HB0014ham003 97TH GENERAL ASSEMBLY

Rep. Karen May

Filed: 5/13/2011

09700HB0014ham003 LRB097 05207 ASK 55629 a

AMENDMENT TO HOUSE BILL 14

AMENDMENT NO. ______. Amend House Bill 14, AS AMENDED, by replacing everything after the enacting clause with the following:

"Section 5. The Public Utilities Act is amended by changing Section 9-201 and by adding Sections 9-220.3 and 9-228 as follows:

(220 ILCS 5/9-201) (from Ch. 111 2/3, par. 9-201)

Sec. 9-201. (a) Unless the Commission otherwise orders, and except as otherwise provided in this Section, no change shall be made by any public utility in any rate or other charge or classification, or in any rule, regulation, practice or contract relating to or affecting any rate or other charge, classification or service, or in any privilege or facility, except after 45 days' notice to the Commission and to the public as herein provided. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules or supplements stating plainly the change or changes to be made in the schedule or schedules then in force, and the time when the change or changes will go into effect, and by publication in a newspaper of general circulation or such other notice to persons affected by such change as may be prescribed by rule of the Commission. The Commission, for good cause shown, may allow changes without requiring the 45 days' notice herein provided for, by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published.

When any change is proposed in any rate or other charge, or classification, or in any rule, regulation, practice, or contract relating to or affecting any rate or other charge, classification or service, or in any privilege or facility, such proposed change shall be plainly indicated on the new schedule filed with the Commission, by some character to be designated by the Commission, immediately preceding or following the item.

When any public utility providing water or sewer service proposes any change in any rate or other charge, or classification, or in any rule, regulation, practice, or contract relating to or affecting any rate or other charge, classification or service, or in any privilege or facility, such utility shall, in addition to the other notice requirements of this Act, provide notice of such change to all customers potentially affected by including a notice and description of such change, and of Commission procedures for intervention, in the first bill sent to each such customer after the filing of the proposed change.

(b) Whenever there shall be filed with the Commission any schedule stating an individual or joint rate or other charge, classification, contract, practice, rule or regulation, the Commission shall have power, and it is hereby given authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders, without answer or other formal pleadings by the interested public utility or utilities, but upon reasonable notice, to enter upon a hearing concerning the propriety of such rate or other charge, classification, contract, practice, rule or regulation, and pending the hearing and decision thereon, such rate or other charge, classification, contract, practice, rule or regulation shall not go into effect. The period of suspension of such rate or other charge, classification, contract, practice, rule or regulation shall not extend more than 105 days beyond the time when such rate or other charge, classification, contract, practice, rule or regulation would otherwise go into effect unless the Commission, in its discretion, extends the period of suspension for a further period of not exceeding 6 months. The Commission may further extend this suspension period for a period equivalent to the length of any delay that the Commission finds to have been caused by the applicant's failure to provide data or information requested by the Commission or that the Commission ordered the applicant to provide to the parties.

All rates or other charges, classifications, contracts, practices, rules or regulations not so suspended shall, on the expiration of 45 days from the time of filing the same with the Commission, or of such lesser time as the Commission may grant, go into effect and be the established and effective rates or other charges, classifications, contracts, practices, rules and regulations, subject to the power of the Commission, after a hearing had on its own motion or upon complaint, as herein provided, to alter or modify the same.

Within 30 days after such changes have been authorized by the Commission, copies of the new or revised schedules shall be posted or filed in accordance with the terms of Section 9-103 of this Act, in such a manner that all changes shall be plainly indicated. The Commission shall incorporate into the period of suspension a review period of 4 business days during which the Commission may review and determine whether the new or revised schedules comply with the Commission's decision approving a change to the public utility's rates. Such review period shall not extend the suspension period by more than 2 days. Absent notification to the contrary within the 4 business day period, the new or revised schedules shall be deemed approved.

(c) If the Commission enters upon a hearing concerning the propriety of any proposed rate or other charge, classification, contract, practice, rule or regulation, the Commission shall establish the rates or other charges, classifications, contracts, practices, rules or regulations proposed, in whole or in part, or others in lieu thereof, which it shall find to be just and reasonable. In such hearing, the burden of proof to establish the justness and reasonableness of the proposed rates or other charges, classifications, contracts, practices, rules or regulations, in whole and in part, shall be upon the utility. The utility, the staff of the Commission, the Attorney General, or any party to a proceeding initiated under this Section who has been granted intervenor status and submitted a post-hearing brief must be given the opportunity to present oral argument, if requested no later than the date for filing exceptions, on the propriety of any proposed rate or other charge, classification, contract, practice, rule, or regulation. No rate or other charge, classification, contract, practice, rule or regulation shall be found just and reasonable unless it is consistent with Sections of this Article.

(d) Except where compliance with Section 8-401 of this Act is of urgent and immediate concern, no representative of a public utility may discuss with a commissioner, commissioner's assistant, or hearing examiner in a non-public setting a planned filing for a general rate increase. If a public utility makes a filing under this Section, then no substantive communication by any such person with a commissioner, commissioner's assistant or hearing examiner concerning the filing is permitted until a notice of hearing has been issued. After the notice of hearing has been issued, the only communications by any such person with a commissioner, commissioner's assistant, or hearing examiner concerning the filing permitted are communications permitted under Section 10-103 of this Act. If any such communication does occur, then within 5 days of the docket being initiated all details relating to the communication shall be placed on the public record of the proceeding. The record shall include any materials, whether written, recorded, filmed, or graphic in nature, produced or reproduced on any media, used in connection with the communication. The record shall reflect the names of all persons who transmitted, received, or were otherwise involved in the communication, the duration of the communication, and whether the communication occurred in person or by other means. In the case of an oral communication, the record shall also reflect the location or locations of all persons involved in the communication and, if the communication occurred by telephone, the telephone numbers for the callers and recipients of the communication. A commissioner, commissioner's assistant, or hearing examiner who is involved in any such communication shall be recused from the affected proceeding. The Commission, or any commissioner or hearing examiner presiding over the proceeding shall, in the event of a violation of this Section, take action necessary to ensure that such violation does not prejudice any party or adversely affect the fairness of the proceedings including dismissing the affected proceeding. Nothing in this subsection (d) is intended to preclude otherwise allowable updates on issues that may be indirectly related to a general rate case filing because cost recovery for the underlying activity may be requested. Such updates may include, without limitation, issues related to outages and restoration, credit ratings, security issuances, reliability, Federal Energy Regulatory Commission matters, Federal Communications Commission matters, regional reliability organizations, consumer education, or labor matters, provided that such updates may not include cost recovery in a planned rate case.

(Source: P.A. 96-33, eff. 7-10-09.)

(220 ILCS 5/9-220.3 new)

Sec. 9-220.3. Electric utility infrastructure enhancement cost recovery mechanism.

(a) If the Commission finds that substantial investments are needed to refurbish, rebuild, modernize, expand, or create systems to maintain or improve upon a utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers, then the Commission may encourage such investments by authorizing utilities to recover such investments, including a reasonable return on such investments, if they are reasonably and prudently incurred, through special cost-tracking mechanisms, as further defined in this Section. For purposes of this Section, systems to maintain or improve upon a utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers may include, but need not be limited to, innovative technologies and infrastructure expected to enhance customers' control over their energy consumption, better identify and control outages, and lead to more widespread or efficient use of distributed generation, renewable energy, energy efficiency, demand response, and other energy resources.

(b) To be eligible to recover investments pursuant to the special cost-tracking mechanism, a utility must submit to the Commission a petition, which must include the following:

(1) A description of the utility's plans to refurbish, rebuild, modernize, expand, or create systems to maintain or improve upon the utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers. This plan description must include estimated investments for each element of the plan, the changes that would be made to existing systems, and the new systems that would be created, an explanation of how such changes and additions would be used and useful for maintaining or improving upon a utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers, and a present value of future revenue requirements study that shows a cost comparison between each element of the plan and all reasonable alternatives.

(2) A description and quantification, to the extent possible, of the risks involved both in carrying out the plan and in not carrying out the plan.

(3) The proposed formula or formulas that would be utilized to compute the rates through which investments would be recovered, which shall include a true-up provision from the prior period's under or over collection of costs.

(4) The proposed accounting system and protocols that would be utilized to distinguish between expenses and investments recovered through existing rate mechanisms and expenses and investments that would be recovered through the proposed special cost-tracking mechanism.

(5) A report on the expected impact of the utility's plans on economic development, State and local tax revenues, and net job creation within Illinois.

(6) The proposed reports through which the utility would keep the Commission informed of progress toward refurbishing, rebuilding, modernizing, expanding, or creating systems, as identified in the plans described in relation to paragraph (1), as well as all material changes to those plans.

(7) Schedules, showing key dates for implementation of the plan, establishment of the special cost-tracking mechanism, submittal of proposed reports, and the updating of formulas.

(8) Any other information that the utility believes necessary to establish the appropriateness of its plans and its proposed special cost-tracking mechanism.

(9) Verified statements of qualified experts, attesting to the veracity of the information contained in the petition, and to the likelihood of implementing the plan and the proposed special cost-tracking mechanism within the time frame specified in the proposed schedules.

(c) The Commission shall issue an order with respect to a special cost-tracking mechanism pursuant to this Section no more than 330 days following receipt of a petition filed pursuant to subsection (b) of this Section. The Commission shall enter an order approving a utility's proposed special cost-tracking mechanism, with or without modifications, as well as an implementation schedule, if it finds that:

(1) The utility's plans to refurbish, rebuild, modernize, expand, or create systems are feasible, necessary to maintain or improve upon the utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers, and are the least-cost means of achieving those results.

(2) The benefits of the utility's plan, in terms of its ability to maintain or improve upon a utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers are likely to exceed the plan's costs or the risks involved in not carrying out the plan exceed those of carrying out the plan.

(3) The special cost-tracking mechanism adopted in the order, including any formulas, accounting systems, or rates of return, or reconciliation procedures embedded within the mechanism:

(A) includes only capitalized infrastructure investments;

(B) includes a rate of return on common equity that evaluates the relative risk of cost recovery through the cost-tracking mechanism in comparison to the risk of recovery through base rates;

(C) includes provisions for an annual reconciliation of amounts collected from a surcharge pursuant to this special cost-tracking mechanism with the actual, prudently incurred, and just and reasonable costs recoverable for each annual period during which the surcharge was in effect;

(D) includes an offset for savings that are realized as a result of the infrastructure investment program for the relevant period;

(E) includes provisions for an annual internal audit that includes, but is not limited to, a determination of whether the costs recovered through this special cost-tracking mechanism are recovered through other approved tariffs, whether the surcharge is properly billed to customers in the correct time periods, whether the applicable costs and revenues are properly identified and recorded;

(F) is expected to provide an adequate incentive for the utility to carry out its plans to refurbish, rebuild, modernize, expand, or create systems necessary to maintain or improve upon the utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers;

(G) is to be applied to all delivery service customers of the utility; and

(H) is otherwise just and reasonable, and in the interests of both the utility and the utility's customers.

(4) It is likely that the plan and the special cost-tracking mechanism adopted in the order can be implemented in a manner consistent with the implementation schedule adopted by the order.

(5) The surcharge that results from the implementation of a special cost-tracking mechanism established pursuant to this Section shall appear as a separate line item on the customer bill.

The Commission's order approving a special cost-tracking mechanism and its implementation schedule, may further include requirements for periodic reporting related to the utility's plans or the special cost-tracking mechanism adopted in the order.

If the Commission is unable to make all of the findings specified in paragraphs (1) through (5) of this subsection (c), then the Commission shall enter an order denying the utility's request to establish a special cost-tracking mechanism pursuant to this Section, and such order shall be considered to be a final order of the Commission subject to petitions for rehearing and appellate procedures.

(d) Following the date of an order approving a special cost-tracking mechanism for a utility, a utility shall have 14 days to notify the Commission in writing whether it will accept any modifications so identified in the order or whether it has elected not to proceed with the special cost-tracking mechanism. If the utility notifies the Commission that it will accept such modifications, then the Commission shall issue an amended order, without further hearing, within 14 days following such notification, approving the program as modified, and such order shall be considered to be a final order of the Commission subject to petitions for rehearing and appellate procedures.

(e) Upon 45 days' notice, a utility that is employing a special cost-tracking mechanism pursuant to this Section may cancel or suspend the mechanism, without the approval of the Commission.

(f) If a utility is recovering costs through a special cost-tracking mechanism, approved pursuant to this Section, after a period of 3 years after the effective date of the mechanism, then the Commission may, on its own motion (1) initiate a proceeding to consider whether the utility is achieving the goals of its original plan, or any subsequently modified plans, to refurbish, rebuild, modernize, expand, or create systems to maintain or improve upon the utility's ability to provide safe, reliable, high-quality, and affordable electric service to the State's current and future utility customers or (2) initiate a proceeding to consider whether subsequently modified plans continue to be in the best interest of the State's current and future utility customers. If the Commission enters an order, following a hearing process, finding that the utility's plans are no longer effective in achieving their goals, or are no longer in the best interest of the State's current and future utility customers, then the Commission may direct the utility to take one of the following actions, at the choice of the utility:

(1) The utility may prepare and file with the Commission, within a period of 12 months after the date of the Commission's order, a general rate case pursuant to Section 9-201. When the rates pursuant to that filing go into effect, the utility's special cost-tracking mechanism pursuant to this Section shall be cancelled.

(2) The utility may request Commission approval to cancel its special cost-tracking mechanism, within a period of not more than 45 days from the date of the Commission's order.

(g) There shall be a rebuttable presumption that any actual expenditures and investments identified within special cost-tracking mechanisms approved pursuant to this Section were prudently incurred by the utility. However, if the Commission enters an order, following a hearing process, pursuant to subsection (f) of this Section, finding that the utility's plans are no longer effective in achieving their goals, or are no longer in the best interest of the State's current and future utility customers, and the utility's special cost-tracking mechanism is subsequently cancelled or suspended, then the rebuttable presumption otherwise afforded by this subsection (g) shall not apply to costs that have not already been found prudent by the Commission in an annual reconciliation proceeding pursuant to subparagraph (D) of paragraph (3) of subsection (c) of this Section.

(h) The Commission may adopt rules to implement the provisions of this Section.

(220 ILCS 5/9-228 new)

Sec. 9-228. Recovery of various costs through rates. In any rate requested by any gas, electric, water, or sewer utility company under the provisions of this Act, the following costs shall be considered recoverable through rates if the Commission determines that the costs are prudent, just, reasonable, and consistent with Commission practice and law:

(1) incentive compensation expense that is based on the achievement of operational metrics, including metrics related to outage duration and frequency, safety, customer service, efficiency and productivity, and environmental compliance, but not metrics based on net income or an affiliate's earnings per share;

(2) pension and other post-employment benefits expense based on actual costs incurred for the applicable calendar year, provided that such costs are supported by an actuarial study;

(3) an investment return on the unamortized discretionary pension contributions net of deferred tax benefits equal to the utility's long-term debt cost component of the applicable Commission-approved cost of capital; however, in no case shall the cost associated with the allowed investment return be greater than the benefit ratepayers receive from the discretionary pension contribution;

(4) severance costs amortized over a period that is consistent with savings resulting from the severance;

(5) regulatory assets previously approved by the Commission;

(6) costs related to a Commission proceeding to approve a mechanism under Section 9-244 or 9-220.3 of this Act, amortized over a 3-year period; and

(7) costs related to annual reconciliation Commission proceedings of mechanisms approved under Section 9-244 and 9-220.3 of this Act.

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