HB0691 EnrolledLRB097 03519 ASK 43556 b

1    AN ACT concerning regulation.
 
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 9-220 as follows:
 
6    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)
7    Sec. 9-220. Rate changes based on changes in fuel costs.
8    (a) Notwithstanding the provisions of Section 9-201, the
9Commission may authorize the increase or decrease of rates and
10charges based upon changes in the cost of fuel used in the
11generation or production of electric power, changes in the cost
12of purchased power, or changes in the cost of purchased gas
13through the application of fuel adjustment clauses or purchased
14gas adjustment clauses. The Commission may also authorize the
15increase or decrease of rates and charges based upon
16expenditures or revenues resulting from the purchase or sale of
17emission allowances created under the federal Clean Air Act
18Amendments of 1990, through such fuel adjustment clauses, as a
19cost of fuel. For the purposes of this paragraph, cost of fuel
20used in the generation or production of electric power shall
21include the amount of any fees paid by the utility for the
22implementation and operation of a process for the
23desulfurization of the flue gas when burning high sulfur coal

 

 

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1at any location within the State of Illinois irrespective of
2the attainment status designation of such location; but shall
3not include transportation costs of coal (i) except to the
4extent that for contracts entered into on and after the
5effective date of this amendatory Act of 1997, the cost of the
6coal, including transportation costs, constitutes the lowest
7cost for adequate and reliable fuel supply reasonably available
8to the public utility in comparison to the cost, including
9transportation costs, of other adequate and reliable sources of
10fuel supply reasonably available to the public utility, or (ii)
11except as otherwise provided in the next 3 sentences of this
12paragraph. Such costs of fuel shall, when requested by a
13utility or at the conclusion of the utility's next general
14electric rate proceeding, whichever shall first occur, include
15transportation costs of coal purchased under existing coal
16purchase contracts. For purposes of this paragraph "existing
17coal purchase contracts" means contracts for the purchase of
18coal in effect on the effective date of this amendatory Act of
191991, as such contracts may thereafter be amended, but only to
20the extent that any such amendment does not increase the
21aggregate quantity of coal to be purchased under such contract.
22Nothing herein shall authorize an electric utility to recover
23through its fuel adjustment clause any amounts of
24transportation costs of coal that were included in the revenue
25requirement used to set base rates in its most recent general
26rate proceeding. Cost shall be based upon uniformly applied

 

 

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1accounting principles. Annually, the Commission shall initiate
2public hearings to determine whether the clauses reflect actual
3costs of fuel, gas, power, or coal transportation purchased to
4determine whether such purchases were prudent, and to reconcile
5any amounts collected with the actual costs of fuel, power,
6gas, or coal transportation prudently purchased. In each such
7proceeding, the burden of proof shall be upon the utility to
8establish the prudence of its cost of fuel, power, gas, or coal
9transportation purchases and costs. The Commission shall issue
10its final order in each such annual proceeding for an electric
11utility by December 31 of the year immediately following the
12year to which the proceeding pertains, provided, that the
13Commission shall issue its final order with respect to such
14annual proceeding for the years 1996 and earlier by December
1531, 1998.
16    (b) A public utility providing electric service, other than
17a public utility described in subsections (e) or (f) of this
18Section, may at any time during the mandatory transition period
19file with the Commission proposed tariff sheets that eliminate
20the public utility's fuel adjustment clause and adjust the
21public utility's base rate tariffs by the amount necessary for
22the base fuel component of the base rates to recover the public
23utility's average fuel and power supply costs per kilowatt-hour
24for the 2 most recent years for which the Commission has issued
25final orders in annual proceedings pursuant to subsection (a),
26where the average fuel and power supply costs per kilowatt-hour

 

 

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

 

 

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

 

 

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1this subsection (d) shall not be available to a public utility
2described in subsections (e) or (f) of this Section to
3eliminate its fuel adjustment clause. Notwithstanding any
4contrary or inconsistent provisions in Section 9-201 of this
5Act, in subsection (a) of this Section, or in any rules or
6regulations promulgated by the Commission pursuant to
7subsection (g) of this Section, the Commission shall review and
8shall by order approve, or approve as modified in the
9Commission's order, the proposed tariff sheets within 240 days
10after the date of the public utility's filing. The Commission's
11order shall approve rates and charges that the Commission,
12based on information in the public utility's filing or on the
13record if a hearing is held by the Commission, finds will
14recover the reasonable, prudent and necessary jurisdictional
15power supply costs or gas supply costs incurred or to be
16incurred by the public utility during a 12 month period found
17by the Commission to be appropriate for these purposes,
18provided, that such period shall be either (i) a 12 month
19historical period occurring during the 15 months ending on the
20date of the public utility's filing, or (ii) a 12 month future
21period ending no later than 15 months following the date of the
22public utility's filing. The public utility shall include with
23its tariff filing information showing both (1) its actual
24jurisdictional power supply costs or gas supply costs for a 12
25month historical period conforming to (i) above and (2) its
26projected jurisdictional power supply costs or gas supply costs

 

 

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1for a future 12 month period conforming to (ii) above. If the
2Commission's order requires modifications in the tariff sheets
3filed by the public utility, the public utility shall have 7
4days following the date of the order to notify the Commission
5whether the public utility will implement the modified tariffs
6or elect to continue its fuel or purchased gas adjustment
7clause in force as though no order had been entered. The
8Commission's order shall provide for any reconciliation of
9power supply costs or gas supply costs, as the case may be, and
10associated revenues through the date that the public utility's
11fuel or purchased gas adjustment clause is eliminated. During
12the 5 years following the date of the Commission's order, a
13public utility whose fuel or purchased gas adjustment clause
14has been eliminated pursuant to this subsection shall not file
15proposed tariff sheets seeking, or otherwise petition the
16Commission for, reinstatement or adoption of a fuel or
17purchased gas adjustment clause. Nothing in this subsection (d)
18shall be construed as limiting the Commission's authority to
19eliminate a public utility's fuel adjustment clause or
20purchased gas adjustment clause in accordance with any other
21applicable provisions of this Act.
22    (e) Notwithstanding any contrary or inconsistent
23provisions in Section 9-201 of this Act, in subsection (a) of
24this Section, or in any rules promulgated by the Commission
25pursuant to subsection (g) of this Section, a public utility
26providing electric service to more than 1,000,000 customers in

 

 

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1this State may, within the first 6 months after the effective
2date of this amendatory Act of 1997, file with the Commission
3proposed tariff sheets that eliminate, effective January 1,
41997, the public utility's fuel adjustment clause without
5adjusting its base rates, and such tariff sheets shall be
6effective upon filing. To the extent the application of the
7fuel adjustment clause had resulted in net charges to customers
8after January 1, 1997, the utility shall also file a tariff
9sheet that provides for a refund stated on a per kilowatt-hour
10basis of such charges over a period not to exceed 6 months;
11provided however, that such refund shall not include the
12proportional amounts of taxes paid under the Use Tax Act,
13Service Use Tax Act, Service Occupation Tax Act, and Retailers'
14Occupation Tax Act on fuel used in generation. The Commission
15shall issue an order within 45 days after the date of the
16public utility's filing approving or approving as modified such
17tariff sheet. If the fuel adjustment clause is eliminated
18pursuant to this subsection, the Commission shall not conduct
19the annual hearings specified in the last 3 sentences of
20subsection (a) of this Section for the utility for any period
21after December 31, 1996 and prior to any reinstatement of such
22clause. A public utility whose fuel adjustment clause has been
23eliminated pursuant to this subsection shall not file a
24proposed tariff sheet seeking, or otherwise petition the
25Commission for, reinstatement of the fuel adjustment clause
26prior to January 1, 2007.

 

 

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1    (f) Notwithstanding any contrary or inconsistent
2provisions in Section 9-201 of this Act, in subsection (a) of
3this Section, or in any rules or regulations promulgated by the
4Commission pursuant to subsection (g) of this Section, a public
5utility providing electric service to more than 500,000
6customers but fewer than 1,000,000 customers in this State may,
7within the first 6 months after the effective date of this
8amendatory Act of 1997, file with the Commission proposed
9tariff sheets that eliminate, effective January 1, 1997, the
10public utility's fuel adjustment clause and adjust its base
11rates by the amount necessary for the base fuel component of
12the base rates to recover 91% of the public utility's average
13fuel and power supply costs for the 2 most recent years for
14which the Commission, as of January 1, 1997, has issued final
15orders in annual proceedings pursuant to subsection (a), where
16the average fuel and power supply costs per kilowatt-hour shall
17be calculated as the sum of the public utility's prudent and
18allowable fuel and power supply costs as found by the
19Commission in the 2 proceedings divided by the public utility's
20actual jurisdictional kilowatt-hour sales for those 2 years,
21provided, that such tariff sheets shall be effective upon
22filing. To the extent the application of the fuel adjustment
23clause had resulted in net charges to customers after January
241, 1997, the utility shall also file a tariff sheet that
25provides for a refund stated on a per kilowatt-hour basis of
26such charges over a period not to exceed 6 months. Provided

 

 

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1however, that such refund shall not include the proportional
2amounts of taxes paid under the Use Tax Act, Service Use Tax
3Act, Service Occupation Tax Act, and Retailers' Occupation Tax
4Act on fuel used in generation. The Commission shall issue an
5order within 45 days after the date of the public utility's
6filing approving or approving as modified such tariff sheet. If
7the fuel adjustment clause is eliminated pursuant to this
8subsection, the Commission shall not conduct the annual
9hearings specified in the last 3 sentences of subsection (a) of
10this Section for the utility for any period after December 31,
111996 and prior to any reinstatement of such clause. A public
12utility whose fuel adjustment clause has been eliminated
13pursuant to this subsection shall not file a proposed tariff
14sheet seeking, or otherwise petition the Commission for,
15reinstatement of the fuel adjustment clause prior to January 1,
162007.
17    (g) The Commission shall have authority to promulgate rules
18and regulations to carry out the provisions of this Section.
19    (h) Any Illinois gas utility may enter into a contract on
20or before September 30, 2011 for up to 10 years of supply with
21any company for the purchase of substitute natural gas (SNG)
22produced from coal through the gasification process if the
23company has commenced construction of a clean coal SNG facility
24by July 1, 2012 and commencement of construction shall mean
25that material physical site work has occurred, such as site
26clearing and excavation, water runoff prevention, water

 

 

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1retention reservoir preparation, or foundation development.
2The contract shall contain the following provisions: (i) at
3least 90% of feedstock to be used in the gasification process
4shall be coal with a high volatile bituminous rank and greater
5than 1.7 pounds of sulfur per million Btu content; (ii) at the
6time the contract term commences, the price per million Btu may
7not exceed $7.95 in 2008 dollars, adjusted annually based on
8the change in the Annual Consumer Price Index for All Urban
9Consumers for the Midwest Region as published in April by the
10United States Department of Labor, Bureau of Labor Statistics
11(or a suitable Consumer Price Index calculation if this
12Consumer Price Index is not available) for the previous
13calendar year; provided that the price per million Btu shall
14not exceed $9.95 at any time during the contract; (iii) the
15utility's supply contract for the purchase of SNG does not
16exceed 15% of the annual system supply requirements of the
17utility as of 2008; and (iv) the contract costs pursuant to
18subsection (h-10) of this Section shall not include any
19lobbying expenses, charitable contributions, advertising,
20organizational memberships, carbon dioxide pipeline or
21sequestration expenses, or marketing expenses.
22    Any gas utility that is providing service to more than
23150,000 customers on August 2, 2011 (the effective date of
24Public Act 97-239) this amendatory Act of the 97th General
25Assembly shall either elect to enter into a contract on or
26before September 30, 2011 for 10 years of SNG supply with the

 

 

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1owner of a clean coal SNG facility or to file biennial rate
2proceedings before the Commission in the years 2012, 2014, and
32016, with such filings made after August 2, 2011 the effective
4date of this amendatory Act of the 97th General Assembly and no
5later than September 30 of the years 2012, 2014, and 2016
6consistent with all requirements of 83 Ill. Adm. Code 255 and
7285 as though the gas utility were filing for an increase in
8its rates, without regard to whether such filing would produce
9an increase, a decrease, or no change in the gas utility's
10rates, and the Commission shall review the gas utility's filing
11and shall issue its order in accordance with the provisions of
12Section 9-201 of this Act.
13    Within 7 days after August 2, 2011 the effective date of
14this amendatory Act of the 97th General Assembly, the owner of
15the clean coal SNG facility shall submit to the Illinois Power
16Agency and each gas utility that is providing service to more
17than 150,000 customers on August 2, 2011 the effective date of
18this amendatory Act of the 97th General Assembly a copy of a
19draft contract. Within 30 days after the receipt of the draft
20contract, each such gas utility shall provide the Illinois
21Power Agency and the owner of the clean coal SNG facility with
22its comments and recommended revisions to the draft contract.
23Within 7 days after the receipt of the gas utility's comments
24and recommended revisions, the owner of the facility shall
25submit its responsive comments and a further revised draft of
26the contract to the Illinois Power Agency. The Illinois Power

 

 

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

 

 

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1    the nameplate capacity of the facility and other
2    by-products produced by the facility, to be included in the
3    pricing formula; the Illinois Power Agency shall approve
4    the amount of budgeted miscellaneous net revenue to be
5    included in the pricing formula if it determines the
6    budgeted amount to be reasonable and accurate;
7        (4) review and confirm in writing that using the EIA
8    Annual Energy Outlook-2011 Henry Hub Spot Price, the
9    contract terms set out in subsection (h), the
10    reconciliation account terms as set out in subsection
11    (h-15), and an estimated inflation rate of 2.5% for each
12    corresponding year, that there will be no cumulative
13    estimated increase for residential customers; and
14        (5) allocate the nameplate capacity of the clean coal
15    SNG by total therms sold to ultimate customers by each gas
16    utility in 2008; provided, however, no utility shall be
17    required to purchase more than 42% of the projected annual
18    output of the facility; additionally, the Illinois Power
19    Agency shall further adjust the allocation only as required
20    to take into account (A) adverse consolidation,
21    derivative, or lease impacts to the balance sheet or income
22    statement of any gas utility or (B) the physical capacity
23    of the gas utility to accept SNG.
24    If the parties to the contract do not agree on the terms
25therein, then the Illinois Power Agency shall retain an
26independent mediator to mediate the dispute between the

 

 

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1parties. If the parties are in agreement on the terms of the
2contract, then the Illinois Power Agency shall approve the
3contract. If after mediation the parties have failed to come to
4agreement, then the Illinois Power Agency shall revise the
5draft contract as necessary to confirm that the contract
6contains only terms that are reasonable and equitable. The
7Illinois Power Agency may, in its discretion, retain an
8independent, qualified, and experienced expert to assist in its
9obligations under this subsection (h). The Illinois Power
10Agency shall adopt and make public policies detailing the
11processes for retaining a mediator and an expert under this
12subsection (h). Any mediator or expert retained under this
13subsection (h) shall be retained no later than 60 days after
14August 2, 2011 the effective date of this amendatory Act of the
1597th General Assembly.
16    The Illinois Power Agency shall complete all of its
17responsibilities under this subsection (h) within 60 days after
18August 2, 2011 the effective date of this amendatory Act of the
1997th General Assembly. The clean coal SNG facility shall pay a
20reasonable fee as required by the Illinois Power Agency for its
21services under this subsection (h) and shall pay the mediator's
22and expert's reasonable fees, if any. A gas utility and its
23customers shall have no obligation to reimburse the clean coal
24SNG facility or the Illinois Power Agency of any such costs.
25    Within 30 days after commercial production of SNG has
26begun, the Commission shall initiate a review to determine

 

 

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

 

 

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1price formula in the contract approved by the Illinois Power
2Agency under this subsection (h) to reflect the disallowed
3costs and shall enter an order specifying the revised price. In
4addition, the Commission's order shall direct the clean coal
5SNG facility to issue refunds of such sums as shall represent
6the difference between actual gross revenues and the gross
7revenue that would have been obtained based upon the same
8volume, from the price revised by the Commission. Any refund
9shall include interest calculated at a rate determined by the
10Commission and shall be returned according to procedures
11prescribed by the Commission.
12    Nothing in this subsection (h) shall preclude any party
13affected by a decision of the Commission under this subsection
14(h) from seeking judicial review of the Commission's decision.
15    (h-1) Any Illinois gas utility may enter into a sourcing
16agreement for up to 30 years of supply with the clean coal SNG
17brownfield facility if the clean coal SNG brownfield facility
18has commenced construction. Any gas utility that is providing
19service to more than 150,000 customers on July 13, 2011 (the
20effective date of Public Act 97-096) this amendatory Act of the
2197th General Assembly shall either elect to file biennial rate
22proceedings before the Commission in the years 2012, 2014, and
232016 or enter into a sourcing agreement or sourcing agreements
24with a clean coal SNG brownfield facility with an initial term
25of 30 years for either (i) a percentage of 43,500,000,000 cubic
26feet per year, such that the utilities entering into sourcing

 

 

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1agreements with the clean coal SNG brownfield facility purchase
2100%, allocated by total therms sold to ultimate customers by
3each gas utility in 2008 or (ii) such lesser amount as may be
4available from the clean coal SNG brownfield facility; provided
5that no utility shall be required to purchase more than 42% of
6the projected annual output of the clean coal SNG brownfield
7facility, with the remainder of such utility's obligation to be
8divided proportionately between the other utilities, and
9provided that the Illinois Power Agency shall further adjust
10the allocation only as required to take into account adverse
11consolidation, derivative, or lease impacts to the balance
12sheet or income statement of any gas utility.
13    A gas utility electing to file biennial rate proceedings
14before the Commission must file a notice of its election with
15the Commission within 60 days after July 13, 2011 the effective
16date of this amendatory Act of the 97th General Assembly or its
17right to make the election is irrevocably waived. A gas utility
18electing to file biennial rate proceedings shall make such
19filings no later than August 1 of the years 2012, 2014, and
202016, consistent with all requirements of 83 Ill. Adm. Code 255
21and 285 as though the gas utility were filing for an increase
22in its rates, without regard to whether such filing would
23produce an increase, a decrease, or no change in the gas
24utility's rates, and notwithstanding any other provisions of
25this Act, the Commission shall fully review the gas utility's
26filing and shall issue its order in accordance with the

 

 

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1provisions of Section 9-201 of this Act, regardless of whether
2the Commission has approved a formula rate for the gas utility.
3    Within 15 days after July 13, 2011 the effective date of
4this amendatory Act of the 97th General Assembly, the owner of
5the clean coal SNG brownfield facility shall submit to the
6Illinois Power Agency and each gas utility that is providing
7service to more than 150,000 customers on July 13, 2011 the
8effective date of this amendatory Act of the 97th General
9Assembly a copy of a draft sourcing agreement. Within 45 days
10after receipt of the draft sourcing agreement, each such gas
11utility shall provide the Illinois Power Agency and the owner
12of a clean coal SNG brownfield facility with its comments and
13recommended revisions to the draft sourcing agreement. Within
1415 days after the receipt of the gas utility's comments and
15recommended revisions, the owner of the clean coal SNG
16brownfield facility shall submit its responsive comments and a
17further revised draft of the sourcing agreement to the Illinois
18Power Agency. The Illinois Power Agency shall review the draft
19sourcing agreement and comments.
20    If the parties to the sourcing agreement do not agree on
21the terms therein, then the Illinois Power Agency shall retain
22an independent mediator to mediate the dispute between the
23parties. If the parties are in agreement on the terms of the
24sourcing agreement, the Illinois Power Agency shall approve the
25final draft sourcing agreement. If after mediation the parties
26have failed to come to agreement, then the Illinois Power

 

 

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1Agency shall revise the draft sourcing agreement as necessary
2to confirm that the final draft sourcing agreement contains
3only terms that are reasonable and equitable. The Illinois
4Power Agency shall adopt and make public a policy detailing the
5process for retaining a mediator under this subsection (h-1).
6Any mediator retained to assist with mediating disputes between
7the parties regarding the sourcing agreement shall be retained
8no later than 60 days after July 13, 2011 the effective date of
9this amendatory Act of the 97th General Assembly.
10    Upon approval of a final draft agreement, the Illinois
11Power Agency shall submit the final draft agreement to the
12Capital Development Board and the Commission no later than 90
13days after July 13, 2011 the effective date of this amendatory
14Act of the 97th General Assembly. The gas utility and the clean
15coal SNG brownfield facility shall pay a reasonable fee as
16required by the Illinois Power Agency for its services under
17this subsection (h-1) and shall pay the mediator's reasonable
18fees, if any. The Illinois Power Agency shall adopt and make
19public a policy detailing the process for retaining a mediator
20under this Section.
21    The sourcing agreement between a gas utility and the clean
22coal SNG brownfield facility shall contain the following
23provisions:
24        (1) Any and all coal used in the gasification process
25    must be coal that has high volatile bituminous rank and
26    greater than 1.7 pounds of sulfur per million Btu content.

 

 

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1        (2) Coal and petroleum coke are feedstocks for the
2    gasification process, with coal comprising at least 50% of
3    the total feedstock over the term of the sourcing agreement
4    unless the facility reasonably determines that it is
5    necessary to use additional petroleum coke to deliver net
6    consumer savings, in which case the facility shall use coal
7    for at least 35% of the total feedstock over the term of
8    any sourcing agreement and with the feedstocks to be
9    procured in accordance with requirements of Section 1-78 of
10    the Illinois Power Agency Act.
11        (3) The sourcing agreement has an initial term that
12    once entered into terminates no more than 30 years after
13    the commencement of the commercial production of SNG at the
14    clean coal SNG brownfield facility.
15        (4) The clean coal SNG brownfield facility guarantees a
16    minimum of $100,000,000 in consumer savings to customers of
17    the utilities that have entered into sourcing agreements
18    with the clean coal SNG brownfield facility, calculated in
19    real 2010 dollars at the conclusion of the term of the
20    sourcing agreement by comparing the delivered SNG price to
21    the Chicago City-gate price on a weighted daily basis for
22    each day over the entire term of the sourcing agreement, to
23    be provided in accordance with subsection (h-2) of this
24    Section.
25        (5) Prior to the clean coal SNG brownfield facility
26    issuing a notice to proceed to construction, the clean coal

 

 

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

 

 

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

 

 

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1    a capital recovery charge, operations and maintenance
2    costs, and sequestration costs, only to the extent approved
3    by the Commission pursuant to paragraphs (1), (2), and (3)
4    of subsection (h-3) of this Section; (B) the actual
5    delivered and processed fuel costs pursuant to paragraph
6    (4) of subsection (h-3) of this Section; (C) actual costs
7    of SNG transportation pursuant to paragraph (6) of
8    subsection (h-3) of this Section; (D) certain taxes and
9    fees imposed by the federal government, the State, or any
10    unit of local government as provided in paragraph (6) of
11    subsection (h-3) of this Section; and (E) the credit, if
12    any, from the consumer protection reserve account pursuant
13    to subsection (h-2) of this Section. The delivered SNG
14    price per million Btu shall proportionately reflect these
15    elements over the term of the sourcing agreement.
16        (9) A formula to translate the recoverable costs and
17    charges under subsection (h-3) of this Section into the
18    delivered SNG price per million btu.
19        (10) Title to the SNG shall pass at a mutually
20    agreeable point in Illinois, and may provide that, rather
21    than the utility taking title to the SNG, a mutually agreed
22    upon third-party gas marketer pursuant to a contract
23    approved by the Illinois Power Agency or its designee may
24    take title to the SNG pursuant to an agreement between the
25    utility, the owner of the clean coal SNG brownfield
26    facility, and the third-party gas marketer.

 

 

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1        (11) A utility may exit the sourcing agreement without
2    penalty if the clean coal SNG brownfield facility does not
3    commence construction by July 1, 2015.
4        (12) A utility is responsible to pay only the
5    Commission determined unit price cost of SNG that is
6    purchased by the utility. Nothing in the sourcing agreement
7    will obligate a utility to invest capital in a clean coal
8    SNG brownfield facility.
9        (13) The quality of SNG must, at a minimum, be
10    equivalent to the quality required for interstate pipeline
11    gas before a utility is required to accept and pay for SNG
12    gas.
13        (14) Nothing in the sourcing agreement will require a
14    utility to construct any facilities to accept delivery of
15    SNG. Provided, however, if a utility is required by law or
16    otherwise elects to connect the clean coal SNG brownfield
17    facility to an interstate pipeline, then the utility shall
18    be entitled to recover pursuant to its tariffs all just and
19    reasonable costs that are prudently incurred. Any costs
20    incurred by the utility to receive, deliver, manage, or
21    otherwise accommodate purchases under the SNG sourcing
22    agreement will be fully recoverable through a utility's
23    purchased gas adjustment clause rider mechanism in
24    conjunction with a SNG brownfield facility rider
25    mechanism. The SNG brownfield facility rider mechanism (A)
26    shall be applicable to all customers who receive

 

 

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

 

 

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1    SNG brownfield facility shall file with the Commission a
2    certificate from an independent engineer that the clean
3    coal SNG brownfield facility has (A) obtained all
4    applicable State and federal environmental permits
5    required for construction; (B) obtained approval from the
6    Commission of a carbon capture and sequestration plan; and
7    (C) obtained all necessary permits required for
8    construction for the transportation and sequestration of
9    carbon dioxide as set forth in the Commission-approved
10    carbon capture and sequestration plan.
11    (h-2) Consumer protection reserve account. The clean coal
12SNG brownfield facility shall guarantee a minimum of
13$100,000,000 in consumer savings to customers of the utilities
14that have entered into sourcing agreements with the clean coal
15SNG brownfield facility, calculated in real 2010 dollars at the
16conclusion of the term of the sourcing agreement by comparing
17the delivered SNG price to the Chicago City-gate price on a
18weighted daily basis for each day over the entire term of the
19sourcing agreement. Prior to the clean coal SNG brownfield
20facility issuing a notice to proceed to construction, the clean
21coal SNG brownfield facility shall establish a consumer
22protection reserve account for the benefit of the retail
23customers of the utilities that have entered into sourcing
24agreements with the clean coal SNG brownfield facility pursuant
25to subsection (h-1), with cash principal in the amount of
26$150,000,000. Such cash principal shall only be recovered

 

 

HB0691 Enrolled- 28 -LRB097 03519 ASK 43556 b

1through the consumer protection reserve account and not as a
2cost to be recovered in the delivered SNG price pursuant to
3subsection (h-3) of this Section. The consumer protection
4reserve account shall be maintained and administered by an
5independent trustee that is mutually agreed upon by the clean
6coal SNG brownfield facility, the utilities, and the Commission
7in an interest-bearing account in accordance with the
8following:
9        (1) The clean coal SNG brownfield facility monthly
10    shall calculate (A) the difference between the monthly
11    delivered SNG price and the Chicago City-gate price, by
12    comparing the delivered SNG price, which shall include the
13    cost of transportation to the delivery point, if any, to
14    the Chicago City-gate price on a weighted daily basis for
15    each day of the prior month based upon a mutually agreed
16    upon published index and (B) the overage amount, if any, by
17    calculating the annualized incremental additional cost, if
18    any, of the delivered SNG in excess of 2.015% of the
19    average annual inflation-adjusted amounts paid by all gas
20    distribution customers in connection with natural gas
21    service during the 5 years ending May 31, 2010.
22        (2) During the first 2 years of operation of the
23    facility:
24            (A) to the extent there is an overage amount, the
25        consumer protection reserve account shall be used to
26        provide a credit to reduce the SNG price by an amount

 

 

HB0691 Enrolled- 29 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 30 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 31 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 32 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 33 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 34 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 35 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 36 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 37 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 38 -LRB097 03519 ASK 43556 b

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

 

 

HB0691 Enrolled- 39 -LRB097 03519 ASK 43556 b

1        capital costs to be recovered under the sourcing
2        agreement. In the event that the estimate submitted by
3        the clean coal SNG brownfield facility is above the
4        range submitted by the Capital Development Board, the
5        amount of capital costs at the lowest end of the range
6        submitted by the Capital Development Board shall be
7        approved by the Commission as the amount of capital
8        costs to be recovered under the sourcing agreement.
9        Within 15 days after the Capital Development Board has
10        submitted its range and the clean coal SNG brownfield
11        facility has submitted its estimate, the Commission
12        shall approve the capital costs for the clean coal SNG
13        brownfield facility.
14            The Capital Development Board shall monitor the
15        construction of the clean coal SNG brownfield facility
16        for the full duration of construction to assess
17        potential cost overruns. The Capital Development
18        Board, in its discretion, may retain an expert to
19        facilitate such monitoring. The clean coal SNG
20        brownfield facility shall pay a reasonable fee as
21        required by the Capital Development Board for the
22        Capital Development Board's services under this
23        subsection (h-3) to be deposited into the Capital
24        Development Board Revolving Fund, and such fee shall
25        not be passed through to a utility or its customers. If
26        an expert is retained by the Capital Development Board

 

 

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1        for monitoring of construction, then the clean coal SNG
2        brownfield facility must pay for the expert's
3        reasonable fees and such costs shall not be passed
4        through to a utility or its customers.
5            (B) Rate of Return. No later than 30 days after the
6        date on which the Illinois Power Agency submits a final
7        draft sourcing agreement, the Commission shall hold a
8        public hearing to determine the rate of return to be
9        recovered under the sourcing agreement. Rate of return
10        shall be comprised of the clean coal SNG brownfield
11        facility's actual cost of debt, including
12        mortgage-style amortization, and a reasonable return
13        on equity. The Commission shall post notice of the
14        hearing on its website no later than 10 days prior to
15        the date of the hearing. The Commission shall provide
16        the public and all interested parties, including the
17        gas utilities, the Attorney General, and the Illinois
18        Power Agency, an opportunity to be heard.
19            In determining the return on equity, the
20        Commission shall select a commercially reasonable
21        return on equity taking into account the return on
22        equity being received by developers of similar
23        facilities in or outside of Illinois, the need to
24        balance an incentive for clean-coal technology with
25        the need to protect ratepayers from high gas prices,
26        the risks being borne by the clean coal SNG brownfield

 

 

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

 

 

HB0691 Enrolled- 42 -LRB097 03519 ASK 43556 b

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

 

 

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

 

 

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

 

 

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1        The Commission shall assess the prudency of the
2    sequestration costs for the clean coal SNG brownfield
3    facility before construction commences at the
4    sequestration site or pipeline. Any revenues the clean coal
5    SNG brownfield facility receives as a result of the
6    capture, transportation, or sequestration of carbon
7    dioxide shall be first credited against all sequestration
8    costs, with the positive balance, if any, treated as
9    additional net revenue.
10        The Commission may, in its discretion, retain an expert
11    to assist in its review of sequestration costs. The clean
12    coal SNG brownfield facility shall pay for the expert's
13    reasonable fees if an expert is retained by the Commission,
14    and such costs shall not be passed through to a utility or
15    its customers. Once made, the Commission's determination
16    of the amount of recoverable sequestration costs shall not
17    be increased unless the clean coal SNG brownfield facility
18    can show by clear and convincing evidence that (i) the
19    costs were not reasonably foreseeable; (ii) the costs were
20    due to circumstances beyond the clean coal SNG brownfield
21    facility's control; and (iii) the clean coal SNG brownfield
22    facility took all reasonable steps to mitigate the costs.
23    If the Commission determines that sequestration costs may
24    be increased, the Commission shall provide for notice and a
25    public hearing for approval of the increased sequestration
26    costs.

 

 

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1        (4) Actual delivered and processed fuel costs shall be
2    set by the Illinois Power Agency through a SNG feedstock
3    procurement, pursuant to Sections 1-20, 1-77, and 1-78 of
4    the Illinois Power Agency Act, to be performed at least
5    every 5 years and purchased by the clean coal SNG
6    brownfield facility pursuant to feedstock procurement
7    contracts developed by the Illinois Power Agency, with coal
8    comprising at least 50% of the total feedstock over the
9    term of the sourcing agreement and petroleum coke
10    comprising the remainder of the SNG feedstock. If the
11    Commission fails to approve a feedstock procurement plan or
12    fails to approve the results of a feedstock procurement
13    event, then the fuel shall be purchased by the company
14    month-by-month on the spot market and those actual
15    delivered and processed fuel costs shall be recoverable
16    under the sourcing agreement. If a supplier defaults under
17    the terms of a procurement contract, then the Illinois
18    Power Agency shall immediately initiate a feedstock
19    procurement process to obtain a replacement supply, and,
20    prior to the conclusion of that process, fuel shall be
21    purchased by the company month-by-month on the spot market
22    and those actual delivered and processed fuel costs shall
23    be recoverable under the sourcing agreement.
24        (5) Taxes and fees imposed by the federal government,
25    the State, or any unit of local government applicable to
26    the clean coal SNG brownfield facility, excluding income

 

 

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1    tax, shall be recoverable by the clean coal SNG brownfield
2    facility under the sourcing agreement to the extent such
3    taxes and fees were not applicable to the facility on July
4    13, 2011 the date of this amendatory Act of the 97th
5    General Assembly.
6        (6) The actual transportation costs, in accordance
7    with the applicable utility's tariffs, and third-party
8    marketer costs incurred by the company, if any, associated
9    with transporting the SNG from the clean coal SNG
10    brownfield facility to the Chicago City-gate to sell such
11    SNG into the natural gas markets shall be recoverable under
12    the sourcing agreement.
13        (7) Unless otherwise provided, within 30 days after a
14    decision of the Commission on recoverable costs under this
15    Section, any interested party to the Commission's decision
16    may apply for a rehearing with respect to the decision. The
17    Commission shall receive and consider the application for
18    rehearing and shall grant or deny the application in whole
19    or in part within 20 days after the date of the receipt of
20    the application by the Commission. If no rehearing is
21    applied for within the required 30 days or an application
22    for rehearing is denied, then the Commission decision shall
23    be final. If an application for rehearing is granted, then
24    the Commission shall hold a rehearing within 30 days after
25    granting the application. The decision of the Commission
26    upon rehearing shall be final.

 

 

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1        Any person affected by a decision of the Commission
2    under this subsection (h-3) may have the decision reviewed
3    only under and in accordance with the Administrative Review
4    Law. Unless otherwise provided, the provisions of the
5    Administrative Review Law, all amendments and
6    modifications to that Law, and the rules adopted pursuant
7    to that Law shall apply to and govern all proceedings for
8    the judicial review of final administrative decisions of
9    the Commission under this subsection (h-3). The term
10    "administrative decision" is defined as in Section 3-101 of
11    the Code of Civil Procedure.
12        (8) The Capital Development Board shall adopt and make
13    public a policy detailing the process for retaining experts
14    under this Section. Any experts retained to assist with
15    calculating the range of capital costs or operations and
16    maintenance costs shall be retained no later than 45 days
17    after July 13, 2011 the effective date of this amendatory
18    Act of the 97th General Assembly.
19    (h-4) No later than 90 days after the Illinois Power Agency
20submits the final draft sourcing agreement pursuant to
21subsection (h-1), the Commission shall approve a sourcing
22agreement containing (i) the capital costs, rate of return, and
23operations and maintenance costs established pursuant to
24subsection (h-3) and (ii) all other terms and conditions,
25rights, provisions, exceptions, and limitations contained in
26the final draft sourcing agreement; provided, however, the

 

 

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1Commission shall correct typographical and scrivener's errors
2and modify the contract only as necessary to provide that the
3gas utility does not have the right to terminate the sourcing
4agreement due to any future events that may occur other than
5the clean coal SNG brownfield facility's failure to timely meet
6milestones, uncured default, extended force majeure, or
7abandonment. Once the sourcing agreement is approved, then the
8gas utility subject to that sourcing agreement shall have 45
9days after the date of the Commission's approval to enter into
10the sourcing agreement.
11    (h-5) Sequestration enforcement.
12        (A) All contracts entered into under subsection (h) of
13    this Section Act and all sourcing agreements under
14    subsection (h-1) of this Section Act, regardless of
15    duration, shall require the owner of any facility supplying
16    SNG under the contract or sourcing agreement to provide
17    certified documentation to the Commission each year,
18    starting in the facility's first year of commercial
19    operation, accurately reporting the quantity of carbon
20    dioxide emissions from the facility that have been captured
21    and sequestered and reporting any quantities of carbon
22    dioxide released from the site or sites at which carbon
23    dioxide emissions were sequestered in prior years, based on
24    continuous monitoring of those sites.
25        (B) If, in any year, the owner of the clean coal SNG
26    facility fails to demonstrate that the SNG facility

 

 

HB0691 Enrolled- 50 -LRB097 03519 ASK 43556 b

1    captured and sequestered at least 90% of the total carbon
2    dioxide emissions that the facility would otherwise emit or
3    that sequestration of emissions from prior years has
4    failed, resulting in the release of carbon dioxide into the
5    atmosphere, then the owner of the clean coal SNG facility
6    must pay a penalty of $20 per ton of excess carbon dioxide
7    emissions not to exceed $40,000,000, in any given year
8    which shall be deposited into the Energy Efficiency Trust
9    Fund and distributed pursuant to subsection (b) of Section
10    6-6 of the Renewable Energy, Energy Efficiency, and Coal
11    Resources Development Law of 1997. On or before the 5-year
12    anniversary of the execution of the contract and every 5
13    years thereafter, an expert hired by the owner of the
14    facility with the approval of the Attorney General shall
15    conduct an analysis to determine the cost of sequestration
16    of at least 90% of the total carbon dioxide emissions the
17    plant would otherwise emit. If the analysis shows that the
18    actual annual cost is greater than the penalty, then the
19    penalty shall be increased to equal the actual cost.
20    Provided, however, to the extent that the owner of the
21    facility described in subsection (h) of this Section Act
22    can demonstrate that the failure was as a result of acts of
23    God (including fire, flood, earthquake, tornado,
24    lightning, hurricane, or other natural disaster); any
25    amendment, modification, or abrogation of any applicable
26    law or regulation that would prevent performance; war;

 

 

HB0691 Enrolled- 51 -LRB097 03519 ASK 43556 b

1    invasion; act of foreign enemies; hostilities (regardless
2    of whether war is declared); civil war; rebellion;
3    revolution; insurrection; military or usurped power or
4    confiscation; terrorist activities; civil disturbance;
5    riots; nationalization; sabotage; blockage; or embargo,
6    the owner of the facility described in subsection (h) of
7    this Section Act shall not be subject to a penalty if and
8    only if (i) it promptly provides notice of its failure to
9    the Commission; (ii) as soon as practicable and consistent
10    with any order or direction from the Commission, it submits
11    to the Commission proposed modifications to its carbon
12    capture and sequestration plan; and (iii) it carries out
13    its proposed modifications in the manner and time directed
14    by the Commission.
15        If the Commission finds that the facility has not
16    satisfied each of these requirements, then the facility
17    shall be subject to the penalty. If the owner of the clean
18    coal SNG facility captured and sequestered more than 90% of
19    the total carbon dioxide emissions that the facility would
20    otherwise emit, then the owner of the facility may credit
21    such additional amounts to reduce the amount of any future
22    penalty to be paid. The penalty resulting from the failure
23    to capture and sequester at least the minimum amount of
24    carbon dioxide shall not be passed on to a utility or its
25    customers.
26        If the clean coal SNG facility fails to meet the

 

 

HB0691 Enrolled- 52 -LRB097 03519 ASK 43556 b

1    requirements specified in this subsection (h-5), then the
2    Attorney General, on behalf of the People of the State of
3    Illinois, shall bring an action to enforce the obligations
4    related to the facility set forth in this subsection (h-5),
5    including any penalty payments owed, but not including the
6    physical obligation to capture and sequester at least 90%
7    of the total carbon dioxide emissions that the facility
8    would otherwise emit. Such action may be filed in any
9    circuit court in Illinois. By entering into a contract
10    pursuant to subsection (h) of this Section, the clean coal
11    SNG facility agrees to waive any objections to venue or to
12    the jurisdiction of the court with regard to the Attorney
13    General's action under this subsection (h-5).
14        Compliance with the sequestration requirements and any
15    penalty requirements specified in this subsection (h-5)
16    for the clean coal SNG facility shall be assessed annually
17    by the Commission, which may in its discretion retain an
18    expert to facilitate its assessment. If any expert is
19    retained by the Commission, then the clean coal SNG
20    facility shall pay for the expert's reasonable fees, and
21    such costs shall not be passed through to the utility or
22    its customers.
23        In addition, carbon dioxide emission credits received
24    by the clean coal SNG facility in connection with
25    sequestration of carbon dioxide from the facility must be
26    sold in a timely fashion with any revenue, less applicable

 

 

HB0691 Enrolled- 53 -LRB097 03519 ASK 43556 b

1    fees and expenses and any expenses required to be paid by
2    facility for carbon dioxide transportation or
3    sequestration, deposited into the reconciliation account
4    within 30 days after receipt of such funds by the owner of
5    the clean coal SNG facility.
6        The clean coal SNG facility is prohibited from
7    transporting or sequestering carbon dioxide unless the
8    owner of the carbon dioxide pipeline that transfers the
9    carbon dioxide from the facility and the owner of the
10    sequestration site where the carbon dioxide captured by the
11    facility is stored has acquired all applicable permits
12    under applicable State and federal laws, statutes, rules,
13    or regulations prior to the transfer or sequestration of
14    carbon dioxide. The responsibility for compliance with the
15    sequestration requirements specified in this subsection
16    (h-5) for the clean coal SNG facility shall reside solely
17    with the clean coal SNG facility, regardless of whether the
18    facility has contracted with another party to capture,
19    transport, or sequester carbon dioxide. described in
20    subsection (h) of this Act described in subsection (h) of
21    this Act
22        (C) If, in any year, the owner of a clean coal SNG
23    brownfield facility fails to demonstrate that the clean
24    coal SNG brownfield facility captured and sequestered at
25    least 85% of the total carbon dioxide emissions that the
26    facility would otherwise emit, then the owner of the clean

 

 

HB0691 Enrolled- 54 -LRB097 03519 ASK 43556 b

1    coal SNG brownfield facility must pay a penalty of $20 per
2    ton of excess carbon emissions up to $20,000,000, which
3    shall be deposited into the Energy Efficiency Trust Fund
4    and distributed pursuant to subsection (b) of Section 6-6
5    of the Renewable Energy, Energy Efficiency, and Coal
6    Resources Development Law of 1997. Provided, however, to
7    the extent that the owner of the clean coal SNG brownfield
8    facility can demonstrate that the failure was as a result
9    of acts of God (including fire, flood, earthquake, tornado,
10    lightning, hurricane, or other natural disaster); any
11    amendment, modification, or abrogation of any applicable
12    law or regulation that would prevent performance; war;
13    invasion; act of foreign enemies; hostilities (regardless
14    of whether war is declared); civil war; rebellion;
15    revolution; insurrection; military or usurped power or
16    confiscation; terrorist activities; civil disturbances;
17    riots; nationalization; sabotage; blockage; or embargo,
18    the owner of the clean coal SNG brownfield facility shall
19    not be subject to a penalty if and only if (i) it promptly
20    provides notice of its failure to the Commission; (ii) as
21    soon as practicable and consistent with any order or
22    direction from the Commission, it submits to the Commission
23    proposed modifications to its carbon capture and
24    sequestration plan; and (iii) it carries out its proposed
25    modifications in the manner and time directed by the
26    Commission. If the Commission finds that the facility has

 

 

HB0691 Enrolled- 55 -LRB097 03519 ASK 43556 b

1    not satisfied each of these requirements, then the facility
2    shall be subject to the penalty. If the owner of a clean
3    coal SNG brownfield facility demonstrates that the clean
4    coal SNG brownfield facility captured and sequestered more
5    than 85% of the total carbon emissions that the facility
6    would otherwise emit, the owner of the clean coal SNG
7    brownfield facility may credit such additional amounts to
8    reduce the amount of any future penalty to be paid. The
9    penalty resulting from the failure to capture and sequester
10    at least the minimum amount of carbon dioxide shall not be
11    passed on to a utility or its customers.
12        In addition to any penalty for the clean coal SNG
13    brownfield facility's failure to capture and sequester at
14    least its minimum sequestration requirement, the Attorney
15    General, on behalf of the People of the State of Illinois,
16    shall bring an action for specific performance of this
17    subsection (h-5). Such action may be filed in any circuit
18    court in Illinois. By entering into a sourcing agreement
19    pursuant to subsection (h-1) of this Section, the clean
20    coal SNG brownfield facility agrees to waive any objections
21    to venue or to the jurisdiction of the court with regard to
22    the Attorney General's action for specific performance
23    under this subsection (h-5). for the facility described in
24    subsection (h) of this Act described in subsection (h) of
25    this Act
26        Compliance with the sequestration requirements and

 

 

HB0691 Enrolled- 56 -LRB097 03519 ASK 43556 b

1    penalty requirements specified in this subsection (h-5)
2    for the clean coal SNG brownfield facility shall be
3    assessed annually by the Commission, which may in its
4    discretion retain an expert to facilitate its assessment.
5    If an expert is retained by the Commission, then the clean
6    coal SNG brownfield facility shall pay for the expert's
7    reasonable fees, and such costs shall not be passed through
8    to a utility or its customers. or a clean coal SNG
9    brownfield facility or requisite penalties are paid
10        Responsibility for compliance with the sequestration
11    requirements specified in this subsection (h-5) for the
12    clean coal SNG brownfield facility shall reside solely with
13    the clean coal SNG brownfield facility regardless of
14    whether the facility has contracted with another party to
15    capture, transport, or sequester carbon dioxide.
16    (h-7) Sequestration permitting, oversight, and
17investigations.
18        (1) No clean coal facility or clean coal SNG brownfield
19    facility may transport or sequester carbon dioxide unless
20    the Commission approves the method of carbon dioxide
21    transportation or sequestration. Such approval shall be
22    required regardless of whether the facility has contracted
23    with another to transport or sequester the carbon dioxide.
24    Nothing in this subsection (h-7) shall release the owner or
25    operator of a carbon dioxide sequestration site or carbon
26    dioxide pipeline from any other permitting requirements

 

 

HB0691 Enrolled- 57 -LRB097 03519 ASK 43556 b

1    under applicable State and federal laws, statutes, rules,
2    or regulations.
3        (2) The Commission shall review carbon dioxide
4    transportation and sequestration methods proposed by a
5    clean coal facility or a clean coal SNG brownfield facility
6    and shall approve those methods it deems reasonable and
7    cost-effective. For purposes of this review,
8    "cost-effective" means a commercially reasonable price for
9    similar carbon dioxide transportation or sequestration
10    techniques. In determining whether sequestration is
11    reasonable and cost-effective, the Commission may consult
12    with the Illinois State Geological Survey and retain third
13    parties to assist in its determination, provided that such
14    third parties shall not own or control any direct or
15    indirect interest in the facility that is proposing the
16    carbon dioxide transportation or the carbon dioxide
17    sequestration method and shall have no contractual
18    relationship with that facility. If a third party is
19    retained by the Commission, then the facility proposing the
20    carbon dioxide transportation or sequestration method
21    shall pay for the expert's reasonable fees, and these costs
22    shall not be passed through to a utility or its customers.
23        No later than 6 months prior to the date upon which the
24    owner intends to commence construction of a clean coal
25    facility or the clean coal SNG brownfield facility, the
26    owner of the facility shall file with the Commission a

 

 

HB0691 Enrolled- 58 -LRB097 03519 ASK 43556 b

1    carbon dioxide transportation or sequestration plan. The
2    Commission shall hold a public hearing within 30 days after
3    receipt of the facility's carbon dioxide transportation or
4    sequestration plan. The Commission shall post notice of the
5    review on its website upon submission of a carbon dioxide
6    transportation or sequestration method and shall accept
7    written public comments. The Commission shall take the
8    comments into account when making its decision.
9        The Commission may not approve a carbon dioxide
10    sequestration method if the owner or operator of the
11    sequestration site has not received (i) an Underground
12    Injection Control permit from the Illinois Environmental
13    Protection Agency pursuant to the Environmental Protection
14    Act; (ii) an Underground Injection Control permit from the
15    Illinois Department of Natural Resources pursuant to the
16    Illinois Oil and Gas Act; or (iii) a permit similar to
17    items (i) or (ii) from the state in which the sequestration
18    site is located if the sequestration will take place
19    outside of Illinois. The Commission shall approve or deny
20    the carbon dioxide transportation or sequestration method
21    within 90 days after the receipt of all required
22    information.
23        (3) At least annually, the Illinois Environmental
24    Protection Agency shall inspect all carbon dioxide
25    sequestration sites in Illinois. The Illinois
26    Environmental Protection Agency may, as often as deemed

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1rider mechanism that (A) shall be applicable to all customers
2who receive transportation service from the utility, (B) shall
3be designed to have an equal percentage impact on the
4transportation services rates of each class of the utility's
5total customers, and (C) shall accurately reflect the net
6customer savings, if any, and above market costs, if any, under
7the SNG contract. Any contract, the terms of which have been
8confirmed in writing by the Illinois Power Agency as set forth
9in subsection (h) of this Section and the performance of the
10parties under such contract cannot be grounds for challenging
11prudence or cost recovery by the utility through the purchased
12gas adjustment clause, and in such cases, the Commission is
13directed not to consider, and has no authority to consider, any
14attempted challenges.
15    The contracts entered into by Illinois gas utilities
16pursuant to subsection (h) of this Section shall provide that
17the utility retains the right to terminate the contract without
18further obligation or liability to any party if the contract
19has been impaired as a result of any legislative,
20administrative, judicial, or other governmental action that is
21taken that eliminates all or part of the prudence protection of
22this subsection (h-10) or denies the recoverability of all or
23part of the contract costs through the purchased gas adjustment
24clause. Should any Illinois gas utility exercise its right
25under this subsection (h-10) to terminate the contract, all
26contract costs incurred prior to termination are and will be

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    the clean coal SNG facility. Such payment shall be made
2    within 30 days after the last completed analysis pursuant
3    to this subsection (h-15). If the facility has repaid all
4    owed amounts, if any, to retail customers and has
5    distributed 50% of any additional amount in the account to
6    the utilities, then the owners of the clean coal SNG
7    facility shall have no further obligation to the utility or
8    the retail customers.
9        If, at the conclusion of the term of the contracts
10    pursuant to subsection (h) and the completion of the final
11    annual analysis pursuant to this subsection (h-15), the
12    facility owes any amount to retail customers and the
13    account has been depleted, then the clean coal SNG facility
14    shall be liable for any remaining amount owed to the retail
15    customers. The clean coal SNG facility shall market the
16    daily production of SNG and distribute on a monthly basis
17    5% of the amounts collected with respect to such future
18    sales to the utilities in proportion to each utility's SNG
19    contract to be used to reduce the utility's natural gas
20    costs through the purchase gas adjustment clause; such
21    payments to the utility shall continue until either 15
22    years after the conclusion of the contract or such time as
23    the sum of such payments equals the remaining amount owed
24    to the retail customers at the end of the contract,
25    whichever is earlier. If the debt to the retail customers
26    is not repaid within 15 years after the conclusion of the

 

 

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

 

 

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1            (B) the amount credited or debited to the
2        reconciliation account during the year;
3            (C) the amount credited to the utilities to be used
4        to reduce the utilities natural gas costs though the
5        purchase gas adjustment clause;
6            (D) the total amount of reconciliation account at
7        the beginning and end of the year;
8            (E) the total amount of consumer savings to date;
9        and
10            (F) any additional information the Commission may
11        require.
12    When any report is erroneous or defective or appears to the
13Commission to be erroneous or defective, the Commission may
14notify the clean coal SNG facility to amend the report within
1530 days; before or after the termination of the 30-day period,
16the Commission may examine the trustee of the reconciliation
17account or the officers, agents, employees, books, records, or
18accounts of the clean coal SNG facility and correct such items
19in the report as upon such examination the Commission may find
20defective or erroneous. All reports shall be under oath.
21    All reports made to the Commission by the clean coal SNG
22facility and the contents of the reports shall be open to
23public inspection and shall be deemed a public record under the
24Freedom of Information Act. Such reports shall be preserved in
25the office of the Commission. The Commission shall publish an
26annual summary of the reports prior to February 1 of the

 

 

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1following year. The annual summary shall be made available to
2the public on the Commission's website and shall be submitted
3to the General Assembly.
4    Any facility that fails to file the report required under
5this paragraph (4) to the Commission within the time specified
6or to make specific answer to any question propounded by the
7Commission within 30 days after the time it is lawfully
8required to do so, or within such further time not to exceed 90
9days as may be allowed by the Commission in its discretion,
10shall pay a penalty of $500 to the Commission for each day it
11is in default.
12    Any person who willfully makes any false report to the
13Commission or to any member, officer, or employee thereof, any
14person who willfully in a report withholds or fails to provide
15material information to which the Commission is entitled under
16this paragraph (4) and which information is either required to
17be filed by statute, rule, regulation, order, or decision of
18the Commission or has been requested by the Commission, and any
19person who willfully aids or abets such person shall be guilty
20of a Class A misdemeanor.
21    (h-20) The General Assembly authorizes the Illinois
22Finance Authority to issue bonds to the maximum extent
23permitted to finance coal gasification facilities described in
24this Section, which constitute both "industrial projects"
25under Article 801 of the Illinois Finance Authority Act and
26"clean coal and energy projects" under Sections 825-65 through

 

 

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1825-75 of the Illinois Finance Authority Act.
2    Administrative costs incurred by the Illinois Finance
3Authority in performance of this subsection (h-20) shall be
4subject to reimbursement by the clean coal SNG facility on
5terms as the Illinois Finance Authority and the clean coal SNG
6facility may agree. The utility and its customers shall have no
7obligation to reimburse the clean coal SNG facility or the
8Illinois Finance Authority for any such costs.
9    (h-25) The State of Illinois pledges that the State may not
10enact any law or take any action to (1) break or repeal the
11authority for SNG purchase contracts entered into between
12public gas utilities and the clean coal SNG facility pursuant
13to subsection (h) of this Section or (2) deny public gas
14utilities their full cost recovery for contract costs, as
15defined in subsection (h-10), that are incurred under such SNG
16purchase contracts. These pledges are for the benefit of the
17parties to such SNG purchase contracts and the issuers and
18holders of bonds or other obligations issued or incurred to
19finance or refinance the clean coal SNG facility. The
20beneficiaries are authorized to include and refer to these
21pledges in any finance agreement into which they may enter in
22regard to such contracts.
23    (h-30) The State of Illinois retains and reserves all other
24rights to enact new or amendatory legislation or take any other
25action, including, but not limited to, such legislation or
26other action that would (1) directly or indirectly raise the

 

 

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1costs that the clean coal SNG facility must incur; (2) directly
2or indirectly place additional restrictions, regulations, or
3requirements on the clean coal SNG facility; (3) prohibit
4sequestration in general or prohibit a specific sequestration
5method or project; or (4) increase minimum sequestration
6requirements.
7    (i) If a gas utility or an affiliate of a gas utility has
8an ownership interest in any entity that produces or sells
9synthetic natural gas, Article VII of this Act shall apply.
10(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;
1197-239, eff. 8-2-11; revised 9-12-11.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.