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Full Text of HB1369  97th General Assembly

HB1369 97TH GENERAL ASSEMBLY

  
  

 


 
97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1369

 

Introduced 2/9/2011, by Rep. Thomas Holbrook

 

SYNOPSIS AS INTRODUCED:
 
220 ILCS 5/16-111.5

    Amends the Public Utilities Act. Provides that the required procurement plan for an electric utility shall include proposed bidding rules, bid documents, standard form contracts, and credit documents and policies. Changes provisions concerning the draft and final procurement plans by the Illinois Power Agency, including the role of the Illinois Commerce Commission. Effective immediately.


LRB097 09305 ASK 49440 b

 

 

A BILL FOR

 

HB1369LRB097 09305 ASK 49440 b

1    AN ACT concerning utilities.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Section 16-111.5 as follows:
 
6    (220 ILCS 5/16-111.5)
7    Sec. 16-111.5. Provisions relating to procurement.
8    (a) An electric utility that on December 31, 2005 served at
9least 100,000 customers in Illinois shall procure power and
10energy for its eligible retail customers in accordance with the
11applicable provisions set forth in Section 1-75 of the Illinois
12Power Agency Act and this Section. "Eligible retail customers"
13for the purposes of this Section means those retail customers
14that purchase power and energy from the electric utility under
15fixed-price bundled service tariffs, other than those retail
16customers whose service is declared or deemed competitive under
17Section 16-113 and those other customer groups specified in
18this Section, including self-generating customers, customers
19electing hourly pricing, or those customers who are otherwise
20ineligible for fixed-price bundled tariff service. Those
21customers that are excluded from the definition of "eligible
22retail customers" shall not be included in the procurement plan
23load requirements, and the utility shall procure any supply

 

 

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1requirements, including capacity, ancillary services, and
2hourly priced energy, in the applicable markets as needed to
3serve those customers, provided that the utility may include in
4its procurement plan load requirements for the load that is
5associated with those retail customers whose service has been
6declared or deemed competitive pursuant to Section 16-113 of
7this Act to the extent that those customers are purchasing
8power and energy during one of the transition periods
9identified in subsection (b) of Section 16-113 of this Act.
10    (b) A procurement plan shall be prepared for each electric
11utility consistent with the applicable requirements of the
12Illinois Power Agency Act and this Section. For purposes of
13this Section, Illinois electric utilities that are affiliated
14by virtue of a common parent company are considered to be a
15single electric utility. Each procurement plan shall analyze
16the projected balance of supply and demand for eligible retail
17customers over a 5-year period with the first planning year
18beginning on June 1 of the year following the year in which the
19plan is filed. The plan shall specifically identify the
20wholesale products to be procured following plan approval, and
21shall follow all the requirements set forth in the Public
22Utilities Act and all applicable State and federal laws,
23statutes, rules, or regulations, as well as Commission orders.
24Nothing in this Section precludes consideration of contracts
25longer than 5 years and related forecast data. Unless specified
26otherwise in this Section, in the procurement plan or in the

 

 

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1implementing tariff, any procurement occurring in accordance
2with this plan shall be competitively bid through a request for
3proposals process. Approval and implementation of the
4procurement plan shall be subject to review and approval by the
5Commission according to the provisions set forth in this
6Section. A procurement plan shall include each of the following
7components:
8        (1) Hourly load analysis. This analysis shall include:
9            (i) multi-year historical analysis of hourly
10        loads;
11            (ii) switching trends and competitive retail
12        market analysis;
13            (iii) known or projected changes to future loads;
14        and
15            (iv) growth forecasts by customer class.
16        (2) Analysis of the impact of any demand side and
17    renewable energy initiatives. This analysis shall include:
18            (i) the impact of demand response programs, both
19        current and projected;
20            (ii) supply side needs that are projected to be
21        offset by purchases of renewable energy resources, if
22        any; and
23            (iii) the impact of energy efficiency programs,
24        both current and projected.
25        (3) A plan for meeting the expected load requirements
26    that will not be met through preexisting contracts. This

 

 

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1    plan shall include:
2            (i) definitions of the different retail customer
3        classes for which supply is being purchased;
4            (ii) the proposed mix of demand-response products
5        for which contracts will be executed during the next
6        year. The cost-effective demand-response measures
7        shall be procured whenever the cost is lower than
8        procuring comparable capacity products, provided that
9        such products shall:
10                (A) be procured by a demand-response provider
11            from eligible retail customers;
12                (B) at least satisfy the demand-response
13            requirements of the regional transmission
14            organization market in which the utility's service
15            territory is located, including, but not limited
16            to, any applicable capacity or dispatch
17            requirements;
18                (C) provide for customers' participation in
19            the stream of benefits produced by the
20            demand-response products;
21                (D) provide for reimbursement by the
22            demand-response provider of the utility for any
23            costs incurred as a result of the failure of the
24            supplier of such products to perform its
25            obligations thereunder; and
26                (E) meet the same credit requirements as apply

 

 

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1            to suppliers of capacity, in the applicable
2            regional transmission organization market;
3            (iii) monthly forecasted system supply
4        requirements, including expected minimum, maximum, and
5        average values for the planning period;
6            (iv) the proposed mix and selection of standard
7        wholesale products for which contracts will be
8        executed during the next year, separately or in
9        combination, to meet that portion of its load
10        requirements not met through pre-existing contracts,
11        including but not limited to monthly 5 x 16 peak period
12        block energy, monthly off-peak wrap energy, monthly 7 x
13        24 energy, annual 5 x 16 energy, annual off-peak wrap
14        energy, annual 7 x 24 energy, monthly capacity, annual
15        capacity, peak load capacity obligations, capacity
16        purchase plan, and ancillary services;
17            (v) proposed term structures for each wholesale
18        product type included in the proposed procurement plan
19        portfolio of products; and
20            (vi) an assessment of the price risk, load
21        uncertainty, and other factors that are associated
22        with the proposed procurement plan; this assessment,
23        to the extent possible, shall include an analysis of
24        the following factors: contract terms, time frames for
25        securing products or services, fuel costs, weather
26        patterns, transmission costs, market conditions, and

 

 

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1        the governmental regulatory environment; the proposed
2        procurement plan shall also identify alternatives for
3        those portfolio measures that are identified as having
4        significant price risk.
5        (4) Proposed procedures for balancing loads. The
6    procurement plan shall include, for load requirements
7    included in the procurement plan, the process for (i)
8    hourly balancing of supply and demand and (ii) the criteria
9    for portfolio re-balancing in the event of significant
10    shifts in load.
11        (5) Proposed bidding rules, bid documents, standard
12    form contracts, and credit documents and policies.
13    (c) The procurement process set forth in Section 1-75 of
14the Illinois Power Agency Act and subsection (e) of this
15Section shall be administered by a procurement administrator
16and monitored by a procurement monitor.
17        (1) The procurement administrator shall:
18            (i) design the final procurement process in
19        accordance with Section 1-75 of the Illinois Power
20        Agency Act and subsection (e) of this Section following
21        Commission approval of the procurement plan;
22            (ii) develop benchmarks in accordance with
23        subsection (e)(3) to be used to evaluate bids; these
24        benchmarks shall be submitted to the Commission for
25        review and approval on a confidential basis prior to
26        the procurement event;

 

 

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1            (iii) serve as the interface between the electric
2        utility and suppliers;
3            (iv) manage the bidder pre-qualification and
4        registration process;
5            (v) obtain the electric utilities' agreement to
6        the final form of all supply contracts and credit
7        collateral agreements;
8            (vi) administer the request for proposals process;
9            (vii) have the discretion to negotiate to
10        determine whether bidders are willing to lower the
11        price of bids that meet the benchmarks approved by the
12        Commission; any post-bid negotiations with bidders
13        shall be limited to price only and shall be completed
14        within 24 hours after opening the sealed bids and shall
15        be conducted in a fair and unbiased manner; in
16        conducting the negotiations, there shall be no
17        disclosure of any information derived from proposals
18        submitted by competing bidders; if information is
19        disclosed to any bidder, it shall be provided to all
20        competing bidders;
21            (viii) maintain confidentiality of supplier and
22        bidding information in a manner consistent with all
23        applicable laws, rules, regulations, and tariffs;
24            (ix) submit a confidential report to the
25        Commission recommending acceptance or rejection of
26        bids;

 

 

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1            (x) notify the utility of contract counterparties
2        and contract specifics; and
3            (xi) administer related contingency procurement
4        events.
5        (2) The procurement monitor, who shall be retained by
6    the Commission, shall:
7            (i) monitor interactions among the procurement
8        administrator, suppliers, and utility;
9            (ii) monitor and report to the Commission on the
10        progress of the procurement process;
11            (iii) provide an independent confidential report
12        to the Commission regarding the results of the
13        procurement event;
14            (iv) assess compliance with the procurement plans
15        approved by the Commission for each utility that on
16        December 31, 2005 provided electric service to a least
17        100,000 customers in Illinois;
18            (v) preserve the confidentiality of supplier and
19        bidding information in a manner consistent with all
20        applicable laws, rules, regulations, and tariffs;
21            (vi) provide expert advice to the Commission and
22        consult with the procurement administrator regarding
23        issues related to procurement process design, rules,
24        protocols, and policy-related matters; and
25            (vii) consult with the procurement administrator
26        regarding the development and use of benchmark

 

 

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1        criteria, standard form contracts, credit policies,
2        and bid documents.
3    (d) Except as provided in subsection (j), the planning
4process shall be conducted as follows:
5        (1) Beginning in 2008, each Illinois utility procuring
6    power pursuant to this Section shall annually provide a
7    range of load forecasts to the Illinois Power Agency by
8    July 15 of each year, or such other date as may be required
9    by the Commission or Agency. The load forecasts shall cover
10    the 5-year procurement planning period for the next
11    procurement plan and shall include hourly data
12    representing a high-load, low-load and expected-load
13    scenario for the load of the eligible retail customers. The
14    utility shall provide supporting data and assumptions for
15    each of the scenarios.
16        (2) Beginning in 2011 2008, the Illinois Power Agency
17    shall prepare a draft procurement plan by August 15th of
18    each year, or such other date as may be required by the
19    Commission. The procurement plan shall identify the
20    portfolio of demand-response and power and energy products
21    to be procured. The draft procurement plan shall also
22    indicate, in legislative style, the specific changes to the
23    most recent Commission-approved procurement plan.
24    Cost-effective demand-response measures shall be procured
25    as set forth in item (iii) of subsection (b) of this
26    Section. Copies of the draft procurement plan shall be

 

 

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1    posted and made publicly available on the Agency's and
2    Commission's websites, and copies shall also be provided to
3    each affected electric utility and each alternative retail
4    electric supplier. An affected utility shall have 30 days
5    following the date of posting to provide comment to the
6    Agency on the draft procurement plan. Other interested
7    entities, including alternative retail electric suppliers,
8    also may comment on the procurement plan within the
9    timeframe outlined in this Section. All comments submitted
10    to the Agency shall be specific, supported by data or other
11    detailed analyses, and, if objecting to all or a portion of
12    the draft procurement plan, accompanied by specific
13    alternative wording or proposals. All comments shall be
14    posted on the Agency's and Commission's websites. During
15    this 30-day comment period, the Agency shall hold at least
16    one public hearing within each utility's service area for
17    the purpose of receiving public comment on the draft
18    procurement plan. The Agency shall endeavor at all times to
19    identify interested parties and proactively seek out
20    comment from parties affected by Agency proposals. Within
21    14 days following the end of the 30-day review period, the
22    Agency shall revise the draft procurement plan as necessary
23    based on the comments received and file the agency's final
24    version of the procurement plan with the Commission and
25    post the Agency's final version of the procurement plan on
26    the websites. The Agency shall identify any revisions to

 

 

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1    the draft procurement plan by documenting such revisions in
2    legislative style.
3        (3) Within 10 5 days after the filing of the Agency's
4    final version of the procurement plan, any person objecting
5    to the procurement plan shall file an objection with the
6    Commission. Within 15 10 days after the filing, the
7    Commission shall determine whether a hearing is necessary.
8    Given the short timeframe in which parties have to review
9    and comment upon the Agency's final version of the
10    procurement plan, the Commission may, in its discretion,
11    reject any subsequent supplements, amendments, or
12    modifications proposed by the Agency to its final version
13    of the procurement plan filed with the Commission. Any such
14    supplement, amendment, or modification may be proposed by
15    the Agency in subsequent draft plans. The Commission shall
16    enter its order confirming or modifying the final
17    procurement plan within 90 days after the filing of the
18    final procurement plan, including all modifications and
19    additions, by the Illinois Power Agency. In its order
20    disposing of the Agency's final procurement plan, the
21    Commission may specifically require and direct the Agency
22    to undertake additional research on specific Agency
23    proposals contained in the Agency's final procurement plan
24    for which the Commission finds the evidentiary record is
25    insufficient or incomplete. The Commission may provide the
26    Agency with specific questions or areas of inquiry related

 

 

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1    to the Agency's proposal that the Commission wishes the
2    Agency to pursue. The Commission may require that the
3    Agency provide a report back to the Commission on the
4    results of the Agency's research in a format, and by a date
5    certain, acceptable to the Commission.
6        (4) The Commission shall approve the procurement plan,
7    including expressly the forecast used in the procurement
8    plan, if the Commission determines that it will ensure
9    adequate, reliable, affordable, efficient, and
10    environmentally sustainable electric service at the lowest
11    total cost over time, taking into account any benefits of
12    price stability.
13    (e) The procurement process shall include each of the
14following components:
15        (1) Solicitation, pre-qualification, and registration
16    of bidders. The procurement administrator shall
17    disseminate information to potential bidders to promote a
18    procurement event, notify potential bidders that the
19    procurement administrator may enter into a post-bid price
20    negotiation with bidders that meet the applicable
21    benchmarks, provide supply requirements, and otherwise
22    explain the competitive procurement process. In addition
23    to such other publication as the procurement administrator
24    determines is appropriate, this information shall be
25    posted on the Illinois Power Agency's and the Commission's
26    websites. The procurement administrator shall also

 

 

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1    administer the prequalification process, including
2    evaluation of credit worthiness, compliance with
3    procurement rules, and agreement to the standard form
4    contract developed pursuant to paragraph (2) of this
5    subsection (e). The procurement administrator shall then
6    identify and register bidders to participate in the
7    procurement event.
8        (2) Standard contract forms and credit terms and
9    instruments. The procurement administrator, in
10    consultation with the utilities, the Commission, and other
11    interested parties and subject to Commission oversight,
12    shall develop and provide standard contract forms for the
13    supplier contracts that meet generally accepted industry
14    practices. Standard credit terms and instruments that meet
15    generally accepted industry practices shall be similarly
16    developed. The procurement administrator shall make
17    available to the Commission all written comments it
18    receives on the contract forms, credit terms, or
19    instruments. If the procurement administrator cannot reach
20    agreement with the applicable electric utility as to the
21    contract terms and conditions, the procurement
22    administrator must notify the Commission of any disputed
23    terms and the Commission shall resolve the dispute. The
24    terms of the contracts shall not be subject to negotiation
25    by winning bidders, and the bidders must agree to the terms
26    of the contract in advance so that winning bids are

 

 

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1    selected solely on the basis of price.
2        (3) Establishment of a market-based price benchmark.
3    As part of the development of the procurement process, the
4    procurement administrator, in consultation with the
5    Commission staff, Agency staff, and the procurement
6    monitor, shall establish benchmarks for evaluating the
7    final prices in the contracts for each of the products that
8    will be procured through the procurement process. The
9    benchmarks shall be based on price data for similar
10    products for the same delivery period and same delivery
11    hub, or other delivery hubs after adjusting for that
12    difference. The price benchmarks may also be adjusted to
13    take into account differences between the information
14    reflected in the underlying data sources and the specific
15    products and procurement process being used to procure
16    power for the Illinois utilities. The benchmarks shall be
17    confidential but shall be provided to, and will be subject
18    to Commission review and approval, prior to a procurement
19    event.
20        (4) Request for proposals competitive procurement
21    process. The procurement administrator shall design and
22    issue a request for proposals to supply electricity in
23    accordance with each utility's procurement plan, as
24    approved by the Commission. The request for proposals shall
25    set forth a procedure for sealed, binding commitment
26    bidding with pay-as-bid settlement, and provision for

 

 

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1    selection of bids on the basis of price.
2        (5) A plan for implementing contingencies in the event
3    of supplier default or failure of the procurement process
4    to fully meet the expected load requirement due to
5    insufficient supplier participation, Commission rejection
6    of results, or any other cause.
7            (i) Event of supplier default: In the event of
8        supplier default, the utility shall review the
9        contract of the defaulting supplier to determine if the
10        amount of supply is 200 megawatts or greater, and if
11        there are more than 60 days remaining of the contract
12        term. If both of these conditions are met, and the
13        default results in termination of the contract, the
14        utility shall immediately notify the Illinois Power
15        Agency that a request for proposals must be issued to
16        procure replacement power, and the procurement
17        administrator shall run an additional procurement
18        event. If the contracted supply of the defaulting
19        supplier is less than 200 megawatts or there are less
20        than 60 days remaining of the contract term, the
21        utility shall procure power and energy from the
22        applicable regional transmission organization market,
23        including ancillary services, capacity, and day-ahead
24        or real time energy, or both, for the duration of the
25        contract term to replace the contracted supply;
26        provided, however, that if a needed product is not

 

 

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1        available through the regional transmission
2        organization market it shall be purchased from the
3        wholesale market.
4            (ii) Failure of the procurement process to fully
5        meet the expected load requirement: If the procurement
6        process fails to fully meet the expected load
7        requirement due to insufficient supplier participation
8        or due to a Commission rejection of the procurement
9        results, the procurement administrator, the
10        procurement monitor, and the Commission staff shall
11        meet within 10 days to analyze potential causes of low
12        supplier interest or causes for the Commission
13        decision. If changes are identified that would likely
14        result in increased supplier participation, or that
15        would address concerns causing the Commission to
16        reject the results of the prior procurement event, the
17        procurement administrator may implement those changes
18        and rerun the request for proposals process according
19        to a schedule determined by those parties and
20        consistent with Section 1-75 of the Illinois Power
21        Agency Act and this subsection. In any event, a new
22        request for proposals process shall be implemented by
23        the procurement administrator within 90 days after the
24        determination that the procurement process has failed
25        to fully meet the expected load requirement.
26            (iii) In all cases where there is insufficient

 

 

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1        supply provided under contracts awarded through the
2        procurement process to fully meet the electric
3        utility's load requirement, the utility shall meet the
4        load requirement by procuring power and energy from the
5        applicable regional transmission organization market,
6        including ancillary services, capacity, and day-ahead
7        or real time energy or both; provided, however, that if
8        a needed product is not available through the regional
9        transmission organization market it shall be purchased
10        from the wholesale market.
11        (6) The procurement process described in this
12    subsection is exempt from the requirements of the Illinois
13    Procurement Code, pursuant to Section 20-10 of that Code.
14    (f) Within 2 business days after opening the sealed bids,
15the procurement administrator shall submit a confidential
16report to the Commission. The report shall contain the results
17of the bidding for each of the products along with the
18procurement administrator's recommendation for the acceptance
19and rejection of bids based on the price benchmark criteria and
20other factors observed in the process. The procurement monitor
21also shall submit a confidential report to the Commission
22within 2 business days after opening the sealed bids. The
23report shall contain the procurement monitor's assessment of
24bidder behavior in the process as well as an assessment of the
25procurement administrator's compliance with the procurement
26process and rules. The Commission shall review the confidential

 

 

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1reports submitted by the procurement administrator and
2procurement monitor, and shall accept or reject the
3recommendations of the procurement administrator within 2
4business days after receipt of the reports.
5    (g) Within 3 business days after the Commission decision
6approving the results of a procurement event, the utility shall
7enter into binding contractual arrangements with the winning
8suppliers using the standard form contracts; except that the
9utility shall not be required either directly or indirectly to
10execute the contracts if a tariff that is consistent with
11subsection (l) of this Section has not been approved and placed
12into effect for that utility.
13    (h) The names of the successful bidders and the load
14weighted average of the winning bid prices for each contract
15type and for each contract term shall be made available to the
16public at the time of Commission approval of a procurement
17event. The Commission, the procurement monitor, the
18procurement administrator, the Illinois Power Agency, and all
19participants in the procurement process shall maintain the
20confidentiality of all other supplier and bidding information
21in a manner consistent with all applicable laws, rules,
22regulations, and tariffs. Confidential information, including
23the confidential reports submitted by the procurement
24administrator and procurement monitor pursuant to subsection
25(f) of this Section, shall not be made publicly available and
26shall not be discoverable by any party in any proceeding,

 

 

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1absent a compelling demonstration of need, nor shall those
2reports be admissible in any proceeding other than one for law
3enforcement purposes.
4    (i) Within 2 business days after a Commission decision
5approving the results of a procurement event or such other date
6as may be required by the Commission from time to time, the
7utility shall file for informational purposes with the
8Commission its actual or estimated retail supply charges, as
9applicable, by customer supply group reflecting the costs
10associated with the procurement and computed in accordance with
11the tariffs filed pursuant to subsection (l) of this Section
12and approved by the Commission.
13    (j) Within 60 days following the effective date of this
14amendatory Act, each electric utility that on December 31, 2005
15provided electric service to at least 100,000 customers in
16Illinois shall prepare and file with the Commission an initial
17procurement plan, which shall conform in all material respects
18to the requirements of the procurement plan set forth in
19subsection (b); provided, however, that the Illinois Power
20Agency Act shall not apply to the initial procurement plan
21prepared pursuant to this subsection. The initial procurement
22plan shall identify the portfolio of power and energy products
23to be procured and delivered for the period June 2008 through
24May 2009, and shall identify the proposed procurement
25administrator, who shall have the same experience and expertise
26as is required of a procurement administrator hired pursuant to

 

 

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1Section 1-75 of the Illinois Power Agency Act. Copies of the
2procurement plan shall be posted and made publicly available on
3the Commission's website. The initial procurement plan may
4include contracts for renewable resources that extend beyond
5May 2009.
6        (i) Within 14 days following filing of the initial
7    procurement plan, any person may file a detailed objection
8    with the Commission contesting the procurement plan
9    submitted by the electric utility. All objections to the
10    electric utility's plan shall be specific, supported by
11    data or other detailed analyses. The electric utility may
12    file a response to any objections to its procurement plan
13    within 7 days after the date objections are due to be
14    filed. Within 7 days after the date the utility's response
15    is due, the Commission shall determine whether a hearing is
16    necessary. If it determines that a hearing is necessary, it
17    shall require the hearing to be completed and issue an
18    order on the procurement plan within 60 days after the
19    filing of the procurement plan by the electric utility.
20        (ii) The order shall approve or modify the procurement
21    plan, approve an independent procurement administrator,
22    and approve or modify the electric utility's tariffs that
23    are proposed with the initial procurement plan. The
24    Commission shall approve the procurement plan if the
25    Commission determines that it will ensure adequate,
26    reliable, affordable, efficient, and environmentally

 

 

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1    sustainable electric service at the lowest total cost over
2    time, taking into account any benefits of price stability.
3    (k) In order to promote price stability for residential and
4small commercial customers during the transition to
5competition in Illinois, and notwithstanding any other
6provision of this Act, each electric utility subject to this
7Section shall enter into one or more multi-year financial swap
8contracts that become effective on the effective date of this
9amendatory Act. These contracts may be executed with generators
10and power marketers, including affiliated interests of the
11electric utility. These contracts shall be for a term of no
12more than 5 years and shall, for each respective utility or for
13any Illinois electric utilities that are affiliated by virtue
14of a common parent company and that are thereby considered a
15single electric utility for purposes of this subsection (k),
16not exceed in the aggregate 3,000 megawatts for any hour of the
17year. The contracts shall be financial contracts and not energy
18sales contracts. The contracts shall be executed as
19transactions under a negotiated master agreement based on the
20form of master agreement for financial swap contracts sponsored
21by the International Swaps and Derivatives Association, Inc.
22and shall be considered pre-existing contracts in the
23utilities' procurement plans for residential and small
24commercial customers. Costs incurred pursuant to a contract
25authorized by this subsection (k) shall be deemed prudently
26incurred and reasonable in amount and the electric utility

 

 

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1shall be entitled to full cost recovery pursuant to the tariffs
2filed with the Commission.
3    (l) An electric utility shall recover its costs incurred
4under this Section, including, but not limited to, the costs of
5procuring power and energy demand-response resources under
6this Section. The utility shall file with the initial
7procurement plan its proposed tariffs through which its costs
8of procuring power that are incurred pursuant to a
9Commission-approved procurement plan and those other costs
10identified in this subsection (l), will be recovered. The
11tariffs shall include a formula rate or charge designed to pass
12through both the costs incurred by the utility in procuring a
13supply of electric power and energy for the applicable customer
14classes with no mark-up or return on the price paid by the
15utility for that supply, plus any just and reasonable costs
16that the utility incurs in arranging and providing for the
17supply of electric power and energy. The formula rate or charge
18shall also contain provisions that ensure that its application
19does not result in over or under recovery due to changes in
20customer usage and demand patterns, and that provide for the
21correction, on at least an annual basis, of any accounting
22errors that may occur. A utility shall recover through the
23tariff all reasonable costs incurred to implement or comply
24with any procurement plan that is developed and put into effect
25pursuant to Section 1-75 of the Illinois Power Agency Act and
26this Section, including any fees assessed by the Illinois Power

 

 

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1Agency, costs associated with load balancing, and contingency
2plan costs. The electric utility shall also recover its full
3costs of procuring electric supply for which it contracted
4before the effective date of this Section in conjunction with
5the provision of full requirements service under fixed-price
6bundled service tariffs subsequent to December 31, 2006. All
7such costs shall be deemed to have been prudently incurred. The
8pass-through tariffs that are filed and approved pursuant to
9this Section shall not be subject to review under, or in any
10way limited by, Section 16-111(i) of this Act.
11    (m) The Commission has the authority to adopt rules to
12carry out the provisions of this Section. For the public
13interest, safety, and welfare, the Commission also has
14authority to adopt rules to carry out the provisions of this
15Section on an emergency basis immediately following the
16effective date of this amendatory Act.
17    (n) Notwithstanding any other provision of this Act, any
18affiliated electric utilities that submit a single procurement
19plan covering their combined needs may procure for those
20combined needs in conjunction with that plan, and may enter
21jointly into power supply contracts, purchases, and other
22procurement arrangements, and allocate capacity and energy and
23cost responsibility therefor among themselves in proportion to
24their requirements.
25    (o) On or before June 1 of each year, the Commission shall
26hold an informal hearing for the purpose of receiving comments

 

 

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1on the prior year's procurement process and any recommendations
2for change.
3    (p) An electric utility subject to this Section may propose
4to invest, lease, own, or operate an electric generation
5facility as part of its procurement plan, provided the utility
6demonstrates that such facility is the least-cost option to
7provide electric service to eligible retail customers. If the
8facility is shown to be the least-cost option and is included
9in a procurement plan prepared in accordance with Section 1-75
10of the Illinois Power Agency Act and this Section, then the
11electric utility shall make a filing pursuant to Section 8-406
12of the Act, and may request of the Commission any statutory
13relief required thereunder. If the Commission grants all of the
14necessary approvals for the proposed facility, such supply
15shall thereafter be considered as a pre-existing contract under
16subsection (b) of this Section. The Commission shall in any
17order approving a proposal under this subsection specify how
18the utility will recover the prudently incurred costs of
19investing in, leasing, owning, or operating such generation
20facility through just and reasonable rates charged to eligible
21retail customers. Cost recovery for facilities included in the
22utility's procurement plan pursuant to this subsection shall
23not be subject to review under or in any way limited by the
24provisions of Section 16-111(i) of this Act. Nothing in this
25Section is intended to prohibit a utility from filing for a
26fuel adjustment clause as is otherwise permitted under Section

 

 

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19-220 of this Act.
2(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.