HB3657 95TH GENERAL ASSEMBLY

LRB095 10191 MJR 32362 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB3657

Introduced 2/28/2007, by Rep. Robert F. Flider

SYNOPSIS AS INTRODUCED:

220 ILCS 5/8-102	from Ch. 111 2/3, par. 8-102
220 ILCS 5/8-401	from Ch. 111 2/3, par. 8-401
220 ILCS 5/9-213	from Ch. 111 2/3, par. 9-213
220 ILCS 5/9-219 new

Amends the Public Utilities Act. Provides that an audit or investigation may examine the reasonableness, prudence, or efficiency of any aspect of the utility's operations, costs, management, decisions, or functions that may affect the adequacy, safety, efficiency, or reliability of utility service or the reasonableness or prudence of the costs underlying rates or charges including power procurement costs for utility service. Provides that every 3 years each electric utility that provides electric services shall file with the Illinois Commerce Commission an energy plan for its service territory consistent with certain planning objectives and requirements. Provides that the cost of new electric utility generating plants and significant additions to electric utility generating plants shall not be included in the rate base of any utility unless such cost is reasonable and prudently incurred. Provides that the Commission shall authorize a decrease of rates and charges based upon changes in the cost of purchased power if it determines that a utility's power procurement costs were not the lowest cost possible. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Public Utilities Act is amended by changing Sections 8-102, 8-401, and 9-213 and by adding Section 9-219 as follows:

(220 ILCS 5/8-102) (from Ch. 111 2/3, par. 8-102)

Sec. 8-102. Audit or investigation. The Commission is authorized to conduct or order a management audit or investigation of any public utility or part thereof. The audit or investigation may examine the reasonableness, prudence, or efficiency of any aspect of the utility's operations, costs, management, decisions or functions that may affect the adequacy, safety, efficiency or reliability of utility service or the reasonableness or prudence of the costs underlying rates or charges for utility service, including power procurement costs. The Commission may conduct or order a management audit or investigation only when it has reasonable grounds to believe that the audit or investigation is necessary to assure that the utility is providing adequate, efficient, reliable, safe, and least-cost service and charging only just and reasonable rates therefor, or that the audit or investigation is likely to be cost-beneficial in enhancing the quality of service or the reasonableness of rates therefor. The Commission shall, before initiating any such audit or investigation, issue an order describing the grounds for the audit or investigation and the appropriate scope and nature of the audit or investigation. The scope and nature of any such audit or investigation shall be reasonably related to the grounds relied upon by the Commission in its order.

Any audit or investigation authorized pursuant to this Section may be conducted by the Commission, or if the Commission is unable to adequately perform the audit or investigation, the Commission may arrange for it to be conducted by persons independent of the utility and selected by the Commission. The cost of an independent audit shall be borne initially by the utility, but shall be recovered as an expense through normal ratemaking procedures. Any audit or investigation shall be conducted in accordance with generally accepted auditing standards.

(Source: P.A. 90-655, eff. 7-30-98.)

(220 ILCS 5/8-401) (from Ch. 111 2/3, par. 8-401)

Sec. 8-401. (a) Every public utility subject to this Act shall provide service and facilities which are in all respects adequate, efficient, reliable and environmentally safe and which, consistent with these obligations, constitute the least-cost means of meeting the utility's service obligations.

(b) Every 3 years, each electric utility shall file with the Commission an energy plan for its service territory consistent with the planning objectives and requirements described in this Article. The Commission shall review each such plan and provide testimony before the Commission in the hearings required by this Article as to the adequacy of each plan in satisfying the objectives of this Article and this Act. Subsequent to the effective date of this amendatory Act of the 95th General Assembly, the next such utility electric plans shall be filed on July 1, 2008.

(c) In preparing the plans required under subsection (b) of this Section each electric utility shall include the following:

(1) Year-by-year, 20-year demand projections for each electric utility for services and projected customers by major service classifications of the electric utility, as well as the basis for the projections, including an examination of possible alternative levels of demand and discussions of the forecasting methodologies and input variables used in making the forecasts. In particular the actual and forecasted impact of conservation, renewable resources, cogeneration, and other improvements in energy efficiency shall be identified and analyzed.

(2) Year-by-year projections of all available sources of supply for each of the next 20 years for each electric utility, including, but not limited to:

(A) available electric generating capacity, indicating planned additions, retirements, purchases, substantial planned outages, deratings, and all other expected changes in levels of generating and production capacity;

(B) the projected utilization of cogeneration, and nonconventional technologies relying on renewable resources, identifying specifically any such capacity expected to be available for purchase by the utility; and

(C) a discussion of all existing and proposed programs and policies to promote and ensure the full utilization of all practical and economical energy conservation;

(3) A demonstration that the proposed plan represents the least-cost means of satisfying energy service needs consistent with the objective of this Section, including:

(A) a discussion of how the utility has determined the appropriate level of reliability to be used in its forecasts and plans, and how this determination has influenced its forecasts and plans;

(B) a demonstration that the plan fully considers and utilizes all available, practical, and economical conservation, renewable resources, cogeneration, and improvements in energy efficiency;

(C) with respect to the planned construction of any new generation or production facilities:

(i) a discussion of proposed and alternative sites and of the likely or possible environmental consequences of the construction and operation of planned facilities;

(ii) a discussion of the types of fuel and methods of generation to be employed at planned facilities;

(iii) a discussion of the operating and capital costs of planned facilities and the expected financial impacts and requirements of construction and operation; and

(iv) a discussion of the expected impact of any planned facility on system reserve margins and rates at the time of proposed inclusion into rate base; and

(D) a demonstration that the utility's rate design accurately reflects the long-term cost of service for each customer class or group and provides full and adequate incentives for each customer class or group to conserve energy.

The Commission shall determine the precise form, scope, and contents of such energy plans consistent with the requirements of this paragraph and shall have the power to require the provision of such additional date, information, and analysis as necessary to effectuate the planning objectives of this Section.

(Source: P.A. 84-617.)

(220 ILCS 5/9-213) (from Ch. 111 2/3, par. 9-213)

Sec. 9-213. The cost of new electric utility generating plants and significant additions to electric utility generating plants shall not be included in the rate base of any utility unless such cost is reasonable and prudently incurred. Prior to including the cost of plants or additions to utility plants in the rate base, the Commission shall conduct an audit of such costs in order to ascertain whether the cost associated with the new generating plant or the addition to electric utility generating plant is reasonable. However, the Commission may, for good cause shown in individual cases, waive the auditing requirement for any generating facility which meets all of the following requirements:

(1) the facility is wholly owned and operated by a public utility, as otherwise defined in this Act, which serves less than 20,000 electric customers within the State of Illinois, and

(2) the facility is designed to generate less than 50 megawatts of electricity, and

(3) the facility is located outside of the State of Illinois.

If the Commission is unable to conduct such an audit, the Commission shall arrange for it to be conducted by persons independent of the utility and selected by the Commission. The cost of such an independent audit shall be borne initially by the utility, but shall be recovered as an expense through normal ratemaking procedures. Any such audits shall be conducted in accordance with generally accepted auditing standards and shall include but not be limited to costs associated with materials, labor, equipment, professional services and other direct and indirect costs.

"Significant additions to the electric utility generating plant", as used in this Section, shall not include a public utility's investment in pollution control devices for the control of sulfur dioxide emissions. Nothing in this Section is intended to affect the provisions of Section 9-214 of this Act.

"Reasonable", as used in this Section, means that a utility's decisions, construction, and supervision of construction, underlying the costs of new electric utility generating plants and significant additions to electric utility generating plants resulted in efficient, economical and timely construction. In determining the reasonableness of plant costs, the Commission shall consider the knowledge and circumstances prevailing at the time of each relevant utility decision or action.

Nothing in this Section shall prevent or limit the Commission from either entering into and conducting joint audits concerning such electric generating plants with the regulatory authority of another state, or from relying on audits conducted by the regulatory authority of another state in lieu of an audit as required by this Section.

(Source: P.A. 87-435.)

(220 ILCS 5/9-219 new)

Sec. 9-219. Rates and least cost power procurement practices. Notwithstanding the provisions of Section 9-201, the Commission shall authorize a decrease of rates and charges based upon changes in the cost of purchased power if it determines that a utility's power procurement costs were not the lowest cost possible. Annually, the Commission shall initiate public hearings to determine whether a utility's purchased power is prudent. In each proceeding, the burden of proof shall be upon the utility to establish prudence of it purchased power costs. The Commission shall issue its final order in each such annual proceeding for an electric utility by December 31 of that year. The Commission shall adopt rules specifying least cost power procurement practices.

Section 99. Effective date. This Act takes effect upon becoming law.