Rep. Kevin A. McCarthy

Filed: 2/18/2011

 

 


 

 


 
09700HB0014ham001LRB097 05207 ASK 47288 a

1
AMENDMENT TO HOUSE BILL 14

2    AMENDMENT NO. ______. Amend House Bill 14 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Public Utilities Act is amended by adding
5Sections 16-108.5 and 19-150 as follows:
 
6    (220 ILCS 5/16-108.5 new)
7    Sec. 16-108.5. Infrastructure investment and
8modernization; regulatory reform.
9    (a) The General Assembly recognizes that for well over a
10century Illinois residents and businesses have been
11well-served by and have benefitted from a comprehensive
12electric utility system. The General Assembly finds that
13electric utilities are now entering a new construction cycle
14that is needed to refurbish, rebuild, modernize, and expand
15systems to continue to provide safe, reliable, and affordable
16service to the State's current and future utility customers in

 

 

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1this newly digitized age. In particular, the General Assembly
2finds that it is the policy of this State that significant
3investments must be made in the State's electric grid over the
4next decade to modernize and upgrade transmission and
5distribution facilities in the State. These investments will
6ensure that the State's electric utility infrastructure will
7promote future economic development in the State and that the
8State's electric utilities will be able to continue to provide
9quality electric service to their customers, including
10innovative technological offerings that will enhance customer
11experience and choice such as smart meters that are dependent
12on a modernized or smart grid. These investments, including
13programs to reinforce the safety and security of high voltage
14transmission lines, will also ensure that the State's electric
15utility infrastructure continues to be safe and reliable. The
16introduction of performance metrics will further ensure that
17safety and reliability and other indicators are not just
18maintained but improved by more than 15% over the next decade.
19    The General Assembly further recognizes that, in addition
20to attracting capital and businesses to the State, these
21investments will create training opportunities for the
22citizens of this State, all of which will create new employment
23opportunities for Illinoisans at a time when they are most
24needed, especially for minority-owned and female-owned
25business enterprises. The General Assembly further finds that
26regulatory reform measures that increase predictability,

 

 

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1stability, and transparency in the ratemaking process are
2needed to promote prudent, long-term infrastructure investment
3and to mutually benefit the State's electric utilities and
4their customers, regulators, and investors.
5    (b) For purposes of this Section, "participating utility"
6means an electric utility that voluntarily elects and commits
7to undertake the infrastructure investment program consisting
8of the commitments and obligations described in paragraphs (1)
9and (2) of this subsection (b), notwithstanding any other
10provisions of this Act and without obtaining any approvals from
11the Commission or any other agency other than as set forth in
12this Section, regardless of whether any such approval would
13otherwise be required, provided further that Illinois electric
14utilities that are affiliated by virtue of a common parent
15company may, at such utilities' election, be considered a
16single electric utility. The utility shall recover the
17expenditures made under the infrastructure investment program
18through the ratemaking process, including, but not limited to,
19the formula rate and process set forth in this Section.
20    During the infrastructure investment program's peak
21program year, it shall create approximately 2000 full-time
22equivalent jobs, including direct jobs, contractor positions,
23positions that would otherwise be eliminated, and induced jobs.
24For purposes of this Section, "peak program year" means the
25consecutive 12-month period with the highest number of
26full-time equivalent jobs that occurs between the beginning of

 

 

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1investment year 2 and the end of investment year 4.
2    Beginning on the date that the initial rates take effect
3pursuant to subsection (c) of this Section, a participating
4utility shall:
5        (1) over a 5-year period, invest at least $1.1 billion
6    in electric system upgrades, modernization projects, and
7    training facilities, including, but not limited to:
8            (A) distribution infrastructure improvements
9        totaling at least $1 billion, including underground
10        residential distribution cable injection and
11        replacement and mainline cable system refurbishment
12        and replacement projects;
13            (B) training facility construction or upgrade
14        projects totaling at least $5 million; any such new
15        facility must be designed for the purpose of obtaining,
16        and the owner of the facility shall apply for,
17        certification under the United States Green Building
18        Council's Leadership in Energy Efficiency Design Green
19        Building Rating System; and
20            (C) wood pole inspection, treatment, and
21        replacement programs; and
22        (2) over a 10-year period, invest at least $1.5 billion
23    to upgrade and modernize its transmission and distribution
24    infrastructure and in smart grid electric system upgrades,
25    including, but not limited to:
26            (A) additional smart meters;

 

 

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1            (B) distribution automation;
2            (C) associated cyber secure data communication
3        network; and
4            (D) substation micro-processor relay upgrades.
5    The investment amounts and job figures set forth in this
6subsection (b) are applicable to a participating utility that
7serves 3 million or more electric distribution customers in
8Illinois. If a participating utility serves less than 3 million
9electric distribution customers in Illinois, then the
10infrastructure investment program commitments and obligations
11described in this subsection (b) shall be reduced
12proportionately, based on the number of customers, for the
13utility.
14    The investments in the infrastructure investment program
15described in this subsection (b) shall be incremental to the
16participating utility's annual capital investment program, as
17defined by, for purposes of this subsection (b), the
18participating utility's average capital spend for calendar
19years 2008, 2009, and 2010 as reported in the applicable
20Federal Energy Regulatory Commission (FERC) Form 1.
21    Within 60 days after filing a tariff under subsection (c)
22of this Section, a participating utility shall submit to the
23Commission its plan, including scope, schedule, and staffing,
24for satisfying its infrastructure investment program
25commitments pursuant to this subsection (b). The submitted plan
26shall include a schedule and staffing plan for the current

 

 

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1year. The plan need not allocate the work equally over the
2respective periods, but should allocate material increments
3throughout such periods commensurate with the work to be
4undertaken. No later than September 1 of each subsequent year,
5the utility shall submit to the Commission a report that
6includes any update to the plan, a schedule for the current
7year, the expenditures made for the prior year and
8cumulatively, and the number of full-time equivalent jobs for
9the prior year and cumulatively. If the utility is materially
10deficient in satisfying a schedule or staffing plan, then the
11plan must also include a corrective action plan to address the
12deficiency. The fact that the plan or a schedule changes shall
13not imply the imprudence or unreasonableness of the
14infrastructure investment program, plan, or schedule.
15    If, subsequent to completion of a corrective action plan,
16the Commission enters an order finding, after notice and
17hearing, that a participating utility did not satisfy its peak
18job commitment described in this subsection (b) for reasons
19that are reasonably within its control, then the Commission
20shall also determine, after consideration of the evidence,
21including, but not limited to, evidence submitted by the
22Department of Commerce and Economic Opportunity and the
23utility, the reduction in the number of full-time equivalent
24jobs during the peak program year due to such failure. The
25Commission shall notify the Department of any proceeding that
26is initiated pursuant to this paragraph. For each full-time

 

 

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1equivalent job deficiency during the peak program year that the
2Commission finds as set forth in this paragraph, the
3participating utility shall, within 30 days after the entry of
4the Commission's order, pay $1,500 to a fund for training
5grants administered under Section 605-800 of The Department of
6Commerce and Economic Opportunity Law.
7    If the Commission finds, after notice and hearing, that a
8participating utility is not satisfying its investment amount
9commitments described in this subsection (b), then the utility
10shall no longer be eligible for a formula rate tariff under
11subsection (c) of this Section.
12    The fact that a participating utility invests more than the
13minimum amounts specified in this subsection (b) shall not
14imply imprudence or unreasonableness.
15    If a participating utility ceases to have in effect a
16formula rate under subsection (c) of this Section, then the
17participating utility's voluntary commitments and obligations
18under this subsection (b) shall immediately terminate, except
19for the utility's obligation to pay an amount already owed to
20the fund for training grants pursuant to a Commission order.
21    In meeting the obligations of paragraphs (1) and (2) of
22this subsection (b), to the extent feasible and consistent with
23State and federal law, the investments under the infrastructure
24investment program should provide employment opportunities for
25all segments of the population and workforce, including
26minority-owned and female-owned business enterprises.

 

 

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1    (c) A participating utility may elect to recover its
2delivery services costs through a formula rate approved by the
3Commission, which shall specify the cost components that form
4the basis of the rate charged to customers with sufficient
5specificity to operate in a standardized manner and be updated
6annually with transparent information included in the
7utility's most recent FERC Form 1 that reflects the utility's
8actual costs for the applicable 12-month period. In the event
9the utility recovers a portion of its costs through automatic
10adjustment clause tariffs on the effective date of this
11amendatory Act of the 97th General Assembly, the utility may
12elect to continue to recover these costs through such tariffs,
13but then these costs shall not be recovered through the formula
14rate.
15    The formula rate shall be implemented through a tariff
16filed with the Commission consistent with the provisions of
17this subsection (c) that shall be applicable to all delivery
18service customers. The Commission shall initiate and conduct an
19investigation of the tariff in a manner consistent with the
20provisions of this subsection (c) and the provisions of Article
21IX of this Act to the extent they do not conflict with this
22subsection (c). The formula rate shall remain in effect at the
23discretion of the utility. The formula rate approved by the
24Commission shall do the following:
25        (1) Provide for the recovery of the utility's actual
26    costs of service for the applicable 12-month period that

 

 

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1    are prudently incurred and reasonable in amount consistent
2    with Commission practice and law. The fact that a cost
3    differs from that incurred in a prior 12-month period or
4    that an investment is different from that made in a prior
5    12-month period shall not imply the imprudence or
6    unreasonableness of that cost or investment.
7        (2) Reflect the utility's actual capital structure for
8    the applicable 12-month period, excluding goodwill,
9    subject to a determination of prudence and reasonableness
10    consistent with Commission practice and law.
11        (3) Include a cost of equity, which shall be calculated
12    as the sum of the following:
13            (A) the average for the applicable 12-month period
14        of the monthly average yields of 30-year U.S. Treasury
15        bonds published by the Board of Governors of the
16        Federal Reserve System in its weekly H.15 Statistical
17        Release or successor publication; and
18            (B) 650 basis points.
19    At such time as the Board of Governors of the Federal
20    Reserve System ceases to include the monthly average yields
21    of 30-year U.S. Treasury bonds in its weekly H.15
22    Statistical Release or successor publication, the monthly
23    average yields of the U.S. Treasury bonds then having the
24    longest duration published by the Board of Governors in its
25    weekly H.15 Statistical Release or successor publication
26    shall instead be used for purposes of this paragraph (3) as

 

 

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1    deemed appropriate by the Commission.
2        (4) Permit and set forth protocols, subject to a
3    determination of prudence and reasonableness consistent
4    with Commission practice and law, for the following:
5            (A) recovery of incentive compensation expense
6        that is based on the achievement of operational
7        metrics, including, but not limited to, metrics
8        related to budget controls, outage duration and
9        frequency, safety, customer service, efficiency and
10        productivity, and environmental compliance. Incentive
11        compensation expense that is based on net income or an
12        affiliate's earnings per share shall not be
13        recoverable under the formula rate;
14            (B) recovery of pension and other post-employment
15        benefits expense based on actual costs incurred for the
16        applicable 12-month period, provided that such costs
17        are supported by an actuarial study;
18            (C) recovery of severance costs amortized over a
19        period that is consistent with savings resulting from
20        the severance;
21            (D) investment return on pension assets net of
22        deferred tax benefits equal to the utility's long-term
23        debt cost of capital as of the end of the applicable
24        12-month period;
25            (E) recovery of the expenses incurred related to
26        the Commission proceeding under this subsection (c) to

 

 

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1        approve this formula rate and initial rates or to
2        subsequent proceedings related to the formula,
3        provided that the recovery shall be amortized over a
4        three year period; recovery of expenses incurred
5        related to the annual Commission proceedings under
6        subsection (d) of this Section to review the inputs to
7        the formula rate shall be recoverable as expenses in
8        the 12-month period incurred;
9            (F) recovery of existing regulatory assets over
10        the periods previously authorized by the Commission;
11            (G) historical weather normalized billing
12        determinants; and
13            (H) allocation methods for common costs.
14    The Commission's review and order with respect to these
15    protocols shall otherwise be consistent with Commission
16    practice and law.
17    The utility shall file, together with its tariff, data
18based on its most recent FERC Form 1, plus projected plant
19additions and correspondingly updated depreciation reserve and
20expense for the current 12-month period, that shall populate
21the formula rate and set the initial delivery services rates
22under the formula. These initial rates shall take effect 30
23days after the filing, provided, however, that the initial
24rates shall be subject to retroactive rate adjustments by the
25Commission, including, but not limited to, refunds or
26surcharges, that are designed to incorporate the provisions of

 

 

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1the Commission's final order approving the formula rate
2structure and protocols and to give effect to the initial rates
3as therein approved such that the refunds or surcharges that
4are applied for the remainder of the period until the first
5rate update will take effect under subsection (d) shall enable
6the utility to recover the same amount of revenues the utility
7otherwise would have recovered had the Commission-approved
8initial rates been in effect as of the date the tariff was
9filed.
10    After the utility files its proposed formula rate structure
11and protocols and initial rates, the Commission shall initiate
12a docket to review and by order approve, or approve as
13modified, the formula rate, including the initial rates, as
14just and reasonable within 180 days after the date on which the
15tariff was filed, or, if the tariff is filed within 30 days
16after the effective date of this amendatory Act of the 97th
17General Assembly, then by December 31, 2011. Such review shall
18be based on the same evidentiary standards, including, but not
19limited to, those concerning the prudence and reasonableness of
20the costs incurred by the utility, the Commission applies in a
21hearing to review a filing for a general increase in rates
22under Article IX of this Act.
23    Subsequent changes to the formula rate, including changes
24to the structure or protocols, shall be made as tariff
25amendments and filed with the Commission as set forth in
26Section 9-201 of this Act, provided that any such changes shall

 

 

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1be consistent with paragraphs (1) through (4) of this
2subsection (c).
3    After 11 years following the effective date of this
4amendatory Act of the 97th General Assembly, the Commission may
5upon petition or its own initiative, but with reasonable
6notice, enter upon a hearing concerning proposed changes to the
7formula rate, including those protocols established under
8paragraph (4) of this subsection (c), provided that there shall
9be a rebuttable presumption that the protocols are just and
10reasonable. These proposed changes shall be stated with
11particularity and accompanied by clear and convincing evidence
12that the changes are just and reasonable. No such change
13adopted by the Commission shall be applied to the calculation
14of the utility's rates until the next calendar year, with the
15rates to become effective on June 1 of the year following that
16calendar year, provided that the next calendar year begins no
17less than 90 days following the date on which the Commission
18issues an order adopting the change.
19    A participating utility that files a tariff pursuant to
20this subsection (c) must submit a one-time $200,000 filing fee
21at the time the Chief Clerk of the Commission accepts the
22filing, which shall be a recoverable expense.
23    (d) Subsequent to the Commission's issuance of an order
24approving the utility's formula rate and initial rates under
25subsection (c) of this Section, the utility shall make an
26annual informational filing with the Chief Clerk of the

 

 

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1Commission setting forth its updated cost inputs to the formula
2rate for the applicable 12-month period and the corresponding
3new charges. Consistent with this subsection (d), the utility
4shall submit information as set forth in the Commission's rules
5applicable to a filing for a general increase in rates.
6Specifically, for each such filing, the utility shall comply
7with the following requirements and include the following
8information:
9        (1) File on or before May 1, with the new charges to
10    take effect beginning with the June billing period of the
11    current year. These charges shall take effect on the first
12    billing day of the June billing period and remain in effect
13    through the last billing day of the following May billing
14    period regardless of whether the Commission enters upon a
15    hearing pursuant to this subsection (d).
16        (2) The inputs to the formula rate for the applicable
17    12-month period shall be based on historical data from the
18    utility's most recent annual FERC Form 1 plus projected
19    plant additions and correspondingly updated depreciation
20    reserve and expense for the current 12-month period. In
21    addition, the utility shall also present, for the prior
22    applicable 12-month period, a reconciliation of the inputs
23    for the prior applicable period (FERC Form 1 historical
24    data and projected plant additions) with the actual costs
25    incurred in the prior applicable period, and set forth the
26    applicable charge or credit, if any, resulting from the

 

 

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1    reconciliation that is incorporated in the current formula
2    rate.
3        (3) The utility shall include, together with the filing
4    of the update of cost inputs to the formula rate,
5    supporting data and documentation for the applicable
6    12-month period that is consistent with the Commission's
7    rules applicable to a filing for a general increase in
8    rates and any rules adopted by the Commission to implement
9    this Section. Normalization adjustments shall not be
10    required. Provided, however, that the utility shall
11    amortize extraordinary charges or credits that are beyond
12    its control and non-recurring in nature, including those
13    related to storms, if the charges or credits exceed
14    $10,000,000 in the applicable 12-month period.
15    Within 45 days after the utility files its annual update of
16cost inputs to the formula rate, the Commission shall have the
17authority, either upon complaint or its own initiative, but
18with reasonable notice, to enter upon a hearing concerning the
19prudence and reasonableness of the costs incurred by the
20utility during the applicable 12-month period that are
21reflected in the inputs to the formula rate derived from the
22utility's FERC Form 1. The complaining party or Commission, to
23the extent it is acting on its own initiative, shall state each
24objection with particularity and provide substantial evidence
25in support thereof, after which the utility shall have the
26opportunity to rebut the evidence. The Commission shall apply

 

 

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1the same evidentiary standards, including, but not limited to,
2those concerning the prudence and reasonableness of the costs
3incurred by the utility, in the hearing as it would apply in a
4hearing to review a filing for a general increase in rates
5under Article IX of this Act. The Commission shall not,
6however, have the authority in a proceeding under this
7subsection (d) to consider or order any changes to the
8structure or protocols of the formula rate approved pursuant to
9subsection (c) of this Section. In a proceeding under this
10subsection (d), the Commission shall enter its order no later
11than 180 days after the utility's filing of its annual update
12of cost inputs to the formula rate, provided that the
13Commission may, in its discretion, extend the period for a
14further period not to exceed 75 days. If, in the order, the
15Commission approves an adjustment to the inputs of the formula
16rate, then the adjustment, whether in the form of a charge or
17credit, with interest, shall be applied prospectively through
18the formula rate. The Commission's determinations of the
19prudence and reasonableness of the costs incurred for the
20applicable 12-month period shall be final upon entry of the
21Commission's order and shall not be subject to reopening,
22reexamination, or collateral attack in any other proceeding,
23case, docket, order, rule or regulation, provided, however,
24that nothing in this subsection (d) shall prohibit a party from
25petitioning the Commission to rehear or appeal to the courts
26the order pursuant to the provisions this Act.

 

 

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1    In the event the Commission does not, either upon complaint
2or its own initiative, enter upon a hearing within 45 days
3after the utility files the annual update of cost inputs to its
4formula rate, then the costs incurred for the applicable
512-month period shall be deemed prudent and reasonable, and the
6filed charges shall not be subject to reopening, reexamination,
7or collateral attack in any other proceeding, case, docket,
8order, rule, or regulation.
9    (e) Nothing in subsections (c) or (d) of this Section shall
10prohibit the Commission from investigating, or an electric
11utility from filing, revenue-neutral tariff changes related to
12rate design of a formula rate that has been placed into effect
13for the utility. Following approval of an electric utility's
14formula rate pursuant to subsection (c) of this Section, the
15utility shall make a filing with the Commission during each
16subsequent 3-year period that either proposes revenue-neutral
17tariff changes or re-files the existing tariffs without change,
18which shall present the Commission with an opportunity to
19suspend the tariffs and consider revenue-neutral tariff
20changes related to rate design.
21    (f) Within 30 days after the filing of a tariff pursuant to
22subsection (c) of this Section, each participating utility
23shall develop and file with the Commission a multi-year plan
24that has the goal of cumulatively improving performance in each
25of the following categories by 15% over a 10-year period: (1)
26reliability, (2) safety, (3) providing opportunities for

 

 

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1minority-owned and female-owned business enterprises
2consistent with State and federal law, and (4) customer
3service. The plan may include financial incentives. If the plan
4does include financial incentives, then it must also include
5symmetrical financial penalties and is subject to Commission
6review and modification following notice and hearing. The
7Commission shall enter an order in the proceeding within 120
8days after the plan is filed. If the Commission modifies the
9plan, then the participating utility may elect to proceed with
10the plan as modified or to proceed with the plan without
11financial incentives.
12    On October 1 of each subsequent year, each participating
13utility shall file a report with the Commission that includes
14performance under each metric, a discussion of performance
15under the plan, and any updates to the plan. If the Commission
16finds in any annual period that the achieved metrics do not
17show material movement such that the goal is likely to be
18achieved and then maintained in any or all categories, then the
19Commission may require the participating utility to devise a
20corrective action plan, subject to Commission approval and
21oversight, to bring performance back on track toward reaching
22and maintaining the 15% goal.
23    (g) Nothing in this Section is intended to legislatively
24overturn the opinion issued in Commonwealth Edison Co. v. Ill.
25Commerce Comm'n, Nos. 2-08-0959, 2-08-1037, 2-08-1137,
261-08-3008, 1-08-3030, 1-08-3054, 1-08-3313 cons. (Ill. App.

 

 

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1Ct. 2d Dist. Sept. 30, 2010) or impact any subsequent review by
2the Illinois Supreme Court of that opinion.
 
3    (220 ILCS 5/19-150 new)
4    Sec. 19-150. Infrastructure investment and modernization;
5regulatory reform.
6    (a) The General Assembly recognizes that for well over a
7century, Illinois residents and businesses have been
8well-served by and have benefitted from a comprehensive gas
9utility system. The General Assembly finds that gas utilities
10are now entering a new construction cycle that is needed to
11refurbish, modernize, and expand systems to continue to provide
12safe, reliable, and affordable service to the State's current
13and future gas customers in this newly digitized age. In
14particular, the General Assembly finds that it is the policy of
15this State that significant investments need to be made over
16the next decade to modernize and upgrade gas distribution
17systems in the State. These investments will ensure that the
18State's gas infrastructure will promote future economic
19development in the State and that the State's utilities will be
20able to continue to provide quality gas service to their
21customers, including innovative technological offerings that
22will enhance customer experience and choice. These investments
23will also ensure that the State's gas utility infrastructure
24continues to be safe and reliable. The introduction of
25performance metrics will further ensure that safety and

 

 

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1reliability and other indicators are not just maintained but
2improved by more than 15% over the next decade.
3    The General Assembly further recognizes that, in addition
4to attracting capital and businesses to the State, these
5investments will create training opportunities for the
6citizens of this State, all of which will create new employment
7opportunities for Illinoisans at a time when they are most
8needed, especially for female-owned and minority-owned
9business enterprises. The General Assembly further finds that
10regulatory reform measures that increase predictability,
11stability, and transparency in the ratemaking process are
12needed to promote prudent, long-term infrastructure investment
13and to mutually benefit the State's gas utilities and their
14customers, regulators and investors.
15    (b) For purposes of this Section, "participating utility"
16means a gas utility that voluntarily elects and commits to
17undertake the infrastructure investment program consisting of
18the commitments and obligations described in this subsection
19(b), notwithstanding any other provisions of this Act and
20without obtaining any approvals from the Commission or any
21other agency other than as set forth in this Section,
22regardless of whether any such approval would otherwise be
23required, provided further that Illinois gas utilities that are
24affiliated by virtue of a common parent company may, at such
25utilities' election, be considered a single gas utility. The
26utility shall recover the expenditures made under the

 

 

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1infrastructure investment program through the ratemaking
2process, including, but not limited to, the formula rate and
3process set forth in this Section.
4    During the infrastructure investment program's peak
5program year, it shall create approximately 400 full-time
6equivalent jobs, including direct jobs, contractor positions,
7positions that would otherwise be eliminated, and induced jobs.
8For purposes of this Section, "peak program year" means the
9consecutive 12-month period with the highest number of
10full-time equivalent jobs that occurs between the beginning of
11investment year 2 and the end of investment year 4. Beginning
12on the date the initial rates take effect pursuant to
13subsection (c) of this Section, a participating utility shall
14invest over a 10-year period at least $500,000,000.00 in
15distribution and transmission upgrades, modernization and
16compliance projects, and training facilities.
17    The investment amounts and job figures set forth in this
18subsection (b) are applicable to a participating utility that
19serves 2 million or more customers in Illinois. If a
20participating utility serves less than 2 million customers in
21Illinois, then the infrastructure investment program
22commitments and obligations described in this subsection (b)
23shall be reduced proportionately, based on the number of
24customers, for the utility.
25    The investments in the infrastructure investment program
26described in this subsection (b) shall be incremental to the

 

 

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1participating utility's annual capital investment program, as
2defined by, for purposes of this subsection (b), the
3participating utility's average capital spend for calendar
4years 2008, 2009, and 2010 as reported in the applicable
5Federal Energy Regulatory Commission (FERC) Form 2 or, if the
6FERC Form 2 was not filed, in the applicable Form 21 ILCC.
7    Within 60 days after filing a tariff under subsection (c)
8of this Section, a participating utility shall submit to the
9Commission its plan, including scope, schedule, and staffing,
10for satisfying its infrastructure investment program
11commitments pursuant to this subsection (b). The submitted plan
12shall include a schedule and staffing plan for the current
13year. The plan need not allocate the work equally over the
14respective periods, but should allocate material increments
15throughout these periods commensurate with the work to be
16undertaken. No later than September 1 of each subsequent year,
17the utility shall submit to the Commission a report that
18includes any update to the plan, a schedule for the current
19year, the expenditures made for the prior year and
20cumulatively, and the number of full-time equivalent jobs for
21the prior year and cumulatively. If the utility is materially
22deficient in satisfying a schedule or staffing plan, then the
23plan must also include a corrective action plan to address the
24deficiency. The fact that the plan or a schedule changes shall
25not imply the imprudence or unreasonableness of the
26infrastructure investment program, plan, or schedule.

 

 

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1    If, subsequent to completion of a corrective action plan,
2the Commission enters an order finding, after notice and
3hearing, that a participating utility did not satisfy its peak
4job commitment described in this subsection (b) for reasons
5that are reasonably within its control, then the Commission
6shall also determine, after consideration of the evidence,
7including, but not limited to, evidence submitted by the
8Department of Commerce and Economic Opportunity and the
9utility, the reduction in the number of full-time equivalent
10jobs during the peak program year due to the failure. The
11Commission shall notify the Department of any proceeding that
12is initiated pursuant to this paragraph. For each full-time
13equivalent job deficiency during the peak program year that the
14Commission finds as set forth in this paragraph, the
15participating utility shall, within 30 days after the entry of
16the Commission's order, pay $1,500 to a fund for training
17grants administered under Section 605-800 of The Department of
18Commerce and Economic Opportunity Law.
19    If the Commission finds, after notice and hearing, that a
20participating utility is not satisfying its investment amount
21commitments described in this subsection (b), then the utility
22shall no longer be eligible for a formula rate tariff under
23subsection (c) of this Section.
24    The fact that a participating utility invests more than the
25minimum amounts specified in this subsection (b) shall not
26imply imprudence or unreasonableness.

 

 

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1    If a participating utility ceases to have in effect a
2formula rate under subsection (c) of this Section, then the
3participating utility's voluntary commitments and obligations
4under this subsection (b) shall immediately terminate, except
5for the utility's obligation to pay an amount already owed to
6the fund for training grants pursuant to a Commission order.
7    In meeting the obligations of this subsection (b), to the
8extent feasible and consistent with State and federal law, the
9investments under the infrastructure investment program should
10provide employment opportunities for all segments of the
11population and workforce, including minority-owned and
12female-owned business enterprises.
13    (c) A participating utility may elect to recover its costs
14of service through a formula rate approved by the Commission,
15which shall specify the cost components that form the basis of
16the rate charged to customers with sufficient specificity to
17operate in a standardized manner and be updated annually with
18transparent information included in the utility's most recent
19FERC Form 2 or, if the FERC Form 2 was not filed, Form 21 ILCC,
20that reflects the utility's actual costs for the applicable
2112-month period. In the event the utility recovers a portion of
22its costs through automatic adjustment clause tariffs on the
23effective date of this amendatory Act of the 97th General
24Assembly, the utility may elect to continue to recover these
25costs through the tariffs, but then these costs shall not be
26recovered through the formula rate.

 

 

09700HB0014ham001- 25 -LRB097 05207 ASK 47288 a

1    The formula rate shall be implemented through a tariff
2filed with the Commission consistent with the provisions of
3this subsection (c) that shall be applicable to all of the
4utility's customers. The Commission shall initiate and conduct
5an investigation of the tariff in a manner consistent with the
6provisions of this subsection (c) and the provisions of Article
7IX of this Act to the extent they do not conflict with this
8subsection (c). The formula rate shall remain in effect at the
9discretion of the utility. The formula rate approved by the
10Commission shall do the following:
11        (1) Provide for the recovery of the utility's actual
12    costs of service for the applicable 12-month period that
13    are prudently incurred and reasonable in amount consistent
14    with Commission practice and law. The fact that a cost
15    differs from that incurred in a prior 12-month period or
16    that an investment is different from that made in a prior
17    12-month period shall not imply the imprudence or
18    unreasonableness of that cost or investment.
19        (2) Reflect the utility's actual capital structure for
20    the applicable 12-month period, excluding goodwill,
21    subject to a determination of prudence and reasonableness
22    consistent with Commission practice and law.
23        (3) Include a cost of equity, which shall be calculated
24    as the sum of the following:
25            (A) the average for the applicable 12-month period
26        of the monthly average yields of 30-year U.S. Treasury

 

 

09700HB0014ham001- 26 -LRB097 05207 ASK 47288 a

1        bonds published by the Board of Governors of the
2        Federal Reserve System in its weekly H.15 Statistical
3        Release or successor publication; and
4            (B) 650 basis points.
5    At such time as the Board of Governors of the Federal
6    Reserve System ceases to include the monthly average yields
7    of 30-year U.S. Treasury bonds in its weekly H.15
8    Statistical Release or successor publication, the monthly
9    average yields of the U.S. Treasury bonds then having the
10    longest duration published by the Board of Governors in its
11    weekly H.15 Statistical Release or successor publication
12    shall instead be used for purposes of this paragraph (3) as
13    deemed appropriate by the Commission.
14        (4) Permit and set forth protocols, subject to a
15    determination of prudence and reasonableness consistent
16    with Commission practice and law, for the following:
17            (A) recovery of incentive compensation expense
18        that is based on the achievement of operational
19        metrics, including, but not limited to, metrics
20        related to budget controls, safety, customer service,
21        efficiency and productivity, and environmental
22        compliance. Incentive compensation expense that is
23        based on net income or an affiliate's earnings per
24        share shall not be recoverable under the formula rate;
25            (B) recovery of pension and other post-employment
26        benefits expense based on actual costs incurred for the

 

 

09700HB0014ham001- 27 -LRB097 05207 ASK 47288 a

1        applicable 12-month period, provided that these costs
2        are supported by an actuarial study;
3            (C) recovery of severance costs amortized over a
4        period that is consistent with savings resulting from
5        the severance;
6            (D) investment return on pension assets net of
7        deferred tax benefits equal to the utility's long-term
8        debt cost of capital as of the end of the applicable
9        12-month period;
10            (E) recovery of the expenses incurred related to
11        the Commission proceeding under this subsection (c) to
12        approve this formula rate and initial rates or to
13        subsequent proceedings related to the formula,
14        provided that the recovery shall be amortized over a
15        3-year period; recovery of expenses incurred related
16        to the annual Commission proceedings under subsection
17        (d) of this Section to review the inputs to the formula
18        rate shall be recoverable as expenses in the 12-month
19        period incurred;
20            (F) recovery of existing regulatory assets over
21        the periods previously authorized by the Commission;
22            (G) historical weather normalized billing
23        determinants; and
24            (H) allocation methods for common costs.
25    The Commission's review and order with respect to these
26    protocols shall otherwise be consistent with Commission

 

 

09700HB0014ham001- 28 -LRB097 05207 ASK 47288 a

1    practice and law.
2    The utility shall file, together with its tariff, data
3based on its most recent FERC Form 2 or, if the FERC Form 2 was
4not filed, Form 21 ILCC, plus projected plant additions and
5correspondingly updated depreciation reserve and expense for
6the current 12-month period, that shall populate the formula
7rate and set the initial rates under the formula. These initial
8rates shall take effect 30 days after the filing, provided,
9however, that the initial rates shall be subject to retroactive
10rate adjustments by the Commission, including, but not limited
11to, refunds or surcharges, that are designed to incorporate the
12provisions of the Commission's final order approving the
13formula rate structure and protocols and to give effect to the
14initial rates as therein approved such that the refunds or
15surcharges that are applied for the remainder of the period
16until the first rate update will take effect under subsection
17(d), shall enable the utility to recover the same amount of
18revenues the utility otherwise would have recovered had the
19Commission-approved initial rates been in effect as of the date
20the tariff was filed.
21    After the utility files its proposed formula rate structure
22and protocols and initial rates, the Commission shall initiate
23a docket to review and by order approve, or approve as
24modified, the formula rate, including the initial rates, as
25just and reasonable within 180 days after the date on which the
26tariff was filed, or, if the tariff is filed within 30 days

 

 

09700HB0014ham001- 29 -LRB097 05207 ASK 47288 a

1after the effective date of this amendatory Act of the 97th
2General Assembly, then by December 31, 2011. This review shall
3be based on the same evidentiary standards, including, but not
4limited to, those concerning the prudence and reasonableness of
5the costs incurred by the utility, the Commission applies in a
6hearing to review a filing for a general increase in rates
7under Article IX of this Act.
8    Subsequent changes to the formula rate, including changes
9to the structure or protocols, shall be made as tariff
10amendments and filed with the Commission as set forth in
11Section 9-201 of this Act, provided that any such changes shall
12be consistent with paragraphs (1) through (4) of this
13subsection (c).
14    After 11 years following the effective date of this
15amendatory Act of the 97th General Assembly, the Commission may
16upon petition or its own initiative, but with reasonable
17notice, enter upon a hearing concerning proposed changes to the
18formula rate, including those protocols established under
19paragraph (4) of this subsection (c), provided that there shall
20be a rebuttable presumption that the protocols are just and
21reasonable. The proposed changes shall be stated with
22particularity and accompanied by clear and convincing evidence
23that the changes are just and reasonable. No such change
24adopted by the Commission shall be applied to the calculation
25of the utility's rates until the next calendar year, with the
26rates to become effective on June 1 of the year following that

 

 

09700HB0014ham001- 30 -LRB097 05207 ASK 47288 a

1calendar year, provided that the next calendar year begins no
2less than 90 days following the date on which the Commission
3issues an order adopting the change.
4    A participating utility that files a tariff pursuant to
5this subsection (c) must submit a one-time $200,000 filing fee
6at the time the Chief Clerk of the Commission accepts the
7filing, which shall be a recoverable expense.
8    (d) Subsequent to the Commission's issuance of an order
9approving the utility's formula rate and initial rates under
10subsection (c) of this Section, the utility shall make an
11annual informational filing with the Chief Clerk of the
12Commission setting forth its updated cost inputs to the formula
13rate for the applicable 12-month period and the corresponding
14new charges. Consistent with this subsection (d), the utility
15shall submit information as set forth in the Commission's rules
16applicable to a filing for a general increase in rates.
17Specifically, for each such filing, the utility shall comply
18with the following requirements and include the following
19information:
20        (1) File on or before May 1, with the new charges to
21    take effect beginning with the June billing period of the
22    current year. These charges shall take effect on the first
23    billing day of the June billing period and remain in effect
24    through the last billing day of the following May billing
25    period regardless of whether the Commission enters upon a
26    hearing pursuant to this subsection (d).

 

 

09700HB0014ham001- 31 -LRB097 05207 ASK 47288 a

1        (2) The inputs to the formula rate for the applicable
2    12-month period shall be based on historical data from the
3    utility's most recent annual FERC Form 2 or, if the FERC
4    Form 2 was not filed, Form 21 ILCC, plus projected plant
5    additions and correspondingly updated depreciation reserve
6    and expense for the current 12-month period. In addition,
7    the utility shall also present, for the prior applicable
8    12-month period, a reconciliation of the inputs for the
9    prior applicable period (FERC Form 2 or Form 21 ILCC, as
10    applicable, historical data and projected plant additions)
11    with the actual costs incurred in the prior applicable
12    period, and set forth the applicable charge or credit, if
13    any, resulting from the reconciliation that is
14    incorporated in the current formula rate.
15        (3) The utility shall include, together with the filing
16    of the update of cost inputs to the formula rate,
17    supporting data and documentation for the applicable
18    12-month period that is consistent with the Commission's
19    rules applicable to a filing for a general increase in
20    rates and any rules adopted by the Commission to implement
21    this Section.
22    Within 45 days after the utility files its annual update of
23cost inputs to the formula rate, the Commission shall have the
24authority, either upon complaint or its own initiative, but
25with reasonable notice, to enter upon a hearing concerning the
26prudence and reasonableness of the costs incurred by the

 

 

09700HB0014ham001- 32 -LRB097 05207 ASK 47288 a

1utility during the applicable 12-month period that are
2reflected in the inputs to the formula rate derived from the
3utility's FERC Form 2 or Form 21 ILCC, as applicable. The
4complaining party or Commission, to the extent it is acting on
5its own initiative, shall state each objection with
6particularity and provide substantial evidence in support
7thereof, after which the utility shall have the opportunity to
8rebut the evidence. The Commission shall apply the same
9evidentiary standards, including, but not limited to, those
10concerning the prudence and reasonableness of the costs
11incurred by the utility, in the hearing as it would apply in a
12hearing to review a filing for a general increase in rates
13under Article IX of this Act. The Commission shall not,
14however, have the authority in a proceeding under this
15subsection (d) to consider or order any changes to the
16structure or protocols of the formula rate approved pursuant to
17subsection (c) of this Section. In a proceeding under this
18subsection (d), the Commission shall enter its order no later
19than 180 days after the utility's filing of its annual update
20of cost inputs to the formula rate, provided that the
21Commission may, in its discretion, extend the period for a
22further period not to exceed 75 days. If, in the order, the
23Commission approves an adjustment to the inputs of the formula
24rate, then the adjustment, whether in the form of a charge or
25credit, with interest, shall be applied prospectively through
26the formula rate. The Commission's determinations of the

 

 

09700HB0014ham001- 33 -LRB097 05207 ASK 47288 a

1prudence and reasonableness of the costs incurred for the
2applicable 12-month period shall be final upon entry of the
3Commission's order and shall not be subject to reopening,
4reexamination, or collateral attack in any other proceeding,
5case, docket, order, rule, or regulation, provided, however,
6that nothing in this subsection (d) shall prohibit a party from
7petitioning the Commission to rehear or appeal to the courts
8the order pursuant to the provisions this Act.
9    In the event the Commission does not, either upon complaint
10or its own initiative, enter upon a hearing within 45 days
11after the utility files the annual update of cost inputs to its
12formula rate, then the costs incurred for the applicable
1312-month period shall be deemed prudent and reasonable, and the
14filed charges shall not be subject to reopening, reexamination,
15or collateral attack in any other proceeding, case, docket,
16order, rule, or regulation.
17    (e) Nothing in subsections (c) or (d) of this Section shall
18prohibit the Commission from investigating, or a gas utility
19from filing, revenue-neutral tariff changes related to rate
20design of a formula rate that has been placed into effect for
21the utility. Following approval of a gas utility's formula rate
22pursuant to subsection (c) of this Section, the utility shall
23make a filing with the Commission during each subsequent 3-year
24period that either proposes revenue-neutral tariff changes or
25re-files the existing tariffs without change, which shall
26present the Commission with an opportunity to suspend these

 

 

09700HB0014ham001- 34 -LRB097 05207 ASK 47288 a

1tariffs and consider revenue-neutral tariff changes related to
2rate design.
3    (f) Within 30 days after the filing of a tariff pursuant to
4subsection (c) of this Section, each participating utility
5shall develop and file with the Commission a multi-year plan
6that has the goal of cumulatively improving performance in each
7of the following categories by 15% over a 10-year period: (1)
8reliability, (2) safety, (3) providing opportunities for
9minority-owned and female-owned business enterprises
10consistent with State and federal law, and (4) customer
11service. The plan may include financial incentives. If the plan
12does include financial incentives, then it must also include
13symmetrical financial penalties and is subject to Commission
14review and modification following notice and hearing. The
15Commission shall enter an order in the proceeding within 120
16days after the plan is filed. If the Commission modifies the
17plan, then the participating utility may elect to proceed with
18the plan as modified or to proceed with the plan without
19financial incentives.
20    On October 1 of each subsequent year, each participating
21utility shall file a report with the Commission that includes
22performance under each metric, a discussion of performance
23under the plan, and any updates to the plan. If the Commission
24finds in any annual period that the achieved metrics do not
25show material movement such that the goal is likely to be
26achieved and then maintained in any or all categories, then the

 

 

09700HB0014ham001- 35 -LRB097 05207 ASK 47288 a

1Commission may require the participating utility to devise a
2corrective action plan, subject to Commission approval and
3oversight, to bring performance back on track toward reaching
4and maintaining the 15% goal.
5    (g) Nothing in this Section is intended to legislatively
6overturn the opinion issued in Commonwealth Edison Co. v. Ill.
7Commerce Comm'n, Nos. 2-08-0959, 2-08-1037, 2-08-1137,
81-08-3008, 1-08-3030, 1-08-3054, 1-08-3313 cons. (Ill. App.
9Ct. 2d Dist. Sept. 30, 2010) or impact any subsequent review by
10the Illinois Supreme Court of that opinion.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.".