Sen. James F. Clayborne, Jr.

Filed: 11/22/2010

 

 


 

 


 
09600HB6267sam002LRB096 18955 ASK 44105 a

1
AMENDMENT TO HOUSE BILL 6267

2    AMENDMENT NO. ______. Amend House Bill 6267, AS AMENDED, by
3replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Public Utilities Act is amended by changing
6Section 9-220 as follows:
 
7    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)
8    Sec. 9-220. Rate changes based on changes in fuel costs.
9    (a) Notwithstanding the provisions of Section 9-201, the
10Commission may authorize the increase or decrease of rates and
11charges based upon changes in the cost of fuel used in the
12generation or production of electric power, changes in the cost
13of purchased power, or changes in the cost of purchased gas
14through the application of fuel adjustment clauses or purchased
15gas adjustment clauses. The Commission may also authorize the
16increase or decrease of rates and charges based upon

 

 

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1expenditures or revenues resulting from the purchase or sale of
2emission allowances created under the federal Clean Air Act
3Amendments of 1990, through such fuel adjustment clauses, as a
4cost of fuel. For the purposes of this paragraph, cost of fuel
5used in the generation or production of electric power shall
6include the amount of any fees paid by the utility for the
7implementation and operation of a process for the
8desulfurization of the flue gas when burning high sulfur coal
9at any location within the State of Illinois irrespective of
10the attainment status designation of such location; but shall
11not include transportation costs of coal (i) except to the
12extent that for contracts entered into on and after the
13effective date of this amendatory Act of 1997, the cost of the
14coal, including transportation costs, constitutes the lowest
15cost for adequate and reliable fuel supply reasonably available
16to the public utility in comparison to the cost, including
17transportation costs, of other adequate and reliable sources of
18fuel supply reasonably available to the public utility, or (ii)
19except as otherwise provided in the next 3 sentences of this
20paragraph. Such costs of fuel shall, when requested by a
21utility or at the conclusion of the utility's next general
22electric rate proceeding, whichever shall first occur, include
23transportation costs of coal purchased under existing coal
24purchase contracts. For purposes of this paragraph "existing
25coal purchase contracts" means contracts for the purchase of
26coal in effect on the effective date of this amendatory Act of

 

 

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11991, as such contracts may thereafter be amended, but only to
2the extent that any such amendment does not increase the
3aggregate quantity of coal to be purchased under such contract.
4Nothing herein shall authorize an electric utility to recover
5through its fuel adjustment clause any amounts of
6transportation costs of coal that were included in the revenue
7requirement used to set base rates in its most recent general
8rate proceeding. Cost shall be based upon uniformly applied
9accounting principles. Annually, the Commission shall initiate
10public hearings to determine whether the clauses reflect actual
11costs of fuel, gas, power, or coal transportation purchased to
12determine whether such purchases were prudent, and to reconcile
13any amounts collected with the actual costs of fuel, power,
14gas, or coal transportation prudently purchased. In each such
15proceeding, the burden of proof shall be upon the utility to
16establish the prudence of its cost of fuel, power, gas, or coal
17transportation purchases and costs. The Commission shall issue
18its final order in each such annual proceeding for an electric
19utility by December 31 of the year immediately following the
20year to which the proceeding pertains, provided, that the
21Commission shall issue its final order with respect to such
22annual proceeding for the years 1996 and earlier by December
2331, 1998.
24    (b) A public utility providing electric service, other than
25a public utility described in subsections (e) or (f) of this
26Section, may at any time during the mandatory transition period

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1eliminate a public utility's fuel adjustment clause or
2purchased gas adjustment clause in accordance with any other
3applicable provisions of this Act.
4    (e) Notwithstanding any contrary or inconsistent
5provisions in Section 9-201 of this Act, in subsection (a) of
6this Section, or in any rules promulgated by the Commission
7pursuant to subsection (g) of this Section, a public utility
8providing electric service to more than 1,000,000 customers in
9this State may, within the first 6 months after the effective
10date of this amendatory Act of 1997, file with the Commission
11proposed tariff sheets that eliminate, effective January 1,
121997, the public utility's fuel adjustment clause without
13adjusting its base rates, and such tariff sheets shall be
14effective upon filing. To the extent the application of the
15fuel adjustment clause had resulted in net charges to customers
16after January 1, 1997, the utility shall also file a tariff
17sheet that provides for a refund stated on a per kilowatt-hour
18basis of such charges over a period not to exceed 6 months;
19provided however, that such refund shall not include the
20proportional amounts of taxes paid under the Use Tax Act,
21Service Use Tax Act, Service Occupation Tax Act, and Retailers'
22Occupation Tax Act on fuel used in generation. The Commission
23shall issue an order within 45 days after the date of the
24public utility's filing approving or approving as modified such
25tariff sheet. If the fuel adjustment clause is eliminated
26pursuant to this subsection, the Commission shall not conduct

 

 

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

 

 

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1Commission in the 2 proceedings divided by the public utility's
2actual jurisdictional kilowatt-hour sales for those 2 years,
3provided, that such tariff sheets shall be effective upon
4filing. To the extent the application of the fuel adjustment
5clause had resulted in net charges to customers after January
61, 1997, the utility shall also file a tariff sheet that
7provides for a refund stated on a per kilowatt-hour basis of
8such charges over a period not to exceed 6 months. Provided
9however, that such refund shall not include the proportional
10amounts of taxes paid under the Use Tax Act, Service Use Tax
11Act, Service Occupation Tax Act, and Retailers' Occupation Tax
12Act on fuel used in generation. The Commission shall issue an
13order within 45 days after the date of the public utility's
14filing approving or approving as modified such tariff sheet. If
15the fuel adjustment clause is eliminated pursuant to this
16subsection, the Commission shall not conduct the annual
17hearings specified in the last 3 sentences of subsection (a) of
18this Section for the utility for any period after December 31,
191996 and prior to any reinstatement of such clause. A public
20utility whose fuel adjustment clause has been eliminated
21pursuant to this subsection shall not file a proposed tariff
22sheet seeking, or otherwise petition the Commission for,
23reinstatement of the fuel adjustment clause prior to January 1,
242007.
25    (g) The Commission shall have authority to promulgate rules
26and regulations to carry out the provisions of this Section.

 

 

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1    (h) Any Illinois gas utility may enter into a contract on
2or before March 31, 2011 for up to 10 years of supply with any
3company for the purchase of substitute natural gas (SNG)
4produced from coal through the gasification process if the
5company has commenced construction of a coal gasification
6facility by July 1, 2012 in Jefferson County and commencement
7of construction shall mean that material physical site work has
8occurred, such as site clearing and excavation, water runoff
9prevention, water retention reservoir preparation, or
10foundation development. The contract shall contain the
11following provisions: (i) the only coal to be used in the
12gasification process has high volatile bituminous rank and
13greater than 1.7 pounds of sulfur per million Btu content; (ii)
14at the time the contract term commences, the price per million
15Btu may not exceed $7.95 in 2008 dollars, adjusted annually
16based on the change in the Annual Consumer Price Index for All
17Urban Consumers for the Midwest Region as published in April by
18the United States Department of Labor, Bureau of Labor
19Statistics (or a suitable Consumer Price Index calculation if
20this Consumer Price Index is not available) for the previous
21calendar year; provided that the price per million Btu shall
22not exceed $9.95 at any time during the contract; (iii) the
23utility's aggregate long-term supply contracts for the
24purchase of SNG does not exceed 25% of the annual system supply
25requirements of the utility as of 2008 and the quantity of SNG
26supplied to a utility may not exceed 16 million MMBtus per

 

 

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1year; and (iv) the contract costs pursuant to subsection (h-10)
2of this Section shall not include any lobbying expenses,
3charitable contributions, advertising, organizational
4memberships, or marketing expenses per year.
5    (h-5) The Attorney General, on behalf of the people of the
6State of Illinois, may specifically enforce the requirements of
7this subsection (h-5). All contracts, regardless of duration,
8shall require the owner of any facility supplying SNG under the
9contract to provide documentation to the Commission each year,
10starting in the facility's first year of commercial operation,
11accurately reporting the quantity of carbon dioxide emissions
12from the facility that have been captured and sequestered and
13reporting any quantities of carbon dioxide released from the
14site or sites at which carbon dioxide emissions were
15sequestered in prior years, based on continuous monitoring of
16those sites. If, in any year, the owner of the facility fails
17to demonstrate that the SNG facility captured and sequestered
18at least 90% of the total carbon dioxide emissions that the
19facility would otherwise emit or that sequestration of
20emissions from prior years has failed, resulting in the release
21of carbon dioxide into the atmosphere, then the owner of the
22facility must offset excess emissions. Any such carbon dioxide
23offsets must be permanent, additional, verifiable, real,
24located within the State of Illinois, and legally and
25practicably enforceable; provided that the owner of the
26facility shall not be obligated to acquire carbon dioxide

 

 

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1emission offsets to the extent that the cost of acquiring such
2offsets would exceed $40 million in any given year. No costs of
3any purchases of carbon offsets may be recovered from a utility
4or its customers. All carbon offsets purchased for this purpose
5must be permanently retired. In addition, carbon dioxide
6emission credits equivalent to 50% of the amount of credits
7associated with the required sequestration of carbon dioxide
8from the facility must be permanently retired unless the owner
9of the facility is required to fund carbon dioxide
10transportation or sequestration. Compliance with the
11sequestration requirements and the offset purchase
12requirements specified in this subsection (h-5) shall be
13assessed annually by an independent expert retained by the
14owner of the SNG facility, with the advance written approval of
15the Attorney General. A SNG facility operating pursuant to this
16subsection (h-5) shall not forfeit its designation as a clean
17coal SNG facility if the facility fails to fully comply with
18the applicable carbon sequestration requirements in any given
19year, provided the requisite offsets are purchased.
20    (h-10) Contract costs for SNG incurred by an Illinois gas
21utility are reasonable and prudent and recoverable through the
22purchased gas adjustment clause and are not subject to review
23or disallowance by the Commission. Contract costs are costs
24incurred by the utility under the terms of a contract that
25incorporates the terms stated in subsection (h) of this Section
26as confirmed in writing by the Illinois Power Agency as set

 

 

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1forth in subsection (h-20) of this Section, which confirmation
2shall be deemed conclusive, or as a consequence of or condition
3to its performance under the contract, including (i) amounts
4paid for SNG under the SNG contract and (ii) costs of
5transportation and storage services of SNG purchased from
6interstate pipelines under federally approved tariffs. Any
7contract, the terms of which have been confirmed in writing by
8the Illinois Power Agency as set forth in subsection (h-20) of
9this Section and the performance of the parties under such
10contract cannot be grounds for challenging prudence or cost
11recovery by the utility through the purchased gas adjustment
12clause, and in such cases, the Commission is directed not to
13consider, and has no authority to consider, any attempted
14challenges.
15    The contracts entered into by Illinois gas utilities shall
16provide that the utility retains the right to terminate the
17contract without further obligation or liability to any party
18if the contract has been impaired as a result of any
19legislative, administrative, judicial, or other governmental
20action that is taken that eliminates all or part of the
21prudence protection of this subsection (h-10) or denies the
22recoverability of all or part of the contract costs through the
23purchased gas adjustment clause. Should any Illinois gas
24utility exercise its right under this subsection (h-10) to
25terminate the contract, all contract costs incurred prior to
26termination are and will be deemed reasonable, prudent, and

 

 

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1recoverable as and when incurred and not subject to review or
2disallowance by the Commission. Any order, issued by the State
3requiring or authorizing the discontinuation of the merchant
4function, defined as the purchase and sale of natural gas by an
5Illinois gas utility for the ultimate consumer in its service
6territory shall include provisions necessary to prevent the
7impairment of the value of any contract hereunder over its full
8term.
9    (h-15) With respect to each contract entered into by the
10company with an Illinois utility in accordance with the terms
11stated in subsection (h) of this Section, within 60 days
12following the completion of purchases of SNG, the Illinois
13Power Agency shall conduct an analysis to determine (i) the
14average contract SNG cost, which shall be calculated as the
15total amount paid to a company for SNG over the contract term,
16plus the cost to the utility of the required transportation and
17storage services of SNG, divided by the total number of MMBtus
18of SNG actually purchased under the utility contract; (ii) the
19average natural gas purchase cost, which shall be calculated as
20the total annual supply costs paid for natural gas (excluding
21SNG) purchased by such utility over the contract term, plus the
22costs of transportation and storage services of such natural
23gas (excluding such costs for SNG), divided by the total number
24of MMBtus of natural gas (excluding SNG) actually purchased by
25the utility during the contract term; (iii) the cost
26differential, which shall be the difference between the average

 

 

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1contract SNG cost and the average natural gas purchase cost;
2and (iv) the revenue share target, which shall be the cost
3differential multiplied by the total amount of SNG purchased
4under such utility contract. If the average contract SNG cost
5is equal to or less than the average natural gas purchase cost,
6then the company shall have no further obligation to the
7utility. If the average contract SNG cost for such SNG contract
8is greater than the average natural gas purchase cost for such
9utility, then the company shall market the daily production of
10SNG and distribute on a monthly basis 5% of amounts collected
11with respect to such future sales to the utilities in
12proportion to each utility's SNG purchases from the company
13during the term of the SNG contract to be used to reduce the
14utility's natural gas costs through the purchased gas
15adjustment clause; such payments to the utility shall continue
16until such time as the sum of such payments equals the revenue
17share target of that utility. The company or utilities shall
18have no obligation to repay the revenue share target except as
19provided for in this subsection (h-15).
20    (h-20) The General Assembly authorizes the Illinois
21Finance Authority to issue bonds to the maximum extent
22permitted to finance coal gasification facilities described in
23this Section, which constitute both "industrial projects"
24under Article 801 of the Illinois Finance Authority Act and
25"clean coal and energy projects" under Sections 825-65 through
26825-75 of the Illinois Finance Authority Act. The General

 

 

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1Assembly further authorizes the Illinois Power Agency to become
2party to agreements and take such actions as necessary to
3enable the Illinois Power Agency or its designate to (i) review
4and confirm in writing that the terms stated in subsection (h)
5of this Section are incorporated in the SNG contract, and (ii)
6conduct an analysis pursuant to subsection (h-15) of this
7Section. Administrative costs incurred by the Illinois Finance
8Authority and Illinois Power Agency in performance of this
9subsection (h-20) shall be subject to reimbursement by the
10company on terms as the Illinois Finance Authority, the
11Illinois Power Agency, and the company may agree. The utility
12and its customers shall have no obligation to reimburse the
13company, the Illinois Finance Authority, or the Illinois Power
14Agency for any such costs.
15    (h-25) The State of Illinois pledges that the State may not
16enact any law or take any action to (1) break or repeal the
17authority for SNG purchase contracts entered into between
18public gas utilities and the clean coal SNG facility located in
19Jefferson County pursuant to subsection (h) of this Section or
20(2) deny public gas utilities their full cost recovery for
21contract costs, as defined in subsection (h-10), that are
22incurred under such SNG purchase contracts. These pledges are
23for the benefit of the parties to such SNG purchase contracts
24and the issuers and holders of bonds or other obligations
25issued or incurred to finance or refinance the clean coal SNG
26facility located in Jefferson County. The beneficiaries are

 

 

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1authorized to include and refer to these pledges in any finance
2agreement into which they may enter in regard to such
3contracts.
4    (h-30) The State of Illinois retains and reserves all other
5rights to enact new or amendatory legislation or take any other
6action, including, but not limited to, such legislation or
7other action that would (1) directly or indirectly raise the
8costs that the clean coal SNG facility must incur; (2) directly
9or indirectly place additional restrictions, regulations, or
10requirements on the clean coal SNG facility; (3) prohibit
11sequestration in general or prohibit a specific sequestration
12method or project; or (4) increase minimum sequestration
13requirements.
14    (i) If a gas utility or an affiliate of a gas utility has
15an ownership interest in any entity that produces or sells
16synthetic natural gas, Article VII of this Act shall apply.
17(Source: P.A. 95-1027, eff. 6-1-09; 96-1364, eff. 7-28-10.)
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.".