of service
7             methodology employing either a level or deferred
8             capital recovery component, based on a capital
9             structure consisting of 45% equity and 55% debt,
10             and a return on equity as may be approved by the
11             Federal Energy Regulatory Commission, which in any
12             case may not exceed the lower of 11.5% or the rate
13             of return approved by the General Assembly
14             pursuant to paragraph (4) of this subsection (d);
15             and
16                 (ii) provide that all miscellaneous net
17             revenue, including but not limited to net revenue
18             from the sale of emission allowances, if any,
19             substitute natural gas, if any, grants or other
20             support provided by the State of Illinois or the
21             United States Government, firm transmission
22             rights, if any, by-products produced by the
23             facility, energy or capacity derived from the
24             facility and not covered by a sourcing agreement
25             pursuant to paragraph (3) of this subsection (d) or
26             item (5) of subsection (d) of Section 16-115 of the

 

 

09600HB6202sam002 - 20 - LRB096 18131 JDS 41272 a

1             Public Utilities Act, whether generated from the
2             synthesis gas derived from coal, from SNG, or from
3             natural gas, shall be credited against the revenue
4             requirement for this initial clean coal facility;
5             (B) power purchase provisions, which shall:
6                 (i) provide that the utility party to such
7             sourcing agreement shall pay the contract price
8             for electricity delivered under such sourcing
9             agreement;
10                 (ii) require delivery of electricity to the
11             regional transmission organization market of the
12             utility that is party to such sourcing agreement;
13                 (iii) require the utility party to such
14             sourcing agreement to buy from the initial clean
15             coal facility in each hour an amount of energy
16             equal to all clean coal energy made available from
17             the initial clean coal facility during such hour
18             times a fraction, the numerator of which is such
19             utility's retail market sales of electricity
20             (expressed in kilowatthours sold) in the State
21             during the prior calendar month and the
22             denominator of which is the total retail market
23             sales of electricity (expressed in kilowatthours
24             sold) in the State by utilities during such prior
25             month and the sales of electricity (expressed in
26             kilowatthours sold) in the State by alternative

 

 

09600HB6202sam002 - 21 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 22 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 23 - LRB096 18131 JDS 41272 a

1                 (iii) not require the utility to take physical
2             delivery of the electricity produced by the
3             facility;
4             (D) general provisions, which shall:
5                 (i) specify a term of no more than 30 years,
6             commencing on the commercial operation date of the
7             facility;
8                 (ii) provide that utilities shall maintain
9             adequate records documenting purchases under the
10             sourcing agreements entered into to comply with
11             this subsection (d) and shall file an accounting
12             with the load forecast that must be filed with the
13             Agency by July 15 of each year, in accordance with
14             subsection (d) of Section 16-111.5 of the Public
15             Utilities Act.
16                 (iii) provide that all costs associated with
17             the initial clean coal facility will be
18             periodically reported to the Federal Energy
19             Regulatory Commission and to purchasers in
20             accordance with applicable laws governing
21             cost-based wholesale power contracts;
22                 (iv) permit the Illinois Power Agency to
23             assume ownership of the initial clean coal
24             facility, without monetary consideration and
25             otherwise on reasonable terms acceptable to the
26             Agency, if the Agency so requests no less than 3

 

 

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1             years prior to the end of the stated contract term;
2                 (v) require the owner of the initial clean coal
3             facility to provide documentation to the
4             Commission each year, starting in the facility's
5             first year of commercial operation, accurately
6             reporting the quantity of carbon emissions from
7             the facility that have been captured and
8             sequestered and report any quantities of carbon
9             released from the site or sites at which carbon
10             emissions were sequestered in prior years, based
11             on continuous monitoring of such sites. If, in any
12             year after the first year of commercial operation,
13             the owner of the facility fails to demonstrate that
14             the initial clean coal facility captured and
15             sequestered at least 50% of the total carbon
16             emissions that the facility would otherwise emit
17             or that sequestration of emissions from prior
18             years has failed, resulting in the release of
19             carbon dioxide into the atmosphere, the owner of
20             the facility must offset excess emissions. Any
21             such carbon offsets must be permanent, additional,
22             verifiable, real, located within the State of
23             Illinois, and legally and practicably enforceable.
24             The cost of such offsets for the facility that are
25             not recoverable shall not exceed $15 million in any
26             given year. No costs of any such purchases of

 

 

09600HB6202sam002 - 25 - LRB096 18131 JDS 41272 a

1             carbon offsets may be recovered from a utility or
2             its customers. All carbon offsets purchased for
3             this purpose and any carbon emission credits
4             associated with sequestration of carbon from the
5             facility must be permanently retired. The initial
6             clean coal facility shall not forfeit its
7             designation as a clean coal facility if the
8             facility fails to fully comply with the applicable
9             carbon sequestration requirements in any given
10             year, provided the requisite offsets are
11             purchased. However, the Attorney General, on
12             behalf of the People of the State of Illinois, may
13             specifically enforce the facility's sequestration
14             requirement and the other terms of this contract
15             provision. Compliance with the sequestration
16             requirements and offset purchase requirements
17             specified in paragraph (3) of this subsection (d)
18             shall be reviewed annually by an independent
19             expert retained by the owner of the initial clean
20             coal facility, with the advance written approval
21             of the Attorney General. The Commission may, in the
22             course of the review specified in item (vii),
23             reduce the allowable return on equity for the
24             facility if the facility wilfully fails to comply
25             with the carbon capture and sequestration
26             requirements set forth in this item (v);

 

 

09600HB6202sam002 - 26 - LRB096 18131 JDS 41272 a

1                 (vi) include limits on, and accordingly
2             provide for modification of, the amount the
3             utility is required to source under the sourcing
4             agreement consistent with paragraph (2) of this
5             subsection (d);
6                 (vii) require Commission review: (1) to
7             determine the justness, reasonableness, and
8             prudence of the inputs to the formula referenced in
9             subparagraphs (A)(i) through (A)(iii) of paragraph
10             (3) of this subsection (d), prior to an adjustment
11             in those inputs including, without limitation, the
12             capital structure and return on equity, fuel
13             costs, and other operations and maintenance costs
14             and (2) to approve the costs to be passed through
15             to customers under the sourcing agreement by which
16             the utility satisfies its statutory obligations.
17             Commission review shall occur no less than every 3
18             years, regardless of whether any adjustments have
19             been proposed, and shall be completed within 9
20             months;
21                 (viii) limit the utility's obligation to such
22             amount as the utility is allowed to recover through
23             tariffs filed with the Commission, provided that
24             neither the clean coal facility nor the utility
25             waives any right to assert federal pre-emption or
26             any other argument in response to a purported

 

 

09600HB6202sam002 - 27 - LRB096 18131 JDS 41272 a

1             disallowance of recovery costs;
2                 (ix) limit the utility's or alternative retail
3             electric supplier's obligation to incur any
4             liability until such time as the facility is in
5             commercial operation and generating power and
6             energy and such power and energy is being delivered
7             to the facility busbar;
8                 (x) provide that the owner or owners of the
9             initial clean coal facility, which is the
10             counterparty to such sourcing agreement, shall
11             have the right from time to time to elect whether
12             the obligations of the utility party thereto shall
13             be governed by the power purchase provisions or the
14             contract for differences provisions;
15                 (xi) append documentation showing that the
16             formula rate and contract, insofar as they relate
17             to the power purchase provisions, have been
18             approved by the Federal Energy Regulatory
19             Commission pursuant to Section 205 of the Federal
20             Power Act;
21                 (xii) provide that any changes to the terms of
22             the contract, insofar as such changes relate to the
23             power purchase provisions, are subject to review
24             under the public interest standard applied by the
25             Federal Energy Regulatory Commission pursuant to
26             Sections 205 and 206 of the Federal Power Act; and

 

 

09600HB6202sam002 - 28 - LRB096 18131 JDS 41272 a

1                 (xiii) conform with customary lender
2             requirements in power purchase agreements used as
3             the basis for financing non-utility generators.
4         (4) Effective date of sourcing agreements with the
5     initial clean coal facility. Any proposed sourcing
6     agreement with the initial clean coal facility shall not
7     become effective unless the following reports are prepared
8     and submitted and authorizations and approvals obtained:
9                 (i) Facility cost report. The owner of the
10             initial clean coal facility shall submit to the
11             Commission, the Agency, and the General Assembly a
12             front-end engineering and design study, a facility
13             cost report, method of financing (including but
14             not limited to structure and associated costs),
15             and an operating and maintenance cost quote for the
16             facility (collectively "facility cost report"),
17             which shall be prepared in accordance with the
18             requirements of this paragraph (4) of subsection
19             (d) of this Section, and shall provide the
20             Commission and the Agency access to the work
21             papers, relied upon documents, and any other
22             backup documentation related to the facility cost
23             report.
24                 (ii) Commission report. Within 6 months
25             following receipt of the facility cost report, the
26             Commission, in consultation with the Agency, shall

 

 

09600HB6202sam002 - 29 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 30 - LRB096 18131 JDS 41272 a

1             projected price, stated in cents per kilowatthour,
2             to be charged for electricity generated by the
3             initial clean coal facility, (B) the projected
4             impact on residential and small business
5             customers' bills over the life of the sourcing
6             agreements, and (C) the maximum allowable return
7             on equity for the project; and
8                 (iv) Commission review. If the General
9             Assembly enacts authorizing legislation pursuant
10             to subparagraph (iii) approving a sourcing
11             agreement, the Commission shall, within 90 days of
12             such enactment, complete a review of such sourcing
13             agreement. During such time period, the Commission
14             shall implement any directive of the General
15             Assembly, resolve any disputes between the parties
16             to the sourcing agreement concerning the terms of
17             such agreement, approve the form of such
18             agreement, and issue an order finding that the
19             sourcing agreement is prudent and reasonable.
20     The facility cost report shall be prepared as follows:
21             (A) The facility cost report shall be prepared by
22         duly licensed engineering and construction firms
23         detailing the estimated capital costs payable to one or
24         more contractors or suppliers for the engineering,
25         procurement and construction of the components
26         comprising the initial clean coal facility and the

 

 

09600HB6202sam002 - 31 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 32 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 33 - LRB096 18131 JDS 41272 a

1             (including the cost of the front end engineering
2             and design study) shall be expressed in nominal
3             dollars as of the date that the quote is prepared
4             and shall include (1) taxes, insurance, and other
5             owner's costs, and (2) an assumed escalation in
6             materials and labor beyond the date as of which the
7             operating and maintenance cost quote is expressed.
8             (D) The facility cost report shall also include (i)
9         an analysis of the initial clean coal facility's
10         ability to deliver power and energy into the applicable
11         regional transmission organization markets and (ii) an
12         analysis of the expected capacity factor for the
13         initial clean coal facility.
14             (E) Amounts paid to third parties unrelated to the
15         owner or owners of the initial clean coal facility to
16         prepare the core plant construction cost quote,
17         including the front end engineering and design study,
18         and the operating and maintenance cost quote will be
19         reimbursed through Coal Development Bonds.
20         (5) Re-powering and retrofitting coal-fired power
21     plants previously owned by Illinois utilities to qualify as
22     clean coal facilities. During the 2009 procurement
23     planning process and thereafter, the Agency and the
24     Commission shall consider sourcing agreements covering
25     electricity generated by power plants that were previously
26     owned by Illinois utilities and that have been or will be

 

 

09600HB6202sam002 - 34 - LRB096 18131 JDS 41272 a

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

 

 

09600HB6202sam002 - 35 - LRB096 18131 JDS 41272 a

1     cost recovery pursuant to the tariffs filed with the
2     Commission.
3         (e) The draft procurement plans are subject to public
4     comment, as required by Section 16-111.5 of the Public
5     Utilities Act.
6         (f) The Agency shall submit the final procurement plan
7     to the Commission. The Agency shall revise a procurement
8     plan if the Commission determines that it does not meet the
9     standards set forth in Section 16-111.5 of the Public
10     Utilities Act.
11         (g) The Agency shall assess fees to each affected
12     utility to recover the costs incurred in preparation of the
13     annual procurement plan for the utility.
14         (h) The Agency shall assess fees to each bidder to
15     recover the costs incurred in connection with a competitive
16     procurement process.
17 (Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
18 96-159, eff. 8-10-09.)
 
19     Section 99. Effective date. This Act takes effect upon
20 becoming law.".