Sen. William R. Haine

Filed: 3/26/2012

 

 


 

 


 
09700SB2867sam004LRB097 15146 JDS 67802 a

1
AMENDMENT TO SENATE BILL 2867

2    AMENDMENT NO. ______. Amend Senate Bill 2867 by replacing
3Section 10 with the following:
 
4    "Section 10. The Public Utilities Act is amended by
5changing Section 9-220 as follows:
 
6    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)
7    Sec. 9-220. Rate changes based on changes in fuel costs.
8    (a) Notwithstanding the provisions of Section 9-201, the
9Commission may authorize the increase or decrease of rates and
10charges based upon changes in the cost of fuel used in the
11generation or production of electric power, changes in the cost
12of purchased power, or changes in the cost of purchased gas
13through the application of fuel adjustment clauses or purchased
14gas adjustment clauses. The Commission may also authorize the
15increase or decrease of rates and charges based upon
16expenditures or revenues resulting from the purchase or sale of

 

 

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1emission allowances created under the federal Clean Air Act
2Amendments of 1990, through such fuel adjustment clauses, as a
3cost of fuel. For the purposes of this paragraph, cost of fuel
4used in the generation or production of electric power shall
5include the amount of any fees paid by the utility for the
6implementation and operation of a process for the
7desulfurization of the flue gas when burning high sulfur coal
8at any location within the State of Illinois irrespective of
9the attainment status designation of such location; but shall
10not include transportation costs of coal (i) except to the
11extent that for contracts entered into on and after the
12effective date of this amendatory Act of 1997, the cost of the
13coal, including transportation costs, constitutes the lowest
14cost for adequate and reliable fuel supply reasonably available
15to the public utility in comparison to the cost, including
16transportation costs, of other adequate and reliable sources of
17fuel supply reasonably available to the public utility, or (ii)
18except as otherwise provided in the next 3 sentences of this
19paragraph. Such costs of fuel shall, when requested by a
20utility or at the conclusion of the utility's next general
21electric rate proceeding, whichever shall first occur, include
22transportation costs of coal purchased under existing coal
23purchase contracts. For purposes of this paragraph "existing
24coal purchase contracts" means contracts for the purchase of
25coal in effect on the effective date of this amendatory Act of
261991, as such contracts may thereafter be amended, but only to

 

 

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1the extent that any such amendment does not increase the
2aggregate quantity of coal to be purchased under such contract.
3Nothing herein shall authorize an electric utility to recover
4through its fuel adjustment clause any amounts of
5transportation costs of coal that were included in the revenue
6requirement used to set base rates in its most recent general
7rate proceeding. Cost shall be based upon uniformly applied
8accounting principles. Annually, the Commission shall initiate
9public hearings to determine whether the clauses reflect actual
10costs of fuel, gas, power, or coal transportation purchased to
11determine whether such purchases were prudent, and to reconcile
12any amounts collected with the actual costs of fuel, power,
13gas, or coal transportation prudently purchased. In each such
14proceeding, the burden of proof shall be upon the utility to
15establish the prudence of its cost of fuel, power, gas, or coal
16transportation purchases and costs. The Commission shall issue
17its final order in each such annual proceeding for an electric
18utility by December 31 of the year immediately following the
19year to which the proceeding pertains, provided, that the
20Commission shall issue its final order with respect to such
21annual proceeding for the years 1996 and earlier by December
2231, 1998.
23    (b) A public utility providing electric service, other than
24a public utility described in subsections (e) or (f) of this
25Section, may at any time during the mandatory transition period
26file with the Commission proposed tariff sheets that eliminate

 

 

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1the public utility's fuel adjustment clause and adjust the
2public utility's base rate tariffs by the amount necessary for
3the base fuel component of the base rates to recover the public
4utility's average fuel and power supply costs per kilowatt-hour
5for the 2 most recent years for which the Commission has issued
6final orders in annual proceedings pursuant to subsection (a),
7where the average fuel and power supply costs per kilowatt-hour
8shall be calculated as the sum of the public utility's prudent
9and allowable fuel and power supply costs as found by the
10Commission in the 2 proceedings divided by the public utility's
11actual jurisdictional kilowatt-hour sales for those 2 years.
12Notwithstanding any contrary or inconsistent provisions in
13Section 9-201 of this Act, in subsection (a) of this Section or
14in any rules or regulations promulgated by the Commission
15pursuant to subsection (g) of this Section, the Commission
16shall review and shall by order approve, or approve as
17modified, the proposed tariff sheets within 60 days after the
18date of the public utility's filing. The Commission may modify
19the public utility's proposed tariff sheets only to the extent
20the Commission finds necessary to achieve conformance to the
21requirements of this subsection (b). During the 5 years
22following the date of the Commission's order, but in any event
23no earlier than January 1, 2007, a public utility whose fuel
24adjustment clause has been eliminated pursuant to this
25subsection shall not file proposed tariff sheets seeking, or
26otherwise petition the Commission for, reinstatement of a fuel

 

 

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1adjustment clause.
2    (c) Notwithstanding any contrary or inconsistent
3provisions in Section 9-201 of this Act, in subsection (a) of
4this Section or in any rules or regulations promulgated by the
5Commission pursuant to subsection (g) of this Section, a public
6utility providing electric service, other than a public utility
7described in subsection (e) or (f) of this Section, may at any
8time during the mandatory transition period file with the
9Commission proposed tariff sheets that establish the rate per
10kilowatt-hour to be applied pursuant to the public utility's
11fuel adjustment clause at the average value for such rate
12during the preceding 24 months, provided that such average rate
13results in a credit to customers' bills, without making any
14revisions to the public utility's base rate tariffs. The
15proposed tariff sheets shall establish the fuel adjustment rate
16for a specific time period of at least 3 years but not more
17than 5 years, provided that the terms and conditions for any
18reinstatement earlier than 5 years shall be set forth in the
19proposed tariff sheets and subject to modification or approval
20by the Commission. The Commission shall review and shall by
21order approve the proposed tariff sheets if it finds that the
22requirements of this subsection are met. The Commission shall
23not conduct the annual hearings specified in the last 3
24sentences of subsection (a) of this Section for the utility for
25the period that the factor established pursuant to this
26subsection is in effect.

 

 

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1    (d) A public utility providing electric service, or a
2public utility providing gas service may file with the
3Commission proposed tariff sheets that eliminate the public
4utility's fuel or purchased gas adjustment clause and adjust
5the public utility's base rate tariffs to provide for recovery
6of power supply costs or gas supply costs that would have been
7recovered through such clause; provided, that the provisions of
8this subsection (d) shall not be available to a public utility
9described in subsections (e) or (f) of this Section to
10eliminate its fuel adjustment clause. Notwithstanding any
11contrary or inconsistent provisions in Section 9-201 of this
12Act, in subsection (a) of this Section, or in any rules or
13regulations promulgated by the Commission pursuant to
14subsection (g) of this Section, the Commission shall review and
15shall by order approve, or approve as modified in the
16Commission's order, the proposed tariff sheets within 240 days
17after the date of the public utility's filing. The Commission's
18order shall approve rates and charges that the Commission,
19based on information in the public utility's filing or on the
20record if a hearing is held by the Commission, finds will
21recover the reasonable, prudent and necessary jurisdictional
22power supply costs or gas supply costs incurred or to be
23incurred by the public utility during a 12 month period found
24by the Commission to be appropriate for these purposes,
25provided, that such period shall be either (i) a 12 month
26historical period occurring during the 15 months ending on the

 

 

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1date of the public utility's filing, or (ii) a 12 month future
2period ending no later than 15 months following the date of the
3public utility's filing. The public utility shall include with
4its tariff filing information showing both (1) its actual
5jurisdictional power supply costs or gas supply costs for a 12
6month historical period conforming to (i) above and (2) its
7projected jurisdictional power supply costs or gas supply costs
8for a future 12 month period conforming to (ii) above. If the
9Commission's order requires modifications in the tariff sheets
10filed by the public utility, the public utility shall have 7
11days following the date of the order to notify the Commission
12whether the public utility will implement the modified tariffs
13or elect to continue its fuel or purchased gas adjustment
14clause in force as though no order had been entered. The
15Commission's order shall provide for any reconciliation of
16power supply costs or gas supply costs, as the case may be, and
17associated revenues through the date that the public utility's
18fuel or purchased gas adjustment clause is eliminated. During
19the 5 years following the date of the Commission's order, a
20public utility whose fuel or purchased gas adjustment clause
21has been eliminated pursuant to this subsection shall not file
22proposed tariff sheets seeking, or otherwise petition the
23Commission for, reinstatement or adoption of a fuel or
24purchased gas adjustment clause. Nothing in this subsection (d)
25shall be construed as limiting the Commission's authority to
26eliminate a public utility's fuel adjustment clause or

 

 

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1purchased gas adjustment clause in accordance with any other
2applicable provisions of this Act.
3    (e) Notwithstanding any contrary or inconsistent
4provisions in Section 9-201 of this Act, in subsection (a) of
5this Section, or in any rules promulgated by the Commission
6pursuant to subsection (g) of this Section, a public utility
7providing electric service to more than 1,000,000 customers in
8this State may, within the first 6 months after the effective
9date of this amendatory Act of 1997, file with the Commission
10proposed tariff sheets that eliminate, effective January 1,
111997, the public utility's fuel adjustment clause without
12adjusting its base rates, and such tariff sheets shall be
13effective upon filing. To the extent the application of the
14fuel adjustment clause had resulted in net charges to customers
15after January 1, 1997, the utility shall also file a tariff
16sheet that provides for a refund stated on a per kilowatt-hour
17basis of such charges over a period not to exceed 6 months;
18provided however, that such refund shall not include the
19proportional amounts of taxes paid under the Use Tax Act,
20Service Use Tax Act, Service Occupation Tax Act, and Retailers'
21Occupation Tax Act on fuel used in generation. The Commission
22shall issue an order within 45 days after the date of the
23public utility's filing approving or approving as modified such
24tariff sheet. If the fuel adjustment clause is eliminated
25pursuant to this subsection, the Commission shall not conduct
26the annual hearings specified in the last 3 sentences of

 

 

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1subsection (a) of this Section for the utility for any period
2after December 31, 1996 and prior to any reinstatement of such
3clause. A public utility whose fuel adjustment clause has been
4eliminated pursuant to this subsection shall not file a
5proposed tariff sheet seeking, or otherwise petition the
6Commission for, reinstatement of the fuel adjustment clause
7prior to January 1, 2007.
8    (f) Notwithstanding any contrary or inconsistent
9provisions in Section 9-201 of this Act, in subsection (a) of
10this Section, or in any rules or regulations promulgated by the
11Commission pursuant to subsection (g) of this Section, a public
12utility providing electric service to more than 500,000
13customers but fewer than 1,000,000 customers in this State may,
14within the first 6 months after the effective date of this
15amendatory Act of 1997, file with the Commission proposed
16tariff sheets that eliminate, effective January 1, 1997, the
17public utility's fuel adjustment clause and adjust its base
18rates by the amount necessary for the base fuel component of
19the base rates to recover 91% of the public utility's average
20fuel and power supply costs for the 2 most recent years for
21which the Commission, as of January 1, 1997, has issued final
22orders in annual proceedings pursuant to subsection (a), where
23the average fuel and power supply costs per kilowatt-hour shall
24be calculated as the sum of the public utility's prudent and
25allowable fuel and power supply costs as found by the
26Commission in the 2 proceedings divided by the public utility's

 

 

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1actual jurisdictional kilowatt-hour sales for those 2 years,
2provided, that such tariff sheets shall be effective upon
3filing. To the extent the application of the fuel adjustment
4clause had resulted in net charges to customers after January
51, 1997, the utility shall also file a tariff sheet that
6provides for a refund stated on a per kilowatt-hour basis of
7such charges over a period not to exceed 6 months. Provided
8however, that such refund shall not include the proportional
9amounts of taxes paid under the Use Tax Act, Service Use Tax
10Act, Service Occupation Tax Act, and Retailers' Occupation Tax
11Act on fuel used in generation. The Commission shall issue an
12order within 45 days after the date of the public utility's
13filing approving or approving as modified such tariff sheet. If
14the fuel adjustment clause is eliminated pursuant to this
15subsection, the Commission shall not conduct the annual
16hearings specified in the last 3 sentences of subsection (a) of
17this Section for the utility for any period after December 31,
181996 and prior to any reinstatement of such clause. A public
19utility whose fuel adjustment clause has been eliminated
20pursuant to this subsection shall not file a proposed tariff
21sheet seeking, or otherwise petition the Commission for,
22reinstatement of the fuel adjustment clause prior to January 1,
232007.
24    (g) The Commission shall have authority to promulgate rules
25and regulations to carry out the provisions of this Section.
26    (h) Any Illinois gas utility may enter into a contract on

 

 

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1or before September 30, 2011 for up to 10 years of supply with
2any company for the purchase of substitute natural gas (SNG)
3produced from coal through the gasification process if the
4company has commenced construction of a clean coal SNG facility
5by July 1, 2012 and commencement of construction shall mean
6that material physical site work has occurred, such as site
7clearing and excavation, water runoff prevention, water
8retention reservoir preparation, or foundation development.
9The contract shall contain the following provisions: (i) at
10least 90% of feedstock to be used in the gasification process
11shall be coal with a high volatile bituminous rank and greater
12than 1.7 pounds of sulfur per million Btu content; (ii) at the
13time the contract term commences, the price per million Btu may
14not exceed $7.95 in 2008 dollars, adjusted annually based on
15the change in the Annual Consumer Price Index for All Urban
16Consumers for the Midwest Region as published in April by the
17United States Department of Labor, Bureau of Labor Statistics
18(or a suitable Consumer Price Index calculation if this
19Consumer Price Index is not available) for the previous
20calendar year; provided that the price per million Btu shall
21not exceed $9.95 at any time during the contract; (iii) the
22utility's supply contract for the purchase of SNG does not
23exceed 15% of the annual system supply requirements of the
24utility as of 2008; and (iv) the contract costs pursuant to
25subsection (h-10) of this Section shall not include any
26lobbying expenses, charitable contributions, advertising,

 

 

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1organizational memberships, carbon dioxide pipeline or
2sequestration expenses, or marketing expenses.
3    Any gas utility that is providing service to more than
4150,000 customers on August 2, 2011 (the effective date of
5Public Act 97-239) shall either elect to enter into a contract
6on or before September 30, 2011 for 10 years of SNG supply with
7the owner of a clean coal SNG facility or to file biennial rate
8proceedings before the Commission in the years 2012, 2014, and
92016, with such filings made after August 2, 2011 and no later
10than September 30 of the years 2012, 2014, and 2016 consistent
11with all requirements of 83 Ill. Adm. Code 255 and 285 as
12though the gas utility were filing for an increase in its
13rates, without regard to whether such filing would produce an
14increase, a decrease, or no change in the gas utility's rates,
15and the Commission shall review the gas utility's filing and
16shall issue its order in accordance with the provisions of
17Section 9-201 of this Act.
18    Within 7 days after August 2, 2011, the owner of the clean
19coal SNG facility shall submit to the Illinois Power Agency and
20each gas utility that is providing service to more than 150,000
21customers on August 2, 2011 a copy of a draft contract. Within
2230 days after the receipt of the draft contract, each such gas
23utility shall provide the Illinois Power Agency and the owner
24of the clean coal SNG facility with its comments and
25recommended revisions to the draft contract. Within 7 days
26after the receipt of the gas utility's comments and recommended

 

 

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1revisions, the owner of the facility shall submit its
2responsive comments and a further revised draft of the contract
3to the Illinois Power Agency. The Illinois Power Agency shall
4review the draft contract and comments.
5    During its review of the draft contract, the Illinois Power
6Agency shall:
7        (1) review and confirm in writing that the terms stated
8    in this subsection (h) are incorporated in the SNG
9    contract;
10        (2) review the SNG pricing formula included in the
11    contract and approve that formula if the Illinois Power
12    Agency determines that the formula, at the time the
13    contract term commences: (A) starts with a price of $6.50
14    per MMBtu adjusted by the adjusted final capitalized plant
15    cost; (B) takes into account budgeted miscellaneous net
16    revenue after cost allowance, including sale of SNG
17    produced by the clean coal SNG facility above the nameplate
18    capacity of the facility and other by-products produced by
19    the facility, as approved by the Illinois Power Agency; (C)
20    does not include carbon dioxide transportation or
21    sequestration expenses; and (D) includes all provisions
22    required under this subsection (h); if the Illinois Power
23    Agency does not approve of the SNG pricing formula, then
24    the Illinois Power Agency shall modify the formula to
25    ensure that it meets the requirements of this subsection
26    (h);

 

 

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1        (3) review and approve the amount of budgeted
2    miscellaneous net revenue after cost allowance, including
3    sale of SNG produced by the clean coal SNG facility above
4    the nameplate capacity of the facility and other
5    by-products produced by the facility, to be included in the
6    pricing formula; the Illinois Power Agency shall approve
7    the amount of budgeted miscellaneous net revenue to be
8    included in the pricing formula if it determines the
9    budgeted amount to be reasonable and accurate;
10        (4) review and confirm in writing that using the EIA
11    Annual Energy Outlook-2011 Henry Hub Spot Price, the
12    contract terms set out in subsection (h), the
13    reconciliation account terms as set out in subsection
14    (h-15), and an estimated inflation rate of 2.5% for each
15    corresponding year, that there will be no cumulative
16    estimated increase for residential customers; and
17        (5) allocate the nameplate capacity of the clean coal
18    SNG by total therms sold to ultimate customers by each gas
19    utility in 2008; provided, however, no utility shall be
20    required to purchase more than 42% of the projected annual
21    output of the facility; additionally, the Illinois Power
22    Agency shall further adjust the allocation only as required
23    to take into account (A) adverse consolidation,
24    derivative, or lease impacts to the balance sheet or income
25    statement of any gas utility or (B) the physical capacity
26    of the gas utility to accept SNG.

 

 

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1    If the parties to the contract do not agree on the terms
2therein, then the Illinois Power Agency shall retain an
3independent mediator to mediate the dispute between the
4parties. If the parties are in agreement on the terms of the
5contract, then the Illinois Power Agency shall approve the
6contract. If after mediation the parties have failed to come to
7agreement, then the Illinois Power Agency shall revise the
8draft contract as necessary to confirm that the contract
9contains only terms that are reasonable and equitable. The
10Illinois Power Agency may, in its discretion, retain an
11independent, qualified, and experienced expert to assist in its
12obligations under this subsection (h). The Illinois Power
13Agency shall adopt and make public policies detailing the
14processes for retaining a mediator and an expert under this
15subsection (h). Any mediator or expert retained under this
16subsection (h) shall be retained no later than 60 days after
17August 2, 2011.
18    The Illinois Power Agency shall complete all of its
19responsibilities under this subsection (h) within 60 days after
20August 2, 2011. The clean coal SNG facility shall pay a
21reasonable fee as required by the Illinois Power Agency for its
22services under this subsection (h) and shall pay the mediator's
23and expert's reasonable fees, if any. A gas utility and its
24customers shall have no obligation to reimburse the clean coal
25SNG facility or the Illinois Power Agency of any such costs.
26    Within 30 days after commercial production of SNG has

 

 

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1begun, the Commission shall initiate a review to determine
2whether the final capitalized plant cost of the clean coal SNG
3facility reflects actual incurred costs and whether the
4incurred costs were reasonable. In determining the actual
5incurred costs included in the final capitalized plant cost and
6the reasonableness of those costs, the Commission may in its
7discretion retain independent, qualified, and experienced
8experts to assist in its determination. The expert shall not
9own or control any direct or indirect interest in the clean
10coal SNG facility and shall have no contractual relationship
11with the clean coal SNG facility. If an expert is retained by
12the Commission, then the clean coal SNG facility shall pay the
13expert's reasonable fees. The fees shall not be passed on to a
14utility or its customers. The Commission shall adopt and make
15public a policy detailing the process for retaining experts
16under this subsection (h).
17    Within 30 days after completion of its review, the
18Commission shall initiate a formal proceeding on the final
19capitalized plant cost of the clean coal SNG facility at which
20comments and testimony may be submitted by any interested
21parties and the public. If the Commission finds that the final
22capitalized plant cost includes costs that were not actually
23incurred or costs that were unreasonably incurred, then the
24Commission shall disallow the amount of non-incurred or
25unreasonable costs from the SNG price under contracts entered
26into under this subsection (h). If the Commission disallows any

 

 

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1costs, then the Commission shall adjust the SNG price using the
2price formula in the contract approved by the Illinois Power
3Agency under this subsection (h) to reflect the disallowed
4costs and shall enter an order specifying the revised price. In
5addition, the Commission's order shall direct the clean coal
6SNG facility to issue refunds of such sums as shall represent
7the difference between actual gross revenues and the gross
8revenue that would have been obtained based upon the same
9volume, from the price revised by the Commission. Any refund
10shall include interest calculated at a rate determined by the
11Commission and shall be returned according to procedures
12prescribed by the Commission.
13    Nothing in this subsection (h) shall preclude any party
14affected by a decision of the Commission under this subsection
15(h) from seeking judicial review of the Commission's decision.
16    (h-1) Any Illinois gas utility may enter into a sourcing
17agreement for up to 30 years of supply with the clean coal SNG
18brownfield facility if the clean coal SNG brownfield facility
19has commenced construction. Any gas utility that is providing
20service to more than 150,000 customers on July 13, 2011 (the
21effective date of Public Act 97-096) shall either elect to file
22biennial rate proceedings before the Commission in the years
232012, 2014, and 2016 or enter into a sourcing agreement or
24sourcing agreements with a clean coal SNG brownfield facility
25with an initial term of 30 years for either (i) a percentage of
2643,500,000,000 cubic feet per year, such that the utilities

 

 

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1entering into sourcing agreements with the clean coal SNG
2brownfield facility purchase 100%, allocated by total therms
3sold to ultimate customers by each gas utility in 2008 or (ii)
4such lesser amount as may be available from the clean coal SNG
5brownfield facility; provided that no utility shall be required
6to purchase more than 42% of the projected annual output of the
7clean coal SNG brownfield facility, with the remainder of such
8utility's obligation to be divided proportionately between the
9other utilities, and provided that the Illinois Power Agency
10shall further adjust the allocation only as required to take
11into account adverse consolidation, derivative, or lease
12impacts to the balance sheet or income statement of any gas
13utility.
14    A gas utility electing to file biennial rate proceedings
15before the Commission must file a notice of its election with
16the Commission within 60 days after July 13, 2011 or its right
17to make the election is irrevocably waived. A gas utility
18electing to file biennial rate proceedings shall make such
19filings no later than August 1 of the years 2012, 2014, and
202016, consistent with all requirements of 83 Ill. Adm. Code 255
21and 285 as though the gas utility were filing for an increase
22in its rates, without regard to whether such filing would
23produce an increase, a decrease, or no change in the gas
24utility's rates, and notwithstanding any other provisions of
25this Act, the Commission shall fully review the gas utility's
26filing and shall issue its order in accordance with the

 

 

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1provisions of Section 9-201 of this Act, regardless of whether
2the Commission has approved a formula rate for the gas utility.
3    Within 15 days after July 13, 2011, the owner of the clean
4coal SNG brownfield facility shall submit to the Illinois Power
5Agency and each gas utility that is providing service to more
6than 150,000 customers on July 13, 2011 a copy of a draft
7sourcing agreement. Within 45 days after receipt of the draft
8sourcing agreement, each such gas utility shall provide the
9Illinois Power Agency and the owner of a clean coal SNG
10brownfield facility with its comments and recommended
11revisions to the draft sourcing agreement. Within 15 days after
12the receipt of the gas utility's comments and recommended
13revisions, the owner of the clean coal SNG brownfield facility
14shall submit its responsive comments and a further revised
15draft of the sourcing agreement to the Illinois Power Agency.
16The Illinois Power Agency shall review the draft sourcing
17agreement and comments.
18    If the parties to the sourcing agreement do not agree on
19the terms therein, then the Illinois Power Agency shall retain
20an independent mediator to mediate the dispute between the
21parties. If the parties are in agreement on the terms of the
22sourcing agreement, the Illinois Power Agency shall approve the
23final draft sourcing agreement. If after mediation the parties
24have failed to come to agreement, then the Illinois Power
25Agency shall revise the draft sourcing agreement as necessary
26to confirm that the final draft sourcing agreement contains

 

 

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1only terms that are reasonable and equitable. The Illinois
2Power Agency shall adopt and make public a policy detailing the
3process for retaining a mediator under this subsection (h-1).
4Any mediator retained to assist with mediating disputes between
5the parties regarding the sourcing agreement shall be retained
6no later than 60 days after July 13, 2011.
7    Upon approval of a final draft agreement, the Illinois
8Power Agency shall submit the final draft agreement to the
9Capital Development Board and the Commission no later than 90
10days after July 13, 2011. The gas utility and the clean coal
11SNG brownfield facility shall pay a reasonable fee as required
12by the Illinois Power Agency for its services under this
13subsection (h-1) and shall pay the mediator's reasonable fees,
14if any. The Illinois Power Agency shall adopt and make public a
15policy detailing the process for retaining a mediator under
16this Section.
17    The sourcing agreement between a gas utility and the clean
18coal SNG brownfield facility shall contain the following
19provisions:
20        (1) Any and all coal used in the gasification process
21    must be coal that has high volatile bituminous rank and
22    greater than 1.7 pounds of sulfur per million Btu content.
23        (2) Coal and petroleum coke are feedstocks for the
24    gasification process, with coal comprising at least 50% of
25    the total feedstock over the term of the sourcing agreement
26    unless the facility reasonably determines that it is

 

 

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1    necessary to use additional petroleum coke to deliver net
2    consumer savings, in which case the facility shall use coal
3    for at least 35% of the total feedstock over the term of
4    any sourcing agreement and with the feedstocks to be
5    procured in accordance with requirements of Section 1-78 of
6    the Illinois Power Agency Act.
7        (3) The sourcing agreement has an initial term that
8    once entered into terminates no more than 30 years after
9    the commencement of the commercial production of SNG at the
10    clean coal SNG brownfield facility.
11        (4) The clean coal SNG brownfield facility guarantees a
12    minimum of $100,000,000 in consumer savings to customers of
13    the utilities that have entered into sourcing agreements
14    with the clean coal SNG brownfield facility, calculated in
15    real 2010 dollars at the conclusion of the term of the
16    sourcing agreement by comparing the delivered SNG price to
17    the Chicago City-gate price on a weighted daily basis for
18    each day over the entire term of the sourcing agreement, to
19    be provided in accordance with subsection (h-2) of this
20    Section.
21        (5) Prior to the clean coal SNG brownfield facility
22    issuing a notice to proceed to construction, the clean coal
23    SNG brownfield facility shall establish a consumer
24    protection reserve account for the benefit of the customers
25    of the utilities that have entered into sourcing agreements
26    with the clean coal SNG brownfield facility pursuant to

 

 

09700SB2867sam004- 22 -LRB097 15146 JDS 67802 a

1    this subsection (h-1), with cash principal in the amount of
2    $150,000,000. This cash principal shall only be
3    recoverable through the consumer protection reserve
4    account and not as a cost to be recovered in the delivered
5    SNG price pursuant to subsection (h-3) of this Section. The
6    consumer protection reserve account shall be maintained
7    and administered by an independent trustee that is mutually
8    agreed upon by the clean coal SNG brownfield facility, the
9    utilities, and the Commission in an interest-bearing
10    account in accordance with subsection (h-2) of this
11    Section.
12        "Consumer protection reserve account principal maximum
13    amount" shall mean the maximum amount of principal to be
14    maintained in the consumer protection reserve account.
15    During the first 2 years of operation of the facility,
16    there shall be no consumer protection reserve account
17    maximum amount. After the first 2 years of operation of the
18    facility, the consumer protection reserve account maximum
19    amount shall be $150,000,000. After 5 years of operation,
20    and every 5 years thereafter, the trustee shall calculate
21    the 5-year average balance of the consumer protection
22    reserve account. If the trustee determines that during the
23    prior 5 years the consumer protection reserve account has
24    had an average account balance of less than $75,000,000,
25    then the consumer protection reserve account principal
26    maximum amount shall be increased by $5,000,000. If the

 

 

09700SB2867sam004- 23 -LRB097 15146 JDS 67802 a

1    trustee determines that during the prior 5 years the
2    consumer protection reserve account has had an average
3    account balance of more than $75,000,000, then the consumer
4    protection reserve account principal maximum amount shall
5    be decreased by $5,000,000.
6        (6) The clean coal SNG brownfield facility shall
7    identify and sell economically viable by-products produced
8    by the facility.
9        (7) Fifty percent of all additional net revenue,
10    defined as miscellaneous net revenue from products
11    produced by the facility and delivered during the month
12    after cost allowance for costs associated with additional
13    net revenue that are not otherwise recoverable pursuant to
14    subsection (h-3) of this Section, including net revenue
15    from sales of substitute natural gas derived from the
16    facility above the nameplate capacity of the facility and
17    other by-products produced by the facility, shall be
18    credited to the consumer protection reserve account
19    pursuant to subsection (h-2) of this Section.
20        (8) The delivered SNG price per million btu to be paid
21    monthly by the utility to the clean coal SNG brownfield
22    facility, which shall be based only upon the following: (A)
23    a capital recovery charge, operations and maintenance
24    costs, and sequestration costs, only to the extent approved
25    by the Commission pursuant to paragraphs (1), (2), and (3)
26    of subsection (h-3) of this Section; (B) the actual

 

 

09700SB2867sam004- 24 -LRB097 15146 JDS 67802 a

1    delivered and processed fuel costs pursuant to paragraph
2    (4) of subsection (h-3) of this Section; (C) actual costs
3    of SNG transportation pursuant to paragraph (6) of
4    subsection (h-3) of this Section; (D) certain taxes and
5    fees imposed by the federal government, the State, or any
6    unit of local government as provided in paragraph (6) of
7    subsection (h-3) of this Section; and (E) the credit, if
8    any, from the consumer protection reserve account pursuant
9    to subsection (h-2) of this Section. The delivered SNG
10    price per million Btu shall proportionately reflect these
11    elements over the term of the sourcing agreement.
12        (9) A formula to translate the recoverable costs and
13    charges under subsection (h-3) of this Section into the
14    delivered SNG price per million btu.
15        (10) Title to the SNG shall pass at a mutually
16    agreeable point in Illinois, and may provide that, rather
17    than the utility taking title to the SNG, a mutually agreed
18    upon third-party gas marketer pursuant to a contract
19    approved by the Illinois Power Agency or its designee may
20    take title to the SNG pursuant to an agreement between the
21    utility, the owner of the clean coal SNG brownfield
22    facility, and the third-party gas marketer.
23        (11) A utility may exit the sourcing agreement without
24    penalty if the clean coal SNG brownfield facility does not
25    commence construction by July 1, 2015.
26        (12) A utility is responsible to pay only the

 

 

09700SB2867sam004- 25 -LRB097 15146 JDS 67802 a

1    Commission determined unit price cost of SNG that is
2    purchased by the utility. Nothing in the sourcing agreement
3    will obligate a utility to invest capital in a clean coal
4    SNG brownfield facility.
5        (13) The quality of SNG must, at a minimum, be
6    equivalent to the quality required for interstate pipeline
7    gas before a utility is required to accept and pay for SNG
8    gas.
9        (14) Nothing in the sourcing agreement will require a
10    utility to construct any facilities to accept delivery of
11    SNG. Provided, however, if a utility is required by law or
12    otherwise elects to connect the clean coal SNG brownfield
13    facility to an interstate pipeline, then the utility shall
14    be entitled to recover pursuant to its tariffs all just and
15    reasonable costs that are prudently incurred. Any costs
16    incurred by the utility to receive, deliver, manage, or
17    otherwise accommodate purchases under the SNG sourcing
18    agreement will be fully recoverable through a utility's
19    purchased gas adjustment clause rider mechanism in
20    conjunction with a SNG brownfield facility rider
21    mechanism. The SNG brownfield facility rider mechanism (A)
22    shall be applicable to all customers who receive
23    transportation service from the utility, (B) shall be
24    designed to have an equal percent impact on the
25    transportation services rates of each class of the
26    utility's customers, and (C) shall accurately reflect the

 

 

09700SB2867sam004- 26 -LRB097 15146 JDS 67802 a

1    net consumer savings, if any, and above-market costs, if
2    any, associated with the utility receiving, delivering,
3    managing, or otherwise accommodating purchases under the
4    SNG sourcing agreement.
5        (15) Remedies for the clean coal SNG brownfield
6    facility's failure to deliver a designated amount for a
7    designated period.
8        (16) The clean coal SNG brownfield facility shall make
9    a good faith effort to ensure that an amount equal to not
10    less than 15% of the value of its prime construction
11    contract for the facility shall be established as a goal to
12    be awarded to minority owned businesses, female owned
13    businesses, and businesses owned by a person with a
14    disability; provided that at least 75% of the amount of
15    such total goal shall be for minority owned businesses.
16    "Minority owned business", "female owned business", and
17    "business owned by a person with a disability" shall have
18    the meanings ascribed to them in Section 2 of the Business
19    Enterprise for Minorities, Females and Persons with
20    Disabilities Act.
21        (17) Prior to the clean coal SNG brownfield facility
22    issuing a notice to proceed to construction, the clean coal
23    SNG brownfield facility shall file with the Commission a
24    certificate from an independent engineer that the clean
25    coal SNG brownfield facility has (A) obtained all
26    applicable State and federal environmental permits

 

 

09700SB2867sam004- 27 -LRB097 15146 JDS 67802 a

1    required for construction; (B) obtained approval from the
2    Commission of a carbon capture and sequestration plan; and
3    (C) obtained all necessary permits required for
4    construction for the transportation and sequestration of
5    carbon dioxide as set forth in the Commission-approved
6    carbon capture and sequestration plan.
7    (h-2) Consumer protection reserve account. The clean coal
8SNG brownfield facility shall guarantee a minimum of
9$100,000,000 in consumer savings to customers of the utilities
10that have entered into sourcing agreements with the clean coal
11SNG brownfield facility, calculated in real 2010 dollars at the
12conclusion of the term of the sourcing agreement by comparing
13the delivered SNG price to the Chicago City-gate price on a
14weighted daily basis for each day over the entire term of the
15sourcing agreement. Prior to the clean coal SNG brownfield
16facility issuing a notice to proceed to construction, the clean
17coal SNG brownfield facility shall establish a consumer
18protection reserve account for the benefit of the retail
19customers of the utilities that have entered into sourcing
20agreements with the clean coal SNG brownfield facility pursuant
21to subsection (h-1), with cash principal in the amount of
22$150,000,000. Such cash principal shall only be recovered
23through the consumer protection reserve account and not as a
24cost to be recovered in the delivered SNG price pursuant to
25subsection (h-3) of this Section. The consumer protection
26reserve account shall be maintained and administered by an

 

 

09700SB2867sam004- 28 -LRB097 15146 JDS 67802 a

1independent trustee that is mutually agreed upon by the clean
2coal SNG brownfield facility, the utilities, and the Commission
3in an interest-bearing account in accordance with the
4following:
5        (1) The clean coal SNG brownfield facility monthly
6    shall calculate (A) the difference between the monthly
7    delivered SNG price and the Chicago City-gate price, by
8    comparing the delivered SNG price, which shall include the
9    cost of transportation to the delivery point, if any, to
10    the Chicago City-gate price on a weighted daily basis for
11    each day of the prior month based upon a mutually agreed
12    upon published index and (B) the overage amount, if any, by
13    calculating the annualized incremental additional cost, if
14    any, of the delivered SNG in excess of 2.015% of the
15    average annual inflation-adjusted amounts paid by all gas
16    distribution customers in connection with natural gas
17    service during the 5 years ending May 31, 2010.
18        (2) During the first 2 years of operation of the
19    facility:
20            (A) to the extent there is an overage amount, the
21        consumer protection reserve account shall be used to
22        provide a credit to reduce the SNG price by an amount
23        equal to the overage amount; and
24            (B) to the extent the monthly delivered SNG price
25        is less than or equal to the Chicago City-gate price,
26        the utility shall credit the difference between the

 

 

09700SB2867sam004- 29 -LRB097 15146 JDS 67802 a

1        monthly delivered SNG price and the monthly Chicago
2        City-gate price, if any, to the consumer protection
3        reserve account. Such credit issued pursuant to this
4        paragraph (B) shall be deemed prudent and reasonable
5        and not subject to a Commission prudence review;
6        (3) After 2 years of operation of the facility, and
7    monthly, on an on-going basis, thereafter:
8            (A) to the extent that the monthly delivered SNG
9        price is less than or equal to the Chicago City-gate
10        price, calculated using the weighted average of the
11        daily Chicago City-gate price on a daily basis over the
12        entire month, the utility shall credit the difference,
13        if any, to the consumer protection reserve account.
14        Such credit issued pursuant to this subparagraph (A)
15        shall be deemed prudent and reasonable and not subject
16        to a Commission prudence review;
17            (B) any amounts in the consumer protection reserve
18        account in excess of the consumer protection reserve
19        account principal maximum amount shall be distributed
20        as follows: (i) if retail customers have not realized
21        net consumer savings, calculated by comparing the
22        delivered SNG price to the weighted average of the
23        daily Chicago City-gate price on a daily basis over the
24        entire term of the sourcing agreement to date, then 50%
25        of any amounts in the consumer protection reserve
26        account in excess of the consumer protection reserve

 

 

09700SB2867sam004- 30 -LRB097 15146 JDS 67802 a

1        account principal maximum shall be distributed to the
2        clean coal SNG brownfield facility, with the remaining
3        50% of any such additional amounts being credited to
4        retail customers, and (ii) if retail customers have
5        realized net consumer savings, then 100% of any amounts
6        in the consumer protection reserve account in excess of
7        the consumer protection reserve account principal
8        maximum shall be distributed to the clean coal SNG
9        brownfield facility; provided, however, that under no
10        circumstances shall the total cumulative amount
11        distributed to the clean coal SNG brownfield facility
12        under this subparagraph (B) exceed $150,000,000;
13            (C) to the extent there is an overage amount, after
14        distributing the amounts pursuant to subparagraph (B)
15        of this paragraph (3), if any, the consumer protection
16        reserve account shall be used to provide a credit to
17        reduce the SNG price by an amount equal to the overage
18        amount;
19            (D) if retail customers have realized net consumer
20        savings, calculated by comparing the delivered SNG
21        price to the weighted average of the daily Chicago
22        City-gate price on a daily basis over the entire term
23        of the sourcing agreement to date, then after
24        distributing the amounts pursuant to subparagraphs (B)
25        and (C) of this paragraph (3), 50% of any additional
26        amounts in the consumer protection reserve account in

 

 

09700SB2867sam004- 31 -LRB097 15146 JDS 67802 a

1        excess of the consumer protection reserve account
2        principal maximum shall be distributed to the clean
3        coal SNG brownfield facility, with the remaining 50% of
4        any such additional amounts being credited to retail
5        customers; provided, however, that if retail customers
6        have not realized such net consumer savings, no such
7        distribution shall be made to the clean coal SNG
8        brownfield facility, and 100% of such additional
9        amounts shall be credited to the retail customers to
10        the extent the consumer protection reserve account
11        exceeds the consumer protection reserve account
12        principal maximum amount.
13        (4) Fifty percent of all additional net revenue,
14    defined as miscellaneous net revenue after cost allowance
15    for costs associated with additional net revenue that are
16    not otherwise recoverable pursuant to subsection (h-3) of
17    this Section, including net revenue from sales of
18    substitute natural gas derived from the facility above the
19    nameplate capacity of the facility and other by-products
20    produced by the facility, shall be credited to the consumer
21    protection reserve account.
22        (5) At the conclusion of the term of the sourcing
23    agreement, to the extent retail customers have not saved
24    the minimum of $100,000,000 in consumer savings as
25    guaranteed in this subsection (h-2), amounts in the
26    consumer protection reserve account shall be credited to

 

 

09700SB2867sam004- 32 -LRB097 15146 JDS 67802 a

1    retail customers to the extent the retail customers have
2    saved the minimum of $100,000,000; 50% of any additional
3    amounts in the consumer protection reserve account shall be
4    distributed to the company, and the remaining 50% shall be
5    distributed to retail customers.
6        (6) If, at the conclusion of the term of the sourcing
7    agreement, the customers have not saved the minimum
8    $100,000,000 in savings as guaranteed in this subsection
9    (h-2) and the consumer protection reserve account has been
10    depleted, then the clean coal SNG brownfield facility shall
11    be liable for any remaining amount owed to the retail
12    customers to the extent that the customers are provided
13    with the $100,000,000 in savings as guaranteed in this
14    subsection (h-2). The retail customers shall have first
15    priority in recovering that debt above any creditors,
16    except the original senior secured lender to the extent
17    that the original senior secured lender has any senior
18    secured debt outstanding, including any clean coal SNG
19    brownfield facility parent companies or affiliates.
20        (7) The clean coal SNG brownfield facility, the
21    utilities, and the trustee shall work together to take
22    commercially reasonable steps to minimize the tax impact of
23    these transactions, while preserving the consumer
24    benefits.
25        (8) The clean coal SNG brownfield facility shall each
26    month, starting in the facility's first year of commercial

 

 

09700SB2867sam004- 33 -LRB097 15146 JDS 67802 a

1    operation, file with the Commission, in such form as the
2    Commission shall require, a report as to the consumer
3    protection reserve account. The monthly report must
4    contain the following information:
5            (A) the extent the monthly delivered SNG price is
6        greater than, less than, or equal to the Chicago
7        City-gate price;
8            (B) the amount credited or debited to the consumer
9        protection reserve account during the month;
10            (C) the amounts credited to consumers and
11        distributed to the clean coal SNG brownfield facility
12        during the month;
13            (D) the total amount of the consumer protection
14        reserve account at the beginning and end of the month;
15            (E) the total amount of consumer savings to date;
16            (F) a confidential summary of the inputs used to
17        calculate the additional net revenue; and
18            (G) any other additional information the
19        Commission shall require.
20        When any report is erroneous or defective or appears to
21    the Commission to be erroneous or defective, the Commission
22    may notify the clean coal SNG brownfield facility to amend
23    the report within 30 days, and, before or after the
24    termination of the 30-day period, the Commission may
25    examine the trustee of the consumer protection reserve
26    account or the officers, agents, employees, books,

 

 

09700SB2867sam004- 34 -LRB097 15146 JDS 67802 a

1    records, or accounts of the clean coal SNG brownfield
2    facility and correct such items in the report as upon such
3    examination the Commission may find defective or
4    erroneous. All reports shall be under oath.
5        All reports made to the Commission by the clean coal
6    SNG brownfield facility and the contents of the reports
7    shall be open to public inspection and shall be deemed a
8    public record under the Freedom of Information Act. Such
9    reports shall be preserved in the office of the Commission.
10    The Commission shall publish an annual summary of the
11    reports prior to February 1 of the following year. The
12    annual summary shall be made available to the public on the
13    Commission's website and shall be submitted to the General
14    Assembly.
15        Any facility that fails to file a report required under
16    this paragraph (8) to the Commission within the time
17    specified or to make specific answer to any question
18    propounded by the Commission within 30 days from the time
19    it is lawfully required to do so, or within such further
20    time not to exceed 90 days as may in its discretion be
21    allowed by the Commission, shall pay a penalty of $500 to
22    the Commission for each day it is in default.
23        Any person who willfully makes any false report to the
24    Commission or to any member, officer, or employee thereof,
25    any person who willfully in a report withholds or fails to
26    provide material information to which the Commission is

 

 

09700SB2867sam004- 35 -LRB097 15146 JDS 67802 a

1    entitled under this paragraph (8) and which information is
2    either required to be filed by statute, rule, regulation,
3    order, or decision of the Commission or has been requested
4    by the Commission, and any person who willfully aids or
5    abets such person shall be guilty of a Class A misdemeanor.
6    (h-3) Recoverable costs and revenue by the clean coal SNG
7brownfield facility.
8        (1) A capital recovery charge approved by the
9    Commission shall be recoverable by the clean coal SNG
10    brownfield facility under a sourcing agreement. The
11    capital recovery charge shall be comprised of capital costs
12    and a reasonable rate of return. "Capital costs" means
13    costs to be incurred in connection with the construction
14    and development of a facility, as defined in Section 1-10
15    of the Illinois Power Agency Act, and such other costs as
16    the Capital Development Board deems appropriate to be
17    recovered in the capital recovery charge.
18            (A) Capital costs. The Capital Development Board
19        shall calculate a range of capital costs that it
20        believes would be reasonable for the clean coal SNG
21        brownfield facility to recover under the sourcing
22        agreement. In making this determination, the Capital
23        Development Board shall review the facility cost
24        report, if any, of the clean coal SNG brownfield
25        facility, adjusting the results based on the change in
26        the Annual Consumer Price Index for All Urban Consumers

 

 

09700SB2867sam004- 36 -LRB097 15146 JDS 67802 a

1        for the Midwest Region as published in April by the
2        United States Department of Labor, Bureau of Labor
3        Statistics, the final draft of the sourcing agreement,
4        and the rate of return approved by the Commission. In
5        addition, the Capital Development Board may consult as
6        much as it deems necessary with the clean coal SNG
7        brownfield facility and conduct whatever research and
8        investigation it deems necessary.
9            The Capital Development Board shall retain an
10        engineering expert to assist in determining both the
11        range of capital costs and the range of operations and
12        maintenance costs that it believes would be reasonable
13        for the clean coal SNG brownfield facility to recover
14        under the sourcing agreement. Provided, however, that
15        such expert shall: (i) not have been involved in the
16        clean coal SNG brownfield facility's facility cost
17        report, if any, (ii) not own or control any direct or
18        indirect interest in the initial clean coal facility,
19        and (iii) have no contractual relationship with the
20        clean coal SNG brownfield facility. In order to qualify
21        as an independent expert, a person or company must
22        have:
23                (i) direct previous experience conducting
24            front-end engineering and design studies for
25            large-scale energy facilities and administering
26            large-scale energy operations and maintenance

 

 

09700SB2867sam004- 37 -LRB097 15146 JDS 67802 a

1            contracts, which may be particularized to the
2            specific type of financing associated with the
3            clean coal SNG brownfield facility;
4                (ii) an advanced degree in economics,
5            mathematics, engineering, or a related area of
6            study;
7                (iii) ten years of experience in the energy
8            sector, including construction and risk management
9            experience;
10                (iv) expertise in assisting companies with
11            obtaining financing for large-scale energy
12            projects, which may be particularized to the
13            specific type of financing associated with the
14            clean coal SNG brownfield facility;
15                (v) expertise in operations and maintenance
16            which may be particularized to the specific type of
17            operations and maintenance associated with the
18            clean coal SNG brownfield facility;
19                (vi) expertise in credit and contract
20            protocols;
21                (vii) adequate resources to perform and
22            fulfill the required functions and
23            responsibilities; and
24                (viii) the absence of a conflict of interest
25            and inappropriate bias for or against an affected
26            gas utility or the clean coal SNG brownfield

 

 

09700SB2867sam004- 38 -LRB097 15146 JDS 67802 a

1            facility.
2            The clean coal SNG brownfield facility and the
3        Illinois Power Agency shall cooperate with the Capital
4        Development Board in any investigation it deems
5        necessary. The Capital Development Board shall make
6        its final determination of the range of capital costs
7        confidentially and shall submit that range to the
8        Commission in a confidential filing within 120 days
9        after July 13, 2011 (the effective date of Public Act
10        97-096). The clean coal SNG brownfield facility shall
11        submit to the Commission its estimate of the capital
12        costs to be recovered under the sourcing agreement.
13        Only after the clean coal SNG brownfield facility has
14        submitted this estimate shall the Commission publicly
15        announce the range of capital costs submitted by the
16        Capital Development Board.
17            In the event that the estimate submitted by the
18        clean coal SNG brownfield facility is within or below
19        the range submitted by the Capital Development Board,
20        the clean coal SNG brownfield facility's estimate
21        shall be approved by the Commission as the amount of
22        capital costs to be recovered under the sourcing
23        agreement. In the event that the estimate submitted by
24        the clean coal SNG brownfield facility is above the
25        range submitted by the Capital Development Board, the
26        amount of capital costs at the lowest end of the range

 

 

09700SB2867sam004- 39 -LRB097 15146 JDS 67802 a

1        submitted by the Capital Development Board shall be
2        approved by the Commission as the amount of capital
3        costs to be recovered under the sourcing agreement.
4        Within 15 days after the Capital Development Board has
5        submitted its range and the clean coal SNG brownfield
6        facility has submitted its estimate, the Commission
7        shall approve the capital costs for the clean coal SNG
8        brownfield facility.
9            The Capital Development Board shall monitor the
10        construction of the clean coal SNG brownfield facility
11        for the full duration of construction to assess
12        potential cost overruns. The Capital Development
13        Board, in its discretion, may retain an expert to
14        facilitate such monitoring. The clean coal SNG
15        brownfield facility shall pay a reasonable fee as
16        required by the Capital Development Board for the
17        Capital Development Board's services under this
18        subsection (h-3) to be deposited into the Capital
19        Development Board Revolving Fund, and such fee shall
20        not be passed through to a utility or its customers. If
21        an expert is retained by the Capital Development Board
22        for monitoring of construction, then the clean coal SNG
23        brownfield facility must pay for the expert's
24        reasonable fees and such costs shall not be passed
25        through to a utility or its customers.
26            (B) Rate of Return. No later than 30 days after the

 

 

09700SB2867sam004- 40 -LRB097 15146 JDS 67802 a

1        date on which the Illinois Power Agency submits a final
2        draft sourcing agreement, the Commission shall hold a
3        public hearing to determine the rate of return to be
4        recovered under the sourcing agreement. Rate of return
5        shall be comprised of the clean coal SNG brownfield
6        facility's actual cost of debt, including
7        mortgage-style amortization, and a reasonable return
8        on equity. The Commission shall post notice of the
9        hearing on its website no later than 10 days prior to
10        the date of the hearing. The Commission shall provide
11        the public and all interested parties, including the
12        gas utilities, the Attorney General, and the Illinois
13        Power Agency, an opportunity to be heard.
14            In determining the return on equity, the
15        Commission shall select a commercially reasonable
16        return on equity taking into account the return on
17        equity being received by developers of similar
18        facilities in or outside of Illinois, the need to
19        balance an incentive for clean-coal technology with
20        the need to protect ratepayers from high gas prices,
21        the risks being borne by the clean coal SNG brownfield
22        facility in the final draft sourcing agreement, and any
23        other information that the Commission may deem
24        relevant. The Commission may establish a return on
25        equity that varies with the amount of savings, if any,
26        to customers during the term of the sourcing agreement,

 

 

09700SB2867sam004- 41 -LRB097 15146 JDS 67802 a

1        comparing the delivered SNG price to a daily weighted
2        average price of natural gas, based upon an index. The
3        Illinois Power Agency shall recommend a return on
4        equity to the Commission using the same criteria.
5        Within 60 days after receiving the final draft sourcing
6        agreement from the Illinois Power Agency, the
7        Commission shall approve the rate of return for the
8        clean coal brownfield facility. Within 30 days after
9        obtaining debt financing for the clean coal SNG
10        brownfield facility, the clean coal SNG brownfield
11        facility shall file a notice with the Commission
12        identifying the actual cost of debt.
13        (2) Operations and maintenance costs approved by the
14    Commission shall be recoverable by the clean coal SNG
15    brownfield facility under the sourcing agreement. The
16    operations and maintenance costs mean costs that have been
17    incurred for the administration, supervision, operation,
18    maintenance, preservation, and protection of the clean
19    coal SNG brownfield facility's physical plant.
20        The Capital Development Board shall calculate a range
21    of operations and maintenance costs that it believes would
22    be reasonable for the clean coal SNG brownfield facility to
23    recover under the sourcing agreement, incorporating an
24    inflation index or combination of inflation indices to most
25    accurately reflect the actual costs of operating the clean
26    coal SNG brownfield facility. In making this

 

 

09700SB2867sam004- 42 -LRB097 15146 JDS 67802 a

1    determination, the Capital Development Board shall review
2    the facility cost report, if any, of the clean coal SNG
3    brownfield facility, adjusting the results for inflation
4    based on the change in the Annual Consumer Price Index for
5    All Urban Consumers for the Midwest Region as published in
6    April by the United States Department of Labor, Bureau of
7    Labor Statistics, the final draft of the sourcing
8    agreement, and the rate of return approved by the
9    Commission. In addition, the Capital Development Board may
10    consult as much as it deems necessary with the clean coal
11    SNG brownfield facility and conduct whatever research and
12    investigation it deems necessary. As set forth in
13    subparagraph (A) of paragraph (1) of this subsection (h-3),
14    the Capital Development Board shall retain an independent
15    engineering expert to assist in determining both the range
16    of operations and maintenance costs that it believes would
17    be reasonable for the clean coal SNG brownfield facility to
18    recover under the sourcing agreement. The clean coal SNG
19    brownfield facility and the Illinois Power Agency shall
20    cooperate with the Capital Development Board in any
21    investigation it deems necessary. The Capital Development
22    Board shall make its final determination of the range of
23    operations and maintenance costs confidentially and shall
24    submit that range to the Commission in a confidential
25    filing within 120 days after July 13, 2011.
26        The clean coal SNG brownfield facility shall submit to

 

 

09700SB2867sam004- 43 -LRB097 15146 JDS 67802 a

1    the Commission its estimate of the operations and
2    maintenance costs to be recovered under the sourcing
3    agreement. Only after the clean coal SNG brownfield
4    facility has submitted this estimate shall the Commission
5    publicly announce the range of operations and maintenance
6    costs submitted by the Capital Development Board. In the
7    event that the estimate submitted by the clean coal SNG
8    brownfield facility is within or below the range submitted
9    by the Capital Development Board, the clean coal SNG
10    brownfield facility's estimate shall be approved by the
11    Commission as the amount of operations and maintenance
12    costs to be recovered under the sourcing agreement. In the
13    event that the estimate submitted by the clean coal SNG
14    brownfield facility is above the range submitted by the
15    Capital Development Board, the amount of operations and
16    maintenance costs at the lowest end of the range submitted
17    by the Capital Development Board shall be approved by the
18    Commission as the amount of operations and maintenance
19    costs to be recovered under the sourcing agreement. Within
20    15 days after the Capital Development Board has submitted
21    its range and the clean coal SNG brownfield facility has
22    submitted its estimate, the Commission shall approve the
23    operations and maintenance costs for the clean coal SNG
24    brownfield facility.
25        The clean coal SNG brownfield facility shall pay for
26    the independent engineering expert's reasonable fees and

 

 

09700SB2867sam004- 44 -LRB097 15146 JDS 67802 a

1    such costs shall not be passed through to a utility or its
2    customers. The clean coal SNG brownfield facility shall pay
3    a reasonable fee as required by the Capital Development
4    Board for the Capital Development Board's services under
5    this subsection (h-3) to be deposited into the Capital
6    Development Board Revolving Fund, and such fee shall not be
7    passed through to a utility or its customers.
8        (3) Sequestration costs approved by the Commission
9    shall be recoverable by the clean coal SNG brownfield
10    facility. "Sequestration costs" means costs to be incurred
11    by the clean coal SNG brownfield facility in accordance
12    with its Commission-approved carbon capture and
13    sequestration plan to:
14            (A) capture carbon dioxide;
15            (B) build, operate, and maintain a sequestration
16        site in which carbon dioxide may be injected;
17            (C) build, operate, and maintain a carbon dioxide
18        pipeline; and
19            (D) transport the carbon dioxide to the
20        sequestration site or a pipeline.
21        The Commission shall assess the prudency of the
22    sequestration costs for the clean coal SNG brownfield
23    facility before construction commences at the
24    sequestration site or pipeline. Any revenues the clean coal
25    SNG brownfield facility receives as a result of the
26    capture, transportation, or sequestration of carbon

 

 

09700SB2867sam004- 45 -LRB097 15146 JDS 67802 a

1    dioxide shall be first credited against all sequestration
2    costs, with the positive balance, if any, treated as
3    additional net revenue.
4        The Commission may, in its discretion, retain an expert
5    to assist in its review of sequestration costs. The clean
6    coal SNG brownfield facility shall pay for the expert's
7    reasonable fees if an expert is retained by the Commission,
8    and such costs shall not be passed through to a utility or
9    its customers. Once made, the Commission's determination
10    of the amount of recoverable sequestration costs shall not
11    be increased unless the clean coal SNG brownfield facility
12    can show by clear and convincing evidence that (i) the
13    costs were not reasonably foreseeable; (ii) the costs were
14    due to circumstances beyond the clean coal SNG brownfield
15    facility's control; and (iii) the clean coal SNG brownfield
16    facility took all reasonable steps to mitigate the costs.
17    If the Commission determines that sequestration costs may
18    be increased, the Commission shall provide for notice and a
19    public hearing for approval of the increased sequestration
20    costs.
21        (4) Actual delivered and processed fuel costs shall be
22    set by the Illinois Power Agency through a SNG feedstock
23    procurement, pursuant to Sections 1-20, 1-77, and 1-78 of
24    the Illinois Power Agency Act, to be performed at least
25    every 5 years and purchased by the clean coal SNG
26    brownfield facility pursuant to feedstock procurement

 

 

09700SB2867sam004- 46 -LRB097 15146 JDS 67802 a

1    contracts developed by the Illinois Power Agency, with coal
2    comprising at least 50% of the total feedstock over the
3    term of the sourcing agreement and petroleum coke
4    comprising the remainder of the SNG feedstock. If the
5    Commission fails to approve a feedstock procurement plan or
6    fails to approve the results of a feedstock procurement
7    event, then the fuel shall be purchased by the company
8    month-by-month on the spot market and those actual
9    delivered and processed fuel costs shall be recoverable
10    under the sourcing agreement. If a supplier defaults under
11    the terms of a procurement contract, then the Illinois
12    Power Agency shall immediately initiate a feedstock
13    procurement process to obtain a replacement supply, and,
14    prior to the conclusion of that process, fuel shall be
15    purchased by the company month-by-month on the spot market
16    and those actual delivered and processed fuel costs shall
17    be recoverable under the sourcing agreement.
18        (5) Taxes and fees imposed by the federal government,
19    the State, or any unit of local government applicable to
20    the clean coal SNG brownfield facility, excluding income
21    tax, shall be recoverable by the clean coal SNG brownfield
22    facility under the sourcing agreement to the extent such
23    taxes and fees were not applicable to the facility on July
24    13, 2011.
25        (6) The actual transportation costs, in accordance
26    with the applicable utility's tariffs, and third-party

 

 

09700SB2867sam004- 47 -LRB097 15146 JDS 67802 a

1    marketer costs incurred by the company, if any, associated
2    with transporting the SNG from the clean coal SNG
3    brownfield facility to the Chicago City-gate to sell such
4    SNG into the natural gas markets shall be recoverable under
5    the sourcing agreement.
6        (7) Unless otherwise provided, within 30 days after a
7    decision of the Commission on recoverable costs under this
8    Section, any interested party to the Commission's decision
9    may apply for a rehearing with respect to the decision. The
10    Commission shall receive and consider the application for
11    rehearing and shall grant or deny the application in whole
12    or in part within 20 days after the date of the receipt of
13    the application by the Commission. If no rehearing is
14    applied for within the required 30 days or an application
15    for rehearing is denied, then the Commission decision shall
16    be final. If an application for rehearing is granted, then
17    the Commission shall hold a rehearing within 30 days after
18    granting the application. The decision of the Commission
19    upon rehearing shall be final.
20        Any person affected by a decision of the Commission
21    under this subsection (h-3) may have the decision reviewed
22    only under and in accordance with the Administrative Review
23    Law. Unless otherwise provided, the provisions of the
24    Administrative Review Law, all amendments and
25    modifications to that Law, and the rules adopted pursuant
26    to that Law shall apply to and govern all proceedings for

 

 

09700SB2867sam004- 48 -LRB097 15146 JDS 67802 a

1    the judicial review of final administrative decisions of
2    the Commission under this subsection (h-3). The term
3    "administrative decision" is defined as in Section 3-101 of
4    the Code of Civil Procedure.
5        (8) The Capital Development Board shall adopt and make
6    public a policy detailing the process for retaining experts
7    under this Section. Any experts retained to assist with
8    calculating the range of capital costs or operations and
9    maintenance costs shall be retained no later than 45 days
10    after July 13, 2011.
11    (h-4) No later than 90 days after the Illinois Power Agency
12submits the final draft sourcing agreement pursuant to
13subsection (h-1), the Commission shall approve a sourcing
14agreement containing (i) the capital costs, rate of return, and
15operations and maintenance costs established pursuant to
16subsection (h-3) and (ii) all other terms and conditions,
17rights, provisions, exceptions, and limitations contained in
18the final draft sourcing agreement; provided, however, the
19Commission shall correct typographical and scrivener's errors
20and modify the contract only as necessary to provide that the
21gas utility does not have the right to terminate the sourcing
22agreement due to any future events that may occur other than
23the clean coal SNG brownfield facility's failure to timely meet
24milestones, uncured default, extended force majeure, or
25abandonment. Once the sourcing agreement is approved, then the
26gas utility subject to that sourcing agreement shall have 45

 

 

09700SB2867sam004- 49 -LRB097 15146 JDS 67802 a

1days after the date of the Commission's approval to enter into
2the sourcing agreement.
3    (h-5) Sequestration enforcement.
4        (A) All contracts entered into under subsection (h) of
5    this Section and all sourcing agreements under subsection
6    (h-1) of this Section, regardless of duration, shall
7    require the owner of any facility supplying SNG under the
8    contract or sourcing agreement to provide certified
9    documentation to the Commission each year, starting in the
10    facility's first year of commercial operation, accurately
11    reporting the quantity of carbon dioxide emissions from the
12    facility that have been captured and sequestered and
13    reporting any quantities of carbon dioxide released from
14    the site or sites at which carbon dioxide emissions were
15    sequestered in prior years, based on continuous monitoring
16    of those sites.
17        (B) If, in any year, the owner of the clean coal SNG
18    facility fails to demonstrate that the SNG facility
19    captured and sequestered at least 90% of the total carbon
20    dioxide emissions that the facility would otherwise emit or
21    that sequestration of emissions from prior years has
22    failed, resulting in the release of carbon dioxide into the
23    atmosphere, then the owner of the clean coal SNG facility
24    must pay a penalty of $20 per ton of excess carbon dioxide
25    emissions not to exceed $40,000,000, in any given year
26    which shall be deposited into the Energy Efficiency Trust

 

 

09700SB2867sam004- 50 -LRB097 15146 JDS 67802 a

1    Fund and distributed pursuant to subsection (b) of Section
2    6-6 of the Renewable Energy, Energy Efficiency, and Coal
3    Resources Development Law of 1997. On or before the 5-year
4    anniversary of the execution of the contract and every 5
5    years thereafter, an expert hired by the owner of the
6    facility with the approval of the Attorney General shall
7    conduct an analysis to determine the cost of sequestration
8    of at least 90% of the total carbon dioxide emissions the
9    plant would otherwise emit. If the analysis shows that the
10    actual annual cost is greater than the penalty, then the
11    penalty shall be increased to equal the actual cost.
12    Provided, however, to the extent that the owner of the
13    facility described in subsection (h) of this Section can
14    demonstrate that the failure was as a result of acts of God
15    (including fire, flood, earthquake, tornado, lightning,
16    hurricane, or other natural disaster); any amendment,
17    modification, or abrogation of any applicable law or
18    regulation that would prevent performance; war; invasion;
19    act of foreign enemies; hostilities (regardless of whether
20    war is declared); civil war; rebellion; revolution;
21    insurrection; military or usurped power or confiscation;
22    terrorist activities; civil disturbance; riots;
23    nationalization; sabotage; blockage; or embargo, the owner
24    of the facility described in subsection (h) of this Section
25    shall not be subject to a penalty if and only if (i) it
26    promptly provides notice of its failure to the Commission;

 

 

09700SB2867sam004- 51 -LRB097 15146 JDS 67802 a

1    (ii) as soon as practicable and consistent with any order
2    or direction from the Commission, it submits to the
3    Commission proposed modifications to its carbon capture
4    and sequestration plan; and (iii) it carries out its
5    proposed modifications in the manner and time directed by
6    the Commission.
7        If the Commission finds that the facility has not
8    satisfied each of these requirements, then the facility
9    shall be subject to the penalty. If the owner of the clean
10    coal SNG facility captured and sequestered more than 90% of
11    the total carbon dioxide emissions that the facility would
12    otherwise emit, then the owner of the facility may credit
13    such additional amounts to reduce the amount of any future
14    penalty to be paid. The penalty resulting from the failure
15    to capture and sequester at least the minimum amount of
16    carbon dioxide shall not be passed on to a utility or its
17    customers.
18        If the clean coal SNG facility fails to meet the
19    requirements specified in this subsection (h-5), then the
20    Attorney General, on behalf of the People of the State of
21    Illinois, shall bring an action to enforce the obligations
22    related to the facility set forth in this subsection (h-5),
23    including any penalty payments owed, but not including the
24    physical obligation to capture and sequester at least 90%
25    of the total carbon dioxide emissions that the facility
26    would otherwise emit. Such action may be filed in any

 

 

09700SB2867sam004- 52 -LRB097 15146 JDS 67802 a

1    circuit court in Illinois. By entering into a contract
2    pursuant to subsection (h) of this Section, the clean coal
3    SNG facility agrees to waive any objections to venue or to
4    the jurisdiction of the court with regard to the Attorney
5    General's action under this subsection (h-5).
6        Compliance with the sequestration requirements and any
7    penalty requirements specified in this subsection (h-5)
8    for the clean coal SNG facility shall be assessed annually
9    by the Commission, which may in its discretion retain an
10    expert to facilitate its assessment. If any expert is
11    retained by the Commission, then the clean coal SNG
12    facility shall pay for the expert's reasonable fees, and
13    such costs shall not be passed through to the utility or
14    its customers.
15        In addition, carbon dioxide emission credits received
16    by the clean coal SNG facility in connection with
17    sequestration of carbon dioxide from the facility must be
18    sold in a timely fashion with any revenue, less applicable
19    fees and expenses and any expenses required to be paid by
20    facility for carbon dioxide transportation or
21    sequestration, deposited into the reconciliation account
22    within 30 days after receipt of such funds by the owner of
23    the clean coal SNG facility.
24        The clean coal SNG facility is prohibited from
25    transporting or sequestering carbon dioxide unless the
26    owner of the carbon dioxide pipeline that transfers the

 

 

09700SB2867sam004- 53 -LRB097 15146 JDS 67802 a

1    carbon dioxide from the facility and the owner of the
2    sequestration site where the carbon dioxide captured by the
3    facility is stored has acquired all applicable permits
4    under applicable State and federal laws, statutes, rules,
5    or regulations prior to the transfer or sequestration of
6    carbon dioxide. The responsibility for compliance with the
7    sequestration requirements specified in this subsection
8    (h-5) for the clean coal SNG facility shall reside solely
9    with the clean coal SNG facility, regardless of whether the
10    facility has contracted with another party to capture,
11    transport, or sequester carbon dioxide.
12        (C) If, in any year, the owner of a clean coal SNG
13    brownfield facility fails to demonstrate that the clean
14    coal SNG brownfield facility captured and sequestered at
15    least 85% of the total carbon dioxide emissions that the
16    facility would otherwise emit, then the owner of the clean
17    coal SNG brownfield facility must pay a penalty of $20 per
18    ton of excess carbon emissions up to $20,000,000, which
19    shall be deposited into the Energy Efficiency Trust Fund
20    and distributed pursuant to subsection (b) of Section 6-6
21    of the Renewable Energy, Energy Efficiency, and Coal
22    Resources Development Law of 1997. Provided, however, to
23    the extent that the owner of the clean coal SNG brownfield
24    facility can demonstrate that the failure was as a result
25    of acts of God (including fire, flood, earthquake, tornado,
26    lightning, hurricane, or other natural disaster); any

 

 

09700SB2867sam004- 54 -LRB097 15146 JDS 67802 a

1    amendment, modification, or abrogation of any applicable
2    law or regulation that would prevent performance; war;
3    invasion; act of foreign enemies; hostilities (regardless
4    of whether war is declared); civil war; rebellion;
5    revolution; insurrection; military or usurped power or
6    confiscation; terrorist activities; civil disturbances;
7    riots; nationalization; sabotage; blockage; or embargo,
8    the owner of the clean coal SNG brownfield facility shall
9    not be subject to a penalty if and only if (i) it promptly
10    provides notice of its failure to the Commission; (ii) as
11    soon as practicable and consistent with any order or
12    direction from the Commission, it submits to the Commission
13    proposed modifications to its carbon capture and
14    sequestration plan; and (iii) it carries out its proposed
15    modifications in the manner and time directed by the
16    Commission. If the Commission finds that the facility has
17    not satisfied each of these requirements, then the facility
18    shall be subject to the penalty. If the owner of a clean
19    coal SNG brownfield facility demonstrates that the clean
20    coal SNG brownfield facility captured and sequestered more
21    than 85% of the total carbon emissions that the facility
22    would otherwise emit, the owner of the clean coal SNG
23    brownfield facility may credit such additional amounts to
24    reduce the amount of any future penalty to be paid. The
25    penalty resulting from the failure to capture and sequester
26    at least the minimum amount of carbon dioxide shall not be

 

 

09700SB2867sam004- 55 -LRB097 15146 JDS 67802 a

1    passed on to a utility or its customers.
2        In addition to any penalty for the clean coal SNG
3    brownfield facility's failure to capture and sequester at
4    least its minimum sequestration requirement, the Attorney
5    General, on behalf of the People of the State of Illinois,
6    shall bring an action for specific performance of this
7    subsection (h-5). Such action may be filed in any circuit
8    court in Illinois. By entering into a sourcing agreement
9    pursuant to subsection (h-1) of this Section, the clean
10    coal SNG brownfield facility agrees to waive any objections
11    to venue or to the jurisdiction of the court with regard to
12    the Attorney General's action for specific performance
13    under this subsection (h-5).
14        Compliance with the sequestration requirements and
15    penalty requirements specified in this subsection (h-5)
16    for the clean coal SNG brownfield facility shall be
17    assessed annually by the Commission, which may in its
18    discretion retain an expert to facilitate its assessment.
19    If an expert is retained by the Commission, then the clean
20    coal SNG brownfield facility shall pay for the expert's
21    reasonable fees, and such costs shall not be passed through
22    to a utility or its customers. A SNG facility operating
23    pursuant to this subsection (h-5) shall not forfeit its
24    designation as a clean coal SNG facility or a clean coal
25    SNG brownfield facility if the facility fails to fully
26    comply with the applicable carbon sequestrian requirements

 

 

09700SB2867sam004- 56 -LRB097 15146 JDS 67802 a

1    in any given year, provided the requisite offsets are
2    purchased or requisite penalties are paid.
3        Responsibility for compliance with the sequestration
4    requirements specified in this subsection (h-5) for the
5    clean coal SNG brownfield facility shall reside solely with
6    the clean coal SNG brownfield facility regardless of
7    whether the facility has contracted with another party to
8    capture, transport, or sequester carbon dioxide.
9    (h-7) Sequestration permitting, oversight, and
10investigations.
11        (1) No clean coal facility or clean coal SNG brownfield
12    facility may transport or sequester carbon dioxide unless
13    the Commission approves the method of carbon dioxide
14    transportation or sequestration. Such approval shall be
15    required regardless of whether the facility has contracted
16    with another to transport or sequester the carbon dioxide.
17    Nothing in this subsection (h-7) shall release the owner or
18    operator of a carbon dioxide sequestration site or carbon
19    dioxide pipeline from any other permitting requirements
20    under applicable State and federal laws, statutes, rules,
21    or regulations.
22        (2) The Commission shall review carbon dioxide
23    transportation and sequestration methods proposed by a
24    clean coal facility or a clean coal SNG brownfield facility
25    and shall approve those methods it deems reasonable and
26    cost-effective. For purposes of this review,

 

 

09700SB2867sam004- 57 -LRB097 15146 JDS 67802 a

1    "cost-effective" means a commercially reasonable price for
2    similar carbon dioxide transportation or sequestration
3    techniques. In determining whether sequestration is
4    reasonable and cost-effective, the Commission may consult
5    with the Illinois State Geological Survey and retain third
6    parties to assist in its determination, provided that such
7    third parties shall not own or control any direct or
8    indirect interest in the facility that is proposing the
9    carbon dioxide transportation or the carbon dioxide
10    sequestration method and shall have no contractual
11    relationship with that facility. If a third party is
12    retained by the Commission, then the facility proposing the
13    carbon dioxide transportation or sequestration method
14    shall pay for the expert's reasonable fees, and these costs
15    shall not be passed through to a utility or its customers.
16        No later than 6 months prior to the date upon which the
17    owner intends to commence construction of a clean coal
18    facility or the clean coal SNG brownfield facility, the
19    owner of the facility shall file with the Commission a
20    carbon dioxide transportation or sequestration plan. The
21    Commission shall hold a public hearing within 30 days after
22    receipt of the facility's carbon dioxide transportation or
23    sequestration plan. The Commission shall post notice of the
24    review on its website upon submission of a carbon dioxide
25    transportation or sequestration method and shall accept
26    written public comments. The Commission shall take the

 

 

09700SB2867sam004- 58 -LRB097 15146 JDS 67802 a

1    comments into account when making its decision.
2        The Commission may not approve a carbon dioxide
3    sequestration method if the owner or operator of the
4    sequestration site has not received (i) an Underground
5    Injection Control permit from the United States
6    Environmental Protection Agency, or from the Illinois
7    Environmental Protection Agency pursuant to the
8    Environmental Protection Act; (ii) an Underground
9    Injection Control permit from the Illinois Department of
10    Natural Resources pursuant to the Illinois Oil and Gas Act;
11    or (iii) an Underground Injection Control permit from the
12    United States Environmental Protection Agency or a permit
13    similar to items (i) or (ii) from the state in which the
14    sequestration site is located if the sequestration will
15    take place outside of Illinois. The Commission shall
16    approve or deny the carbon dioxide transportation or
17    sequestration method within 90 days after the receipt of
18    all required information.
19        (3) (Blank). At least annually, the Illinois
20    Environmental Protection Agency shall inspect all carbon
21    dioxide sequestration sites in Illinois. The Illinois
22    Environmental Protection Agency may, as often as deemed
23    necessary, monitor and conduct investigations of those
24    sites. The owner or operator of the sequestration site must
25    cooperate with the Illinois Environmental Protection
26    Agency investigations of carbon dioxide sequestration

 

 

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1    sites.
2        If the Illinois Environmental Protection Agency
3    determines at any time a site creates conditions that
4    warrant the issuance of a seal order under Section 34 of
5    the Environmental Protection Act, then the Illinois
6    Environmental Protection Agency shall seal the site
7    pursuant to the Environmental Protection Act. If the
8    Illinois Environmental Protection Agency determines at any
9    time a carbon dioxide sequestration site creates
10    conditions that warrant the institution of a civil action
11    for an injunction under Section 43 of the Environmental
12    Protection Act, then the Illinois Environmental Protection
13    Agency shall request the State's Attorney or the Attorney
14    General institute such action. The Illinois Environmental
15    Protection Agency shall provide notice of any such actions
16    as soon as possible on its website. The SNG facility shall
17    incur all reasonable costs associated with any such
18    inspection or monitoring of the sequestration sites, and
19    these costs shall not be recoverable from utilities or
20    their customers.
21        (4) At least annually, the Commission shall inspect all
22    carbon dioxide pipelines in Illinois that transport carbon
23    dioxide to ensure the safety and feasibility of those
24    pipelines. The Commission may, as often as deemed
25    necessary, monitor and conduct investigations of those
26    pipelines. The owner or operator of the pipeline must

 

 

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1    cooperate with the Commission investigations of the carbon
2    dioxide pipelines.
3        In circumstances whereby a carbon dioxide pipeline
4    creates a substantial danger to the environment or to the
5    public health of persons or to the welfare of persons where
6    such danger is to the livelihood of such persons, the
7    State's Attorney or Attorney General, upon the request of
8    the Commission or on his or her own motion, may institute a
9    civil action for an immediate injunction to halt any
10    discharge or other activity causing or contributing to the
11    danger or to require such other action as may be necessary.
12    The court may issue an ex parte order and shall schedule a
13    hearing on the matter not later than 3 working days after
14    the date of injunction. The Commission shall provide notice
15    of any such actions as soon as possible on its website. The
16    SNG facility shall incur all reasonable costs associated
17    with any such inspection or monitoring of the sequestration
18    sites, and these costs shall not be recoverable from a
19    utility or its customers.
20    (h-9) The clean coal SNG brownfield facility shall have the
21right to recover prudently incurred increased costs or reduced
22revenue resulting from any new or amendatory legislation or
23other action. The State of Illinois pledges that the State will
24not enact any law or take any action to:
25        (1) break, or repeal the authority for, sourcing
26    agreements approved by the Commission and entered into

 

 

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1    between public utilities and the clean coal SNG brownfield
2    facility;
3        (2) deny public utilities full cost recovery for their
4    costs incurred under those sourcing agreements; or
5        (3) deny the clean coal SNG brownfield facility full
6    cost and revenue recovery as provided under those sourcing
7    agreements that are recoverable pursuant to subsection
8    (h-3) of this Section.
9    These pledges are for the benefit of the parties to those
10sourcing agreements and the issuers and holders of bonds or
11other obligations issued or incurred to finance or refinance
12the clean coal SNG brownfield facility. The clean coal SNG
13brownfield facility is authorized to include and refer to these
14pledges in any financing agreement into which it may enter in
15regard to those sourcing agreements.
16    The State of Illinois retains and reserves all other rights
17to enact new or amendatory legislation or take any other
18action, without impairment of the right of the clean coal SNG
19brownfield facility to recover prudently incurred increased
20costs or reduced revenue resulting from the new or amendatory
21legislation or other action, including, but not limited to,
22such legislation or other action that would (i) directly or
23indirectly raise the costs the clean coal SNG brownfield
24facility must incur; (ii) directly or indirectly place
25additional restrictions, regulations, or requirements on the
26clean coal SNG brownfield facility; (iii) prohibit

 

 

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1sequestration in general or prohibit a specific sequestration
2method or project; or (iv) increase minimum sequestration
3requirements for the clean coal SNG brownfield facility to the
4extent technically feasible. The clean coal SNG brownfield
5facility shall have the right to recover prudently incurred
6increased costs or reduced revenue resulting from the new or
7amendatory legislation or other action as described in this
8subsection (h-9).
9    (h-10) Contract costs for SNG incurred by an Illinois gas
10utility are reasonable and prudent and recoverable through the
11purchased gas adjustment clause and are not subject to review
12or disallowance by the Commission. Contract costs are costs
13incurred by the utility under the terms of a contract that
14incorporates the terms stated in subsection (h) of this Section
15as confirmed in writing by the Illinois Power Agency as set
16forth in subsection (h) of this Section, which confirmation
17shall be deemed conclusive, or as a consequence of or condition
18to its performance under the contract, including (i) amounts
19paid for SNG under the SNG contract and (ii) costs of
20transportation and storage services of SNG purchased from
21interstate pipelines under federally approved tariffs. The
22Illinois gas utility shall initiate a clean coal SNG facility
23rider mechanism that (A) shall be applicable to all customers
24who receive transportation service from the utility, (B) shall
25be designed to have an equal percentage impact on the
26transportation services rates of each class of the utility's

 

 

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1total customers, and (C) shall accurately reflect the net
2customer savings, if any, and above market costs, if any, under
3the SNG contract. Any contract, the terms of which have been
4confirmed in writing by the Illinois Power Agency as set forth
5in subsection (h) of this Section and the performance of the
6parties under such contract cannot be grounds for challenging
7prudence or cost recovery by the utility through the purchased
8gas adjustment clause, and in such cases, the Commission is
9directed not to consider, and has no authority to consider, any
10attempted challenges.
11    The contracts entered into by Illinois gas utilities
12pursuant to subsection (h) of this Section shall provide that
13the utility retains the right to terminate the contract without
14further obligation or liability to any party if the contract
15has been impaired as a result of any legislative,
16administrative, judicial, or other governmental action that is
17taken that eliminates all or part of the prudence protection of
18this subsection (h-10) or denies the recoverability of all or
19part of the contract costs through the purchased gas adjustment
20clause. Should any Illinois gas utility exercise its right
21under this subsection (h-10) to terminate the contract, all
22contract costs incurred prior to termination are and will be
23deemed reasonable, prudent, and recoverable as and when
24incurred and not subject to review or disallowance by the
25Commission. Any order, issued by the State requiring or
26authorizing the discontinuation of the merchant function,

 

 

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1defined as the purchase and sale of natural gas by an Illinois
2gas utility for the ultimate consumer in its service territory
3shall include provisions necessary to prevent the impairment of
4the value of any contract hereunder over its full term.
5    (h-11) All costs incurred by an Illinois gas utility in
6procuring SNG from a clean coal SNG brownfield facility
7pursuant to subsection (h-1) or a third-party marketer pursuant
8to subsection (h-1) are reasonable and prudent and recoverable
9through the purchased gas adjustment clause in conjunction with
10a SNG brownfield facility rider mechanism and are not subject
11to review or disallowance by the Commission; provided that if a
12utility is required by law or otherwise elects to connect the
13clean coal SNG brownfield facility to an interstate pipeline,
14then the utility shall be entitled to recover pursuant to its
15tariffs all just and reasonable costs that are prudently
16incurred. Sourcing agreement costs are costs incurred by the
17utility under the terms of a sourcing agreement that
18incorporates the terms stated in subsection (h-1) of this
19Section as approved by the Commission as set forth in
20subsection (h-4) of this Section, which approval shall be
21deemed conclusive, or as a consequence of or condition to its
22performance under the contract, including (i) amounts paid for
23SNG under the SNG contract and (ii) costs of transportation and
24storage services of SNG purchased from interstate pipelines
25under federally approved tariffs. Any sourcing agreement, the
26terms of which have been approved by the Commission as set

 

 

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1forth in subsection (h-4) of this Section, and the performance
2of the parties under the sourcing agreement cannot be grounds
3for challenging prudence or cost recovery by the utility, and
4in these cases, the Commission is directed not to consider, and
5has no authority to consider, any attempted challenges.
6    (h-15) Reconciliation account. The clean coal SNG facility
7shall establish a reconciliation account for the benefit of the
8retail customers of the utilities that have entered into
9contracts with the clean coal SNG facility pursuant to
10subsection (h). The reconciliation account shall be maintained
11and administered by an independent trustee that is mutually
12agreed upon by the owners of the clean coal SNG facility, the
13utilities, and the Commission in an interest-bearing account in
14accordance with the following:
15        (1) The clean coal SNG facility shall conduct an
16    analysis annually within 60 days after receiving the
17    necessary cost information, which shall be provided by the
18    gas utility within 6 months after the end of the preceding
19    calendar year, to determine (i) the average annual contract
20    SNG cost, which shall be calculated as the total amount
21    paid for SNG purchased from the clean coal SNG facility
22    over the preceding 12 months, plus the cost to the utility
23    of the required transportation and storage services of SNG,
24    divided by the total number of MMBtus of SNG actually
25    purchased from the clean coal SNG facility in the preceding
26    12 months under the utility contract; (ii) the average

 

 

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1    annual natural gas purchase cost, which shall be calculated
2    as the total annual supply costs paid for baseload natural
3    gas (excluding any SNG) purchased by such utility over the
4    preceding 12 months plus the costs of transportation and
5    storage services of such natural gas (excluding such costs
6    for SNG), divided by the total number of MMbtus of baseload
7    natural gas (excluding SNG) actually purchased by the
8    utility during the year; (iii) the cost differential, which
9    shall be the difference between the average annual contract
10    SNG cost and the average annual natural gas purchase cost;
11    and (iv) the revenue share target which shall be the cost
12    differential multiplied by the total amount of SNG
13    purchased over the preceding 12 months under such utility
14    contract.
15            (A) To the extent the annual average contract SNG
16        cost is less than the annual average natural gas
17        purchase cost, the utility shall credit an amount equal
18        to the revenue share target to the reconciliation
19        account. Such credit payment shall be made monthly
20        starting within 30 days after the completed analysis in
21        this subsection (h-15) and based on collections from
22        all customers via a line item charge in all customer
23        bills designed to have an equal percentage impact on
24        the transportation services of each class of
25        customers. Credit payments made pursuant to this
26        subparagraph (A) shall be deemed prudent and

 

 

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1        reasonable and not subject to Commission prudence
2        review.
3            (B) To the extent the annual average contract SNG
4        cost is greater than the annual average natural gas
5        purchase cost, the reconciliation account shall be
6        used to provide a credit equal to the revenue share
7        target to the utilities to be used to reduce the
8        utility's natural gas costs through the purchased gas
9        adjustment clause. Such payment shall be made within 30
10        days after the completed analysis pursuant to this
11        subsection (h-15), but only to the extent that the
12        reconciliation account has a positive balance.
13        (2) At the conclusion of the term of the SNG contracts
14    pursuant to subsection (h) and the completion of the final
15    annual analysis pursuant to this subsection (h-15), to the
16    extent the facility owes any amount to retail customers,
17    amounts in the account shall be credited to retail
18    customers to the extent the owed amount is repaid; 50% of
19    any additional amount in the reconciliation account shall
20    be distributed to the utilities to be used to reduce the
21    utilities' natural gas costs through the purchase gas
22    adjustment clause with the remaining amount distributed to
23    the clean coal SNG facility. Such payment shall be made
24    within 30 days after the last completed analysis pursuant
25    to this subsection (h-15). If the facility has repaid all
26    owed amounts, if any, to retail customers and has

 

 

09700SB2867sam004- 68 -LRB097 15146 JDS 67802 a

1    distributed 50% of any additional amount in the account to
2    the utilities, then the owners of the clean coal SNG
3    facility shall have no further obligation to the utility or
4    the retail customers.
5        If, at the conclusion of the term of the contracts
6    pursuant to subsection (h) and the completion of the final
7    annual analysis pursuant to this subsection (h-15), the
8    facility owes any amount to retail customers and the
9    account has been depleted, then the clean coal SNG facility
10    shall be liable for any remaining amount owed to the retail
11    customers. The clean coal SNG facility shall market the
12    daily production of SNG and distribute on a monthly basis
13    5% of the amounts collected with respect to such future
14    sales to the utilities in proportion to each utility's SNG
15    contract to be used to reduce the utility's natural gas
16    costs through the purchase gas adjustment clause; such
17    payments to the utility shall continue until either 15
18    years after the conclusion of the contract or such time as
19    the sum of such payments equals the remaining amount owed
20    to the retail customers at the end of the contract,
21    whichever is earlier. If the debt to the retail customers
22    is not repaid within 15 years after the conclusion of the
23    contract, then the owner of the clean coal SNG facility
24    must sell the facility, and all proceeds from that sale
25    must be used to repay any amount owed to the retail
26    customers under this subsection (h-15).

 

 

09700SB2867sam004- 69 -LRB097 15146 JDS 67802 a

1        The retail customers shall have first priority in
2    recovering that debt above any creditors, except the
3    secured lenders to the extent that the secured lenders have
4    any secured debt outstanding, including any parent
5    companies or affiliates of the clean coal SNG facility.
6        (3) 50% of all additional net revenue, defined as
7    miscellaneous net revenue after cost allowance and above
8    the budgeted estimate established for revenue pursuant to
9    subsection (h), including sale of substitute natural gas
10    derived from the clean coal SNG facility above the
11    nameplate capacity of the facility and other by-products
12    produced by the facility, shall be credited to the
13    reconciliation account on an annual basis with such payment
14    made within 30 days after the end of each calendar year
15    during the term of the contract.
16        (4) The clean coal SNG facility shall each year,
17    starting in the facility's first year of commercial
18    operation, file with the Commission, in such form as the
19    Commission shall require, a report as to the reconciliation
20    account. The annual report must contain the following
21    information:
22            (A) the revenue share target amount;
23            (B) the amount credited or debited to the
24        reconciliation account during the year;
25            (C) the amount credited to the utilities to be used
26        to reduce the utilities natural gas costs though the

 

 

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1        purchase gas adjustment clause;
2            (D) the total amount of reconciliation account at
3        the beginning and end of the year;
4            (E) the total amount of consumer savings to date;
5        and
6            (F) any additional information the Commission may
7        require.
8    When any report is erroneous or defective or appears to the
9Commission to be erroneous or defective, the Commission may
10notify the clean coal SNG facility to amend the report within
1130 days; before or after the termination of the 30-day period,
12the Commission may examine the trustee of the reconciliation
13account or the officers, agents, employees, books, records, or
14accounts of the clean coal SNG facility and correct such items
15in the report as upon such examination the Commission may find
16defective or erroneous. All reports shall be under oath.
17    All reports made to the Commission by the clean coal SNG
18facility and the contents of the reports shall be open to
19public inspection and shall be deemed a public record under the
20Freedom of Information Act. Such reports shall be preserved in
21the office of the Commission. The Commission shall publish an
22annual summary of the reports prior to February 1 of the
23following year. The annual summary shall be made available to
24the public on the Commission's website and shall be submitted
25to the General Assembly.
26    Any facility that fails to file the report required under

 

 

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1this paragraph (4) to the Commission within the time specified
2or to make specific answer to any question propounded by the
3Commission within 30 days after the time it is lawfully
4required to do so, or within such further time not to exceed 90
5days as may be allowed by the Commission in its discretion,
6shall pay a penalty of $500 to the Commission for each day it
7is in default.
8    Any person who willfully makes any false report to the
9Commission or to any member, officer, or employee thereof, any
10person who willfully in a report withholds or fails to provide
11material information to which the Commission is entitled under
12this paragraph (4) and which information is either required to
13be filed by statute, rule, regulation, order, or decision of
14the Commission or has been requested by the Commission, and any
15person who willfully aids or abets such person shall be guilty
16of a Class A misdemeanor.
17    (h-20) The General Assembly authorizes the Illinois
18Finance Authority to issue bonds to the maximum extent
19permitted to finance coal gasification facilities described in
20this Section, which constitute both "industrial projects"
21under Article 801 of the Illinois Finance Authority Act and
22"clean coal and energy projects" under Sections 825-65 through
23825-75 of the Illinois Finance Authority Act.
24    Administrative costs incurred by the Illinois Finance
25Authority in performance of this subsection (h-20) shall be
26subject to reimbursement by the clean coal SNG facility on

 

 

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1terms as the Illinois Finance Authority and the clean coal SNG
2facility may agree. The utility and its customers shall have no
3obligation to reimburse the clean coal SNG facility or the
4Illinois Finance Authority for any such costs.
5    (h-25) The State of Illinois pledges that the State may not
6enact any law or take any action to (1) break or repeal the
7authority for SNG purchase contracts entered into between
8public gas utilities and the clean coal SNG facility pursuant
9to subsection (h) of this Section or (2) deny public gas
10utilities their full cost recovery for contract costs, as
11defined in subsection (h-10), that are incurred under such SNG
12purchase contracts. These pledges are for the benefit of the
13parties to such SNG purchase contracts and the issuers and
14holders of bonds or other obligations issued or incurred to
15finance or refinance the clean coal SNG facility. The
16beneficiaries are authorized to include and refer to these
17pledges in any finance agreement into which they may enter in
18regard to such contracts.
19    (h-30) The State of Illinois retains and reserves all other
20rights to enact new or amendatory legislation or take any other
21action, including, but not limited to, such legislation or
22other action that would (1) directly or indirectly raise the
23costs that the clean coal SNG facility must incur; (2) directly
24or indirectly place additional restrictions, regulations, or
25requirements on the clean coal SNG facility; (3) prohibit
26sequestration in general or prohibit a specific sequestration

 

 

09700SB2867sam004- 73 -LRB097 15146 JDS 67802 a

1method or project; or (4) increase minimum sequestration
2requirements.
3    (i) If a gas utility or an affiliate of a gas utility has
4an ownership interest in any entity that produces or sells
5synthetic natural gas, Article VII of this Act shall apply.
6(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;
797-239, eff. 8-2-11; 97-630, eff. 12-8-11.)".