SB3766 EnrolledLRB097 19347 CEL 64596 b

1    AN ACT concerning public utilities.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Section 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) shall either elect to enter into a contract
25on or before September 30, 2011 for 10 years of SNG supply with
26the owner of a clean coal SNG facility or to file biennial rate

 

 

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1proceedings before the Commission in the years 2012, 2014, and
22016, with such filings made after August 2, 2011 and no later
3than September 30 of the years 2012, 2014, and 2016 consistent
4with all requirements of 83 Ill. Adm. Code 255 and 285 as
5though the gas utility were filing for an increase in its
6rates, without regard to whether such filing would produce an
7increase, a decrease, or no change in the gas utility's rates,
8and the Commission shall review the gas utility's filing and
9shall issue its order in accordance with the provisions of
10Section 9-201 of this Act.
11    Within 7 days after August 2, 2011, the owner of the clean
12coal SNG facility shall submit to the Illinois Power Agency and
13each gas utility that is providing service to more than 150,000
14customers on August 2, 2011 a copy of a draft contract. Within
1530 days after the receipt of the draft contract, each such gas
16utility shall provide the Illinois Power Agency and the owner
17of the clean coal SNG facility with its comments and
18recommended revisions to the draft contract. Within 7 days
19after the receipt of the gas utility's comments and recommended
20revisions, the owner of the facility shall submit its
21responsive comments and a further revised draft of the contract
22to the Illinois Power Agency. The Illinois Power Agency shall
23review the draft contract and comments.
24    During its review of the draft contract, the Illinois Power
25Agency shall:
26        (1) review and confirm in writing that the terms stated

 

 

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

 

 

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

 

 

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1draft contract as necessary to confirm that the contract
2contains only terms that are reasonable and equitable. The
3Illinois Power Agency may, in its discretion, retain an
4independent, qualified, and experienced expert to assist in its
5obligations under this subsection (h). The Illinois Power
6Agency shall adopt and make public policies detailing the
7processes for retaining a mediator and an expert under this
8subsection (h). Any mediator or expert retained under this
9subsection (h) shall be retained no later than 60 days after
10August 2, 2011.
11    The Illinois Power Agency shall complete all of its
12responsibilities under this subsection (h) within 60 days after
13August 2, 2011. The clean coal SNG facility shall pay a
14reasonable fee as required by the Illinois Power Agency for its
15services under this subsection (h) and shall pay the mediator's
16and expert's reasonable fees, if any. A gas utility and its
17customers shall have no obligation to reimburse the clean coal
18SNG facility or the Illinois Power Agency of any such costs.
19    Within 30 days after commercial production of SNG has
20begun, the Commission shall initiate a review to determine
21whether the final capitalized plant cost of the clean coal SNG
22facility reflects actual incurred costs and whether the
23incurred costs were reasonable. In determining the actual
24incurred costs included in the final capitalized plant cost and
25the reasonableness of those costs, the Commission may in its
26discretion retain independent, qualified, and experienced

 

 

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1experts to assist in its determination. The expert shall not
2own or control any direct or indirect interest in the clean
3coal SNG facility and shall have no contractual relationship
4with the clean coal SNG facility. If an expert is retained by
5the Commission, then the clean coal SNG facility shall pay the
6expert's reasonable fees. The fees shall not be passed on to a
7utility or its customers. The Commission shall adopt and make
8public a policy detailing the process for retaining experts
9under this subsection (h).
10    Within 30 days after completion of its review, the
11Commission shall initiate a formal proceeding on the final
12capitalized plant cost of the clean coal SNG facility at which
13comments and testimony may be submitted by any interested
14parties and the public. If the Commission finds that the final
15capitalized plant cost includes costs that were not actually
16incurred or costs that were unreasonably incurred, then the
17Commission shall disallow the amount of non-incurred or
18unreasonable costs from the SNG price under contracts entered
19into under this subsection (h). If the Commission disallows any
20costs, then the Commission shall adjust the SNG price using the
21price formula in the contract approved by the Illinois Power
22Agency under this subsection (h) to reflect the disallowed
23costs and shall enter an order specifying the revised price. In
24addition, the Commission's order shall direct the clean coal
25SNG facility to issue refunds of such sums as shall represent
26the difference between actual gross revenues and the gross

 

 

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1revenue that would have been obtained based upon the same
2volume, from the price revised by the Commission. Any refund
3shall include interest calculated at a rate determined by the
4Commission and shall be returned according to procedures
5prescribed by the Commission.
6    Nothing in this subsection (h) shall preclude any party
7affected by a decision of the Commission under this subsection
8(h) from seeking judicial review of the Commission's decision.
9    (h-1) Any Illinois gas utility may enter into a sourcing
10agreement for up to 30 years of supply with the clean coal SNG
11brownfield facility if the clean coal SNG brownfield facility
12has commenced construction. Any gas utility that is providing
13service to more than 150,000 customers on July 13, 2011 (the
14effective date of Public Act 97-096) shall either elect to file
15biennial rate proceedings before the Commission in the years
162012, 2014, and 2016 or enter into a sourcing agreement or
17sourcing agreements with a clean coal SNG brownfield facility
18with an initial term of 30 years for either (i) a percentage of
1943,500,000,000 cubic feet per year, such that the utilities
20entering into sourcing agreements with the clean coal SNG
21brownfield facility purchase 100%, allocated by total therms
22sold to ultimate customers by each gas utility in 2008 or (ii)
23such lesser amount as may be available from the clean coal SNG
24brownfield facility; provided that no utility shall be required
25to purchase more than 42% of the projected annual output of the
26clean coal SNG brownfield facility (the projected annual output

 

 

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1of which is 47,799,714 MMBtu), with the remainder of such
2utility's obligation to be divided proportionately between the
3other utilities, and provided that the Illinois Power Agency
4shall further adjust the allocation only as required to take
5into account adverse consolidation, derivative, or lease
6impacts to the balance sheet or income statement of any gas
7utility.
8    A gas utility electing to file biennial rate proceedings
9before the Commission must file a notice of its election with
10the Commission within 60 days after July 13, 2011 or its right
11to make the election is irrevocably waived. A gas utility
12electing to file biennial rate proceedings shall make such
13filings no later than August 1 of the years 2012, 2014, and
142016, consistent with all requirements of 83 Ill. Adm. Code 255
15and 285 as though the gas utility were filing for an increase
16in its rates, without regard to whether such filing would
17produce an increase, a decrease, or no change in the gas
18utility's rates, and notwithstanding any other provisions of
19this Act, the Commission shall fully review the gas utility's
20filing and shall issue its order in accordance with the
21provisions of Section 9-201 of this Act, regardless of whether
22the Commission has approved a formula rate for the gas utility.
23If more than 2 gas utilities elect to file biennial rate
24proceedings before the Commission by July 13, 2011, then the
25requirement that the other utilities enter into a sourcing
26agreement with the clean coal SNG brownfield facility shall be

 

 

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1waived.
2    Within 15 days after July 13, 2011, the owner of the clean
3coal SNG brownfield facility shall submit to the Illinois Power
4Agency and each gas utility that is providing service to more
5than 150,000 customers on July 13, 2011 a copy of a draft
6sourcing agreement. Within 45 days after receipt of the draft
7sourcing agreement, each such gas utility shall provide the
8Illinois Power Agency and the owner of a clean coal SNG
9brownfield facility with its verbal or written comments and
10recommended revisions to the draft sourcing agreement. Within
1115 days after the receipt of the gas utility's comments and
12recommended revisions, the owner of the clean coal SNG
13brownfield facility shall submit its responsive verbal or
14written comments and a further revised draft of the sourcing
15agreement to the Illinois Power Agency. The Illinois Power
16Agency shall review the draft sourcing agreement and comments.
17    If the parties to the sourcing agreement do not agree on
18the terms therein, then the Illinois Power Agency shall retain
19an independent mediator to mediate the dispute between the
20parties. If the parties are in agreement on the terms of the
21sourcing agreement, the Illinois Power Agency shall approve the
22final draft sourcing agreement. If after mediation the parties
23have failed to come to agreement, then the Illinois Power
24Agency shall revise the draft sourcing agreement as necessary
25to confirm that the final draft sourcing agreement contains
26only terms that are reasonable and equitable. The Illinois

 

 

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1Power Agency shall adopt and make public a policy detailing the
2process for retaining a mediator under this subsection (h-1).
3Any mediator retained to assist with mediating disputes between
4the parties regarding the sourcing agreement shall be retained
5no later than 60 days after July 13, 2011.
6    Upon approval of a final draft agreement, the Illinois
7Power Agency shall submit the final draft agreement to the
8Capital Development Board and the Commission no later than 90
9days after July 13, 2011. The gas utility and the clean coal
10SNG brownfield facility shall pay a reasonable fee as required
11by the Illinois Power Agency for its services under this
12subsection (h-1) and shall pay the mediator's reasonable fees,
13if any. The Illinois Power Agency shall adopt and make public a
14policy detailing the process for retaining a mediator under
15this Section.
16    The sourcing agreement between a gas utility and the clean
17coal SNG brownfield facility shall contain the following
18provisions:
19        (1) Any and all coal used in the gasification process
20    must be coal that has high volatile bituminous rank and
21    greater than 1.7 pounds of sulfur per million Btu content.
22        (2) Coal and petroleum coke are feedstocks for the
23    gasification process, with coal comprising at least 50% of
24    the total feedstock over the term of the sourcing agreement
25    unless the facility reasonably determines that it is
26    necessary to use additional petroleum coke to deliver net

 

 

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

 

 

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1    $150,000,000. This cash principal shall only be
2    recoverable through the consumer protection reserve
3    account and not as a cost to be recovered in the delivered
4    SNG price pursuant to subsection (h-3) of this Section. The
5    consumer protection reserve account shall be maintained
6    and administered by an independent trustee that is mutually
7    agreed upon by the clean coal SNG brownfield facility, the
8    utilities, and the Commission in an interest-bearing
9    account in accordance with subsection (h-2) of this
10    Section.
11        "Consumer protection reserve account principal maximum
12    amount" shall mean the maximum amount of principal to be
13    maintained in the consumer protection reserve account.
14    During the first 2 years of operation of the facility,
15    there shall be no consumer protection reserve account
16    maximum amount. After the first 2 years of operation of the
17    facility, the consumer protection reserve account maximum
18    amount shall be $150,000,000. After 5 years of operation,
19    and every 5 years thereafter, the trustee shall calculate
20    the 5-year average balance of the consumer protection
21    reserve account. If the trustee determines that during the
22    prior 5 years the consumer protection reserve account has
23    had an average account balance of less than $75,000,000,
24    then the consumer protection reserve account principal
25    maximum amount shall be increased by $5,000,000. If the
26    trustee determines that during the prior 5 years the

 

 

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

 

 

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1    (4) of subsection (h-3) of this Section; (C) actual costs
2    of SNG transportation pursuant to paragraph (6) of
3    subsection (h-3) of this Section; (D) certain taxes and
4    fees imposed by the federal government, the State, or any
5    unit of local government as provided in paragraph (6) of
6    subsection (h-3) of this Section; and (E) the credit, if
7    any, from the consumer protection reserve account pursuant
8    to subsection (h-2) of this Section. The delivered SNG
9    price per million Btu shall proportionately reflect these
10    elements over the term of the sourcing agreement.
11        (9) A formula to translate the recoverable costs and
12    charges under subsection (h-3) of this Section into the
13    delivered SNG price per million btu.
14        (10) Title to the SNG shall pass at a mutually
15    agreeable point in Illinois, and may provide that, rather
16    than the utility taking title to the SNG, a mutually agreed
17    upon third-party gas marketer pursuant to a contract
18    approved by the Illinois Power Agency or its designee may
19    take title to the SNG pursuant to an agreement between the
20    utility, the owner of the clean coal SNG brownfield
21    facility, and the third-party gas marketer.
22        (11) A utility may exit the sourcing agreement without
23    penalty if the clean coal SNG brownfield facility does not
24    commence construction by July 1, 2015.
25        (12) A utility is responsible to pay only the
26    Commission determined unit price cost of SNG that is

 

 

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1    purchased by the utility, which unit price shall be set on
2    a per-MMBtu basis so as to fully recover the costs
3    enumerated in subsection (h-3) when multiplied by the
4    allocations determined in this subsection (h-1). Nothing
5    in the sourcing agreement will obligate a utility to invest
6    capital in a clean coal SNG brownfield facility.
7        (13) The quality of SNG must, at a minimum, be
8    equivalent to the quality required for interstate pipeline
9    gas before a utility is required to accept and pay for SNG
10    gas.
11        (14) Nothing in the sourcing agreement will require a
12    utility to construct any facilities to accept delivery of
13    SNG, but the sourcing agreement may require that the
14    utility mutually agree with the clean coal SNG brownfield
15    facility upon a receiving pipeline. Provided, however, if a
16    utility is required by law or otherwise elects to connect
17    the clean coal SNG brownfield facility to an interstate
18    pipeline, then the utility shall be entitled to recover
19    pursuant to its tariffs all just and reasonable costs that
20    are prudently incurred. Any costs incurred by the utility
21    to receive, deliver, manage, or otherwise accommodate
22    purchases under the SNG sourcing agreement will be fully
23    recoverable through a utility's purchased gas adjustment
24    clause rider mechanism in conjunction with a SNG brownfield
25    facility rider mechanism. The SNG brownfield facility
26    rider mechanism (A) shall be applicable to all customers

 

 

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1    who receive transportation service from the utility, (B)
2    shall be 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; provided, however, that the designated
12    amount on any given day may be zero.
13        (16) The clean coal SNG brownfield facility shall make
14    a good faith effort to ensure that an amount equal to not
15    less than 15% of the value of its prime construction
16    contract for the facility shall be established as a goal to
17    be awarded to minority owned businesses, female owned
18    businesses, and businesses owned by a person with a
19    disability; provided that at least 75% of the amount of
20    such total goal shall be for minority owned businesses.
21    "Minority owned business", "female owned business", and
22    "business owned by a person with a disability" shall have
23    the meanings ascribed to them in Section 2 of the Business
24    Enterprise for Minorities, Females and Persons with
25    Disabilities Act.
26        (17) Prior to the clean coal SNG brownfield facility

 

 

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

 

 

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1$150,000,000. Such cash principal shall only be recovered
2through the consumer protection reserve account and not as a
3cost to be recovered in the delivered SNG price pursuant to
4subsection (h-3) of this Section. The consumer protection
5reserve account shall be maintained and administered by an
6independent trustee that is mutually agreed upon by the clean
7coal SNG brownfield facility, the utilities, and the Commission
8in an interest-bearing account in accordance with the
9following:
10        (1) The clean coal SNG brownfield facility monthly
11    shall calculate (A) the difference between the monthly
12    delivered SNG price and the Chicago City-gate price, by
13    comparing the delivered SNG price, which shall include the
14    cost of transportation to the delivery point, if any, to
15    the Chicago City-gate price on a weighted daily basis for
16    each day of the prior month based upon a mutually agreed
17    upon published index and (B) the overage amount, if any, by
18    calculating the annualized incremental additional cost, if
19    any, of the delivered SNG in excess of 2.015% of the
20    average annual inflation-adjusted amounts paid by all gas
21    distribution customers in connection with natural gas
22    service during the 5 years ending May 31, 2010, as
23    determined by the Illinois Power Agency in the October 11,
24    2011 final draft sourcing agreement.
25        (2) During the first 2 years of operation of the
26    facility:

 

 

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

 

 

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1        as follows: (i) if retail customers have not realized
2        net consumer savings, calculated by comparing the
3        delivered SNG price to the weighted average of the
4        daily Chicago City-gate price on a daily basis over the
5        entire term of the sourcing agreement to date, then 50%
6        of any amounts in the consumer protection reserve
7        account in excess of the consumer protection reserve
8        account principal maximum shall be distributed to the
9        clean coal SNG brownfield facility, with the remaining
10        50% of any such additional amounts being credited to
11        retail customers, and (ii) if retail customers have
12        realized net consumer savings, then 100% of any amounts
13        in the consumer protection reserve account in excess of
14        the consumer protection reserve account principal
15        maximum shall be distributed to the clean coal SNG
16        brownfield facility; provided, however, that under no
17        circumstances shall the total cumulative amount
18        distributed to the clean coal SNG brownfield facility
19        under this subparagraph (B) exceed $150,000,000;
20            (C) to the extent there is an overage amount, after
21        distributing the amounts pursuant to subparagraph (B)
22        of this paragraph (3), if any, the consumer protection
23        reserve account shall be used to provide a credit to
24        reduce the SNG price by an amount equal to the overage
25        amount;
26            (D) if retail customers have realized net consumer

 

 

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

 

 

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

 

 

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

 

 

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1        When any report is erroneous or defective or appears to
2    the Commission to be erroneous or defective, the Commission
3    may notify the clean coal SNG brownfield facility to amend
4    the report within 30 days, and, before or after the
5    termination of the 30-day period, the Commission may
6    examine the trustee of the consumer protection reserve
7    account or the officers, agents, employees, books,
8    records, or accounts of the clean coal SNG brownfield
9    facility and correct such items in the report as upon such
10    examination the Commission may find defective or
11    erroneous. All reports shall be under oath.
12        All reports made to the Commission by the clean coal
13    SNG brownfield facility and the contents of the reports
14    shall be open to public inspection and shall be deemed a
15    public record under the Freedom of Information Act. Such
16    reports shall be preserved in the office of the Commission.
17    The Commission shall publish an annual summary of the
18    reports prior to February 1 of the following year. The
19    annual summary shall be made available to the public on the
20    Commission's website and shall be submitted to the General
21    Assembly.
22        Any facility that fails to file a report required under
23    this paragraph (8) to the Commission within the time
24    specified or to make specific answer to any question
25    propounded by the Commission within 30 days from the time
26    it is lawfully required to do so, or within such further

 

 

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1    time not to exceed 90 days as may in its discretion be
2    allowed by the Commission, shall pay a penalty of $500 to
3    the Commission for each day it is in default.
4        Any person who willfully makes any false report to the
5    Commission or to any member, officer, or employee thereof,
6    any person who willfully in a report withholds or fails to
7    provide material information to which the Commission is
8    entitled under this paragraph (8) and which information is
9    either required to be filed by statute, rule, regulation,
10    order, or decision of the Commission or has been requested
11    by the Commission, and any person who willfully aids or
12    abets such person shall be guilty of a Class A misdemeanor.
13    (h-3) Recoverable costs and revenue by the clean coal SNG
14brownfield facility.
15        (1) A capital recovery charge approved by the
16    Commission shall be recoverable by the clean coal SNG
17    brownfield facility under a sourcing agreement. The
18    capital recovery charge shall be comprised of capital costs
19    and a reasonable rate of return. "Capital costs" means
20    costs to be incurred in connection with the construction
21    and development of a facility, as defined in Section 1-10
22    of the Illinois Power Agency Act, and such other costs as
23    the Capital Development Board deems appropriate to be
24    recovered in the capital recovery charge.
25            (A) Capital costs. The Capital Development Board
26        shall calculate a range of capital costs that it

 

 

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

 

 

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

 

 

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

 

 

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1        the clean coal SNG brownfield facility's estimate
2        shall be approved by the Commission as the amount of
3        capital costs to be recovered under the sourcing
4        agreement. In the event that the estimate submitted by
5        the clean coal SNG brownfield facility is above the
6        range submitted by the Capital Development Board, the
7        amount of capital costs at the lowest end of the range
8        submitted by the Capital Development Board shall be
9        approved by the Commission as the amount of capital
10        costs to be recovered under the sourcing agreement.
11        Within 15 days after the Capital Development Board has
12        submitted its range and the clean coal SNG brownfield
13        facility has submitted its estimate, the Commission
14        shall approve the capital costs for the clean coal SNG
15        brownfield facility.
16            The Capital Development Board shall monitor the
17        construction of the clean coal SNG brownfield facility
18        for the full duration of construction to assess
19        potential cost overruns. The Capital Development
20        Board, in its discretion, may retain an expert to
21        facilitate such monitoring. The clean coal SNG
22        brownfield facility shall pay a reasonable fee as
23        required by the Capital Development Board for the
24        Capital Development Board's services under this
25        subsection (h-3) to be deposited into the Capital
26        Development Board Revolving Fund, and such fee shall

 

 

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

 

 

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1        the need to protect ratepayers from high gas prices,
2        the risks being borne by the clean coal SNG brownfield
3        facility in the final draft sourcing agreement, and any
4        other information that the Commission may deem
5        relevant. The Commission may establish a return on
6        equity that varies with the amount of savings, if any,
7        to customers during the term of the sourcing agreement,
8        comparing the delivered SNG price to a daily weighted
9        average price of natural gas, based upon an index. The
10        Illinois Power Agency shall recommend a return on
11        equity to the Commission using the same criteria.
12        Within 60 days after receiving the final draft sourcing
13        agreement from the Illinois Power Agency, the
14        Commission shall approve the rate of return for the
15        clean coal brownfield facility. Within 30 days after
16        obtaining debt financing for the clean coal SNG
17        brownfield facility, the clean coal SNG brownfield
18        facility shall file a notice with the Commission
19        identifying the actual cost of debt. The filing of such
20        notice shall not provide the Commission with
21        authorization to make modifications to the sourcing
22        agreement at the time of debt financing.
23        (2) Operations and maintenance costs approved by the
24    Commission shall be recoverable by the clean coal SNG
25    brownfield facility under the sourcing agreement. The
26    operations and maintenance costs mean costs that have been

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    the Commission shall hold a rehearing within 30 days after
2    granting the application. The decision of the Commission
3    upon rehearing shall be final.
4        Any person affected by a decision of the Commission
5    under this subsection (h-3) may have the decision reviewed
6    only under and in accordance with the Administrative Review
7    Law. Unless otherwise provided, the provisions of the
8    Administrative Review Law, all amendments and
9    modifications to that Law, and the rules adopted pursuant
10    to that Law shall apply to and govern all proceedings for
11    the judicial review of final administrative decisions of
12    the Commission under this subsection (h-3). The term
13    "administrative decision" is defined as in Section 3-101 of
14    the Code of Civil Procedure.
15        (8) The Capital Development Board shall adopt and make
16    public a policy detailing the process for retaining experts
17    under this Section. Any experts retained to assist with
18    calculating the range of capital costs or operations and
19    maintenance costs shall be retained no later than 45 days
20    after July 13, 2011.
21    (h-4) No later than 90 days after the Illinois Power Agency
22submits the final draft sourcing agreement pursuant to
23subsection (h-1), the Commission shall approve a sourcing
24agreement containing (i) the capital costs, rate of return, and
25operations and maintenance costs established pursuant to
26subsection (h-3) and (ii) all other terms and conditions,

 

 

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1rights, provisions, exceptions, and limitations contained in
2the final draft sourcing agreement; provided, however, the
3Commission shall correct typographical and scrivener's errors
4and modify the contract only as necessary to provide that the
5gas utility does not have the right to terminate the sourcing
6agreement due to any future events that may occur other than
7the clean coal SNG brownfield facility's failure to timely meet
8milestones, uncured default, extended force majeure, or
9abandonment. Once the sourcing agreement is approved, then the
10gas utility subject to that sourcing agreement shall have 45
11days after the date of the Commission's approval to enter into
12the sourcing agreement.
13    (h-4.5) Notwithstanding any other provisions of this Act,
14any sourcing agreement approved by the Commission prior to the
15effective date of this amendatory Act of the 97th General
16Assembly is void and shall not be further considered by the
17Commission, except in accordance with this subsection (h-4.5).
18The Commission shall issue an Order within 30 days after the
19effective date of this amendatory Act of the 97th General
20Assembly to approve a revised version of any such sourcing
21agreement, incorporating only the following modifications to
22the sourcing agreement endorsed in the Proposed Order on
23Rehearing, as reflected in the form of sourcing agreement
24attached to the brief on exceptions of the clean coal SNG
25brownfield facility:
26        (1) Fill in the following blanks in Schedule 5.2A:

 

 

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1            (A) Row (C), the word "Actual" shall be replaced
2        with "Fixed" in each instance, and the value shall be
3        set to 70%.
4            (B) Row (M), the value shall be set to 95.452838%
5        if the sourcing agreement is signed by the utility
6        within 30 days after the ICC Order to approve it,
7        otherwise the value shall be set to 100%.
8            (C) Rows (D), (G), (I), (N), and (P) shall be
9        calculated and filled in according to the formulas
10        shown in Schedule 5.2A.
11        (2) Fill in the following blanks on Schedule 5.2B:
12            (A) Row (E), the value shall be set to 95.452838%
13        if the sourcing agreement is signed by the utility
14        within 30 days after the ICC Order to approve it,
15        otherwise the value shall be set to 100%.
16            (B) Rows (F) and (G) shall be calculated and filled
17        in according to the formula in Schedule 5.2B, and the
18        same value from Row (G) shall replace the "$[X.XX]" in
19        Section 5.2, component "B".
20        (3) Correct the following scrivener's and
21    typographical errors:
22            (A) In Sections 2.1(b), 2.2(b), 2.2(c), 2.2(e),
23        and 5.1 and in the definition of "Monthly Delivered
24        Quantity", the term "MCQ" shall be replaced with
25        "Applicable MCQ".
26            (B) In the last sentence of Section 2.2(c),

 

 

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1        "Maximum DCQ" shall be replaced with "Buyer's
2        Allocated Percentage of the Maximum DCQ".
3            (C) In Section 4.2, the last "at" shall be replaced
4        with "or is not delivered to".
5            (D) In Section 4.8, the word "designated" shall be
6        inserted before the phrase "point of interconnection".
7            (E) In Section 5.1, the phrase "accepted at" shall
8        be replaced with "delivered to".
9            (F) In the definitions of "Title Transfer Point"
10        and "Transportation and Marketing Component", the
11        phrase "is defined" shall be replaced with "has the
12        meaning specified".
13    The Commission shall make no other modifications to the
14sourcing agreement endorsed in the Proposed Order on Rehearing,
15as reflected in the form of sourcing agreement attached to the
16brief on exceptions of the clean coal SNG brownfield facility,
17other than those listed in this subsection (h-4.5), and shall
18impose no additional terms and conditions on the clean coal SNG
19brownfield facility. A gas utility subject to the obligation
20set forth in subsection (h-1) to enter into a sourcing
21agreement shall satisfy this obligation only by entering into
22the sourcing agreement approved under the provisions of this
23subsection (h-4.5) within 45 days after the date of the
24Commission's approval of such sourcing agreement.
25    (h-5) Sequestration enforcement.
26        (A) All contracts entered into under subsection (h) of

 

 

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1    this Section and all sourcing agreements under subsection
2    (h-1) of this Section, regardless of duration, shall
3    require the owner of any facility supplying SNG under the
4    contract or sourcing agreement to provide certified
5    documentation to the Commission each year, starting in the
6    facility's first year of commercial operation, accurately
7    reporting the quantity of carbon dioxide emissions from the
8    facility that have been captured and sequestered and
9    reporting any quantities of carbon dioxide released from
10    the site or sites at which carbon dioxide emissions were
11    sequestered in prior years, based on continuous monitoring
12    of those sites.
13        (B) If, in any year, the owner of the clean coal SNG
14    facility fails to demonstrate that the SNG facility
15    captured and sequestered at least 90% of the total carbon
16    dioxide emissions that the facility would otherwise emit or
17    that sequestration of emissions from prior years has
18    failed, resulting in the release of carbon dioxide into the
19    atmosphere, then the owner of the clean coal SNG facility
20    must pay a penalty of $20 per ton of excess carbon dioxide
21    emissions not to exceed $40,000,000, in any given year
22    which shall be deposited into the Energy Efficiency Trust
23    Fund and distributed pursuant to subsection (b) of Section
24    6-6 of the Renewable Energy, Energy Efficiency, and Coal
25    Resources Development Law of 1997. On or before the 5-year
26    anniversary of the execution of the contract and every 5

 

 

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1    years thereafter, an expert hired by the owner of the
2    facility with the approval of the Attorney General shall
3    conduct an analysis to determine the cost of sequestration
4    of at least 90% of the total carbon dioxide emissions the
5    plant would otherwise emit. If the analysis shows that the
6    actual annual cost is greater than the penalty, then the
7    penalty shall be increased to equal the actual cost.
8    Provided, however, to the extent that the owner of the
9    facility described in subsection (h) of this Section can
10    demonstrate that the failure was as a result of acts of God
11    (including fire, flood, earthquake, tornado, lightning,
12    hurricane, or other natural disaster); any amendment,
13    modification, or abrogation of any applicable law or
14    regulation that would prevent performance; war; invasion;
15    act of foreign enemies; hostilities (regardless of whether
16    war is declared); civil war; rebellion; revolution;
17    insurrection; military or usurped power or confiscation;
18    terrorist activities; civil disturbance; riots;
19    nationalization; sabotage; blockage; or embargo, the owner
20    of the facility described in subsection (h) of this Section
21    shall not be subject to a penalty if and only if (i) it
22    promptly provides notice of its failure to the Commission;
23    (ii) as soon as practicable and consistent with any order
24    or direction from the Commission, it submits to the
25    Commission proposed modifications to its carbon capture
26    and sequestration plan; and (iii) it carries out its

 

 

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1    proposed modifications in the manner and time directed by
2    the Commission.
3        If the Commission finds that the facility has not
4    satisfied each of these requirements, then the facility
5    shall be subject to the penalty. If the owner of the clean
6    coal SNG facility captured and sequestered more than 90% of
7    the total carbon dioxide emissions that the facility would
8    otherwise emit, then the owner of the facility may credit
9    such additional amounts to reduce the amount of any future
10    penalty to be paid. The penalty resulting from the failure
11    to capture and sequester at least the minimum amount of
12    carbon dioxide shall not be passed on to a utility or its
13    customers.
14        If the clean coal SNG facility fails to meet the
15    requirements specified in this subsection (h-5), then the
16    Attorney General, on behalf of the People of the State of
17    Illinois, shall bring an action to enforce the obligations
18    related to the facility set forth in this subsection (h-5),
19    including any penalty payments owed, but not including the
20    physical obligation to capture and sequester at least 90%
21    of the total carbon dioxide emissions that the facility
22    would otherwise emit. Such action may be filed in any
23    circuit court in Illinois. By entering into a contract
24    pursuant to subsection (h) of this Section, the clean coal
25    SNG facility agrees to waive any objections to venue or to
26    the jurisdiction of the court with regard to the Attorney

 

 

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1    General's action under this subsection (h-5).
2        Compliance with the sequestration requirements and any
3    penalty requirements specified in this subsection (h-5)
4    for the clean coal SNG facility shall be assessed annually
5    by the Commission, which may in its discretion retain an
6    expert to facilitate its assessment. If any expert is
7    retained by the Commission, then the clean coal SNG
8    facility shall pay for the expert's reasonable fees, and
9    such costs shall not be passed through to the utility or
10    its customers.
11        In addition, carbon dioxide emission credits received
12    by the clean coal SNG facility in connection with
13    sequestration of carbon dioxide from the facility must be
14    sold in a timely fashion with any revenue, less applicable
15    fees and expenses and any expenses required to be paid by
16    facility for carbon dioxide transportation or
17    sequestration, deposited into the reconciliation account
18    within 30 days after receipt of such funds by the owner of
19    the clean coal SNG facility.
20        The clean coal SNG facility is prohibited from
21    transporting or sequestering carbon dioxide unless the
22    owner of the carbon dioxide pipeline that transfers the
23    carbon dioxide from the facility and the owner of the
24    sequestration site where the carbon dioxide captured by the
25    facility is stored has acquired all applicable permits
26    under applicable State and federal laws, statutes, rules,

 

 

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1    or regulations prior to the transfer or sequestration of
2    carbon dioxide. The responsibility for compliance with the
3    sequestration requirements specified in this subsection
4    (h-5) for the clean coal SNG facility shall reside solely
5    with the clean coal SNG facility, regardless of whether the
6    facility has contracted with another party to capture,
7    transport, or sequester carbon dioxide.
8        (C) If, in any year, the owner of a clean coal SNG
9    brownfield facility fails to demonstrate that the clean
10    coal SNG brownfield facility captured and sequestered at
11    least 85% of the total carbon dioxide emissions that the
12    facility would otherwise emit, then the owner of the clean
13    coal SNG brownfield facility must pay a penalty of $20 per
14    ton of excess carbon emissions up to $20,000,000, which
15    shall be deposited into the Energy Efficiency Trust Fund
16    and distributed pursuant to subsection (b) of Section 6-6
17    of the Renewable Energy, Energy Efficiency, and Coal
18    Resources Development Law of 1997. Provided, however, to
19    the extent that the owner of the clean coal SNG brownfield
20    facility can demonstrate that the failure was as a result
21    of acts of God (including fire, flood, earthquake, tornado,
22    lightning, hurricane, or other natural disaster); any
23    amendment, modification, or abrogation of any applicable
24    law or regulation that would prevent performance; war;
25    invasion; act of foreign enemies; hostilities (regardless
26    of whether war is declared); civil war; rebellion;

 

 

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1    revolution; insurrection; military or usurped power or
2    confiscation; terrorist activities; civil disturbances;
3    riots; nationalization; sabotage; blockage; or embargo,
4    the owner of the clean coal SNG brownfield facility shall
5    not be subject to a penalty if and only if (i) it promptly
6    provides notice of its failure to the Commission; (ii) as
7    soon as practicable and consistent with any order or
8    direction from the Commission, it submits to the Commission
9    proposed modifications to its carbon capture and
10    sequestration plan; and (iii) it carries out its proposed
11    modifications in the manner and time directed by the
12    Commission. If the Commission finds that the facility has
13    not satisfied each of these requirements, then the facility
14    shall be subject to the penalty. If the owner of a clean
15    coal SNG brownfield facility demonstrates that the clean
16    coal SNG brownfield facility captured and sequestered more
17    than 85% of the total carbon emissions that the facility
18    would otherwise emit, the owner of the clean coal SNG
19    brownfield facility may credit such additional amounts to
20    reduce the amount of any future penalty to be paid. The
21    penalty resulting from the failure to capture and sequester
22    at least the minimum amount of carbon dioxide shall not be
23    passed on to a utility or its customers.
24        In addition to any penalty for the clean coal SNG
25    brownfield facility's failure to capture and sequester at
26    least its minimum sequestration requirement, the Attorney

 

 

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1    General, on behalf of the People of the State of Illinois,
2    shall bring an action for specific performance of this
3    subsection (h-5). Such action may be filed in any circuit
4    court in Illinois. By entering into a sourcing agreement
5    pursuant to subsection (h-1) of this Section, the clean
6    coal SNG brownfield facility agrees to waive any objections
7    to venue or to the jurisdiction of the court with regard to
8    the Attorney General's action for specific performance
9    under this subsection (h-5).
10        Compliance with the sequestration requirements and
11    penalty requirements specified in this subsection (h-5)
12    for the clean coal SNG brownfield facility shall be
13    assessed annually by the Commission, which may in its
14    discretion retain an expert to facilitate its assessment.
15    If an expert is retained by the Commission, then the clean
16    coal SNG brownfield facility shall pay for the expert's
17    reasonable fees, and such costs shall not be passed through
18    to a utility or its customers.
19        Responsibility for compliance with the sequestration
20    requirements specified in this subsection (h-5) for the
21    clean coal SNG brownfield facility shall reside solely with
22    the clean coal SNG brownfield facility regardless of
23    whether the facility has contracted with another party to
24    capture, transport, or sequester carbon dioxide.
25    (h-7) Sequestration permitting, oversight, and
26investigations.

 

 

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1        (1) No clean coal facility or clean coal SNG brownfield
2    facility may transport or sequester carbon dioxide unless
3    the Commission approves the method of carbon dioxide
4    transportation or sequestration. Such approval shall be
5    required regardless of whether the facility has contracted
6    with another to transport or sequester the carbon dioxide.
7    Nothing in this subsection (h-7) shall release the owner or
8    operator of a carbon dioxide sequestration site or carbon
9    dioxide pipeline from any other permitting requirements
10    under applicable State and federal laws, statutes, rules,
11    or regulations.
12        (2) The Commission shall review carbon dioxide
13    transportation and sequestration methods proposed by a
14    clean coal facility or a clean coal SNG brownfield facility
15    and shall approve those methods it deems reasonable and
16    cost-effective. For purposes of this review,
17    "cost-effective" means a commercially reasonable price for
18    similar carbon dioxide transportation or sequestration
19    techniques. In determining whether sequestration is
20    reasonable and cost-effective, the Commission may consult
21    with the Illinois State Geological Survey and retain third
22    parties to assist in its determination, provided that such
23    third parties shall not own or control any direct or
24    indirect interest in the facility that is proposing the
25    carbon dioxide transportation or the carbon dioxide
26    sequestration method and shall have no contractual

 

 

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1    relationship with that facility. If a third party is
2    retained by the Commission, then the facility proposing the
3    carbon dioxide transportation or sequestration method
4    shall pay for the expert's reasonable fees, and these costs
5    shall not be passed through to a utility or its customers.
6        No later than 6 months prior to the date upon which the
7    owner intends to commence construction of a clean coal
8    facility or the clean coal SNG brownfield facility, the
9    owner of the facility shall file with the Commission a
10    carbon dioxide transportation or sequestration plan. The
11    Commission shall hold a public hearing within 30 days after
12    receipt of the facility's carbon dioxide transportation or
13    sequestration plan. The Commission shall post notice of the
14    review on its website upon submission of a carbon dioxide
15    transportation or sequestration method and shall accept
16    written public comments. The Commission shall take the
17    comments into account when making its decision.
18        The Commission may not approve a carbon dioxide
19    sequestration method if the owner or operator of the
20    sequestration site has not received (i) an Underground
21    Injection Control permit from the Illinois Environmental
22    Protection Agency pursuant to the Environmental Protection
23    Act; (ii) an Underground Injection Control permit from the
24    Illinois Department of Natural Resources pursuant to the
25    Illinois Oil and Gas Act; or (iii) a permit similar to
26    items (i) or (ii) from the state in which the sequestration

 

 

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1    site is located if the sequestration will take place
2    outside of Illinois. The Commission shall approve or deny
3    the carbon dioxide transportation or sequestration method
4    within 90 days after the receipt of all required
5    information.
6        (3) At least annually, the Illinois Environmental
7    Protection Agency shall inspect all carbon dioxide
8    sequestration sites in Illinois. The Illinois
9    Environmental Protection Agency may, as often as deemed
10    necessary, monitor and conduct investigations of those
11    sites. The owner or operator of the sequestration site must
12    cooperate with the Illinois Environmental Protection
13    Agency investigations of carbon dioxide sequestration
14    sites.
15        If the Illinois Environmental Protection Agency
16    determines at any time a site creates conditions that
17    warrant the issuance of a seal order under Section 34 of
18    the Environmental Protection Act, then the Illinois
19    Environmental Protection Agency shall seal the site
20    pursuant to the Environmental Protection Act. If the
21    Illinois Environmental Protection Agency determines at any
22    time a carbon dioxide sequestration site creates
23    conditions that warrant the institution of a civil action
24    for an injunction under Section 43 of the Environmental
25    Protection Act, then the Illinois Environmental Protection
26    Agency shall request the State's Attorney or the Attorney

 

 

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

 

 

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1    the date of injunction. The Commission shall provide notice
2    of any such actions as soon as possible on its website. The
3    SNG facility shall incur all reasonable costs associated
4    with any such inspection or monitoring of the sequestration
5    sites, and these costs shall not be recoverable from a
6    utility or its customers.
7    (h-9) The clean coal SNG brownfield facility shall have the
8right to recover prudently incurred increased costs or reduced
9revenue resulting from any new or amendatory legislation or
10other action. The State of Illinois pledges that the State will
11not enact any law or take any action to:
12        (1) break, or repeal the authority for, sourcing
13    agreements approved by the Commission and entered into
14    between public utilities and the clean coal SNG brownfield
15    facility;
16        (2) deny public utilities full cost recovery for their
17    costs incurred under those sourcing agreements; or
18        (3) deny the clean coal SNG brownfield facility full
19    cost and revenue recovery as provided under those sourcing
20    agreements that are recoverable pursuant to subsection
21    (h-3) of this Section.
22    These pledges are for the benefit of the parties to those
23sourcing agreements and the issuers and holders of bonds or
24other obligations issued or incurred to finance or refinance
25the clean coal SNG brownfield facility. The clean coal SNG
26brownfield facility is authorized to include and refer to these

 

 

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1pledges in any financing agreement into which it may enter in
2regard to those sourcing agreements.
3    The State of Illinois retains and reserves all other rights
4to enact new or amendatory legislation or take any other
5action, without impairment of the right of the clean coal SNG
6brownfield facility to recover prudently incurred increased
7costs or reduced revenue resulting from the new or amendatory
8legislation or other action, including, but not limited to,
9such legislation or other action that would (i) directly or
10indirectly raise the costs the clean coal SNG brownfield
11facility must incur; (ii) directly or indirectly place
12additional restrictions, regulations, or requirements on the
13clean coal SNG brownfield facility; (iii) prohibit
14sequestration in general or prohibit a specific sequestration
15method or project; or (iv) increase minimum sequestration
16requirements for the clean coal SNG brownfield facility to the
17extent technically feasible. The clean coal SNG brownfield
18facility shall have the right to recover prudently incurred
19increased costs or reduced revenue resulting from the new or
20amendatory legislation or other action as described in this
21subsection (h-9).
22    (h-10) Contract costs for SNG incurred by an Illinois gas
23utility are reasonable and prudent and recoverable through the
24purchased gas adjustment clause and are not subject to review
25or disallowance by the Commission. Contract costs are costs
26incurred by the utility under the terms of a contract that

 

 

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1incorporates the terms stated in subsection (h) of this Section
2as confirmed in writing by the Illinois Power Agency as set
3forth in subsection (h) of this Section, which confirmation
4shall be deemed conclusive, or as a consequence of or condition
5to its performance under the contract, including (i) amounts
6paid for SNG under the SNG contract and (ii) costs of
7transportation and storage services of SNG purchased from
8interstate pipelines under federally approved tariffs. The
9Illinois gas utility shall initiate a clean coal SNG facility
10rider mechanism that (A) shall be applicable to all customers
11who receive transportation service from the utility, (B) shall
12be designed to have an equal percentage impact on the
13transportation services rates of each class of the utility's
14total customers, and (C) shall accurately reflect the net
15customer savings, if any, and above market costs, if any, under
16the SNG contract. Any contract, the terms of which have been
17confirmed in writing by the Illinois Power Agency as set forth
18in subsection (h) of this Section and the performance of the
19parties under such contract cannot be grounds for challenging
20prudence or cost recovery by the utility through the purchased
21gas adjustment clause, and in such cases, the Commission is
22directed not to consider, and has no authority to consider, any
23attempted challenges.
24    The contracts entered into by Illinois gas utilities
25pursuant to subsection (h) of this Section shall provide that
26the utility retains the right to terminate the contract without

 

 

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1further obligation or liability to any party if the contract
2has been impaired as a result of any legislative,
3administrative, judicial, or other governmental action that is
4taken that eliminates all or part of the prudence protection of
5this subsection (h-10) or denies the recoverability of all or
6part of the contract costs through the purchased gas adjustment
7clause. Should any Illinois gas utility exercise its right
8under this subsection (h-10) to terminate the contract, all
9contract costs incurred prior to termination are and will be
10deemed reasonable, prudent, and recoverable as and when
11incurred and not subject to review or disallowance by the
12Commission. Any order, issued by the State requiring or
13authorizing the discontinuation of the merchant function,
14defined as the purchase and sale of natural gas by an Illinois
15gas utility for the ultimate consumer in its service territory
16shall include provisions necessary to prevent the impairment of
17the value of any contract hereunder over its full term.
18    (h-11) All costs incurred by an Illinois gas utility in
19procuring SNG from a clean coal SNG brownfield facility
20pursuant to subsection (h-1) or a third-party marketer pursuant
21to subsection (h-1) are reasonable and prudent and recoverable
22through the purchased gas adjustment clause in conjunction with
23a SNG brownfield facility rider mechanism and are not subject
24to review or disallowance by the Commission; provided that if a
25utility is required by law or otherwise elects to connect the
26clean coal SNG brownfield facility to an interstate pipeline,

 

 

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1then the utility shall be entitled to recover pursuant to its
2tariffs all just and reasonable costs that are prudently
3incurred. Sourcing agreement costs are costs incurred by the
4utility under the terms of a sourcing agreement that
5incorporates the terms stated in subsection (h-1) of this
6Section as approved by the Commission as set forth in
7subsection (h-4) of this Section, which approval shall be
8deemed conclusive, or as a consequence of or condition to its
9performance under the contract, including (i) amounts paid for
10SNG under the SNG contract and (ii) costs of transportation and
11storage services of SNG purchased from interstate pipelines
12under federally approved tariffs. Any sourcing agreement, the
13terms of which have been approved by the Commission as set
14forth in subsection (h-4) of this Section, and the performance
15of the parties under the sourcing agreement cannot be grounds
16for challenging prudence or cost recovery by the utility, and
17in these cases, the Commission is directed not to consider, and
18has no authority to consider, any attempted challenges.
19    (h-15) Reconciliation account. The clean coal SNG facility
20shall establish a reconciliation account for the benefit of the
21retail customers of the utilities that have entered into
22contracts with the clean coal SNG facility pursuant to
23subsection (h). The reconciliation account shall be maintained
24and administered by an independent trustee that is mutually
25agreed upon by the owners of the clean coal SNG facility, the
26utilities, and the Commission in an interest-bearing account in

 

 

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1accordance with the following:
2        (1) The clean coal SNG facility shall conduct an
3    analysis annually within 60 days after receiving the
4    necessary cost information, which shall be provided by the
5    gas utility within 6 months after the end of the preceding
6    calendar year, to determine (i) the average annual contract
7    SNG cost, which shall be calculated as the total amount
8    paid for SNG purchased from the clean coal SNG facility
9    over the preceding 12 months, plus the cost to the utility
10    of the required transportation and storage services of SNG,
11    divided by the total number of MMBtus of SNG actually
12    purchased from the clean coal SNG facility in the preceding
13    12 months under the utility contract; (ii) the average
14    annual natural gas purchase cost, which shall be calculated
15    as the total annual supply costs paid for baseload natural
16    gas (excluding any SNG) purchased by such utility over the
17    preceding 12 months plus the costs of transportation and
18    storage services of such natural gas (excluding such costs
19    for SNG), divided by the total number of MMbtus of baseload
20    natural gas (excluding SNG) actually purchased by the
21    utility during the year; (iii) the cost differential, which
22    shall be the difference between the average annual contract
23    SNG cost and the average annual natural gas purchase cost;
24    and (iv) the revenue share target which shall be the cost
25    differential multiplied by the total amount of SNG
26    purchased over the preceding 12 months under such utility

 

 

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

 

 

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1    pursuant to subsection (h) and the completion of the final
2    annual analysis pursuant to this subsection (h-15), to the
3    extent the facility owes any amount to retail customers,
4    amounts in the account shall be credited to retail
5    customers to the extent the owed amount is repaid; 50% of
6    any additional amount in the reconciliation account shall
7    be distributed to the utilities to be used to reduce the
8    utilities' natural gas costs through the purchase gas
9    adjustment clause with the remaining amount distributed to
10    the clean coal SNG facility. Such payment shall be made
11    within 30 days after the last completed analysis pursuant
12    to this subsection (h-15). If the facility has repaid all
13    owed amounts, if any, to retail customers and has
14    distributed 50% of any additional amount in the account to
15    the utilities, then the owners of the clean coal SNG
16    facility shall have no further obligation to the utility or
17    the retail customers.
18        If, at the conclusion of the term of the contracts
19    pursuant to subsection (h) and the completion of the final
20    annual analysis pursuant to this subsection (h-15), the
21    facility owes any amount to retail customers and the
22    account has been depleted, then the clean coal SNG facility
23    shall be liable for any remaining amount owed to the retail
24    customers. The clean coal SNG facility shall market the
25    daily production of SNG and distribute on a monthly basis
26    5% of the amounts collected with respect to such future

 

 

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1    sales to the utilities in proportion to each utility's SNG
2    contract to be used to reduce the utility's natural gas
3    costs through the purchase gas adjustment clause; such
4    payments to the utility shall continue until either 15
5    years after the conclusion of the contract or such time as
6    the sum of such payments equals the remaining amount owed
7    to the retail customers at the end of the contract,
8    whichever is earlier. If the debt to the retail customers
9    is not repaid within 15 years after the conclusion of the
10    contract, then the owner of the clean coal SNG facility
11    must sell the facility, and all proceeds from that sale
12    must be used to repay any amount owed to the retail
13    customers under this subsection (h-15).
14        The retail customers shall have first priority in
15    recovering that debt above any creditors, except the
16    secured lenders to the extent that the secured lenders have
17    any secured debt outstanding, including any parent
18    companies or affiliates of the clean coal SNG facility.
19        (3) 50% of all additional net revenue, defined as
20    miscellaneous net revenue after cost allowance and above
21    the budgeted estimate established for revenue pursuant to
22    subsection (h), including sale of substitute natural gas
23    derived from the clean coal SNG facility above the
24    nameplate capacity of the facility and other by-products
25    produced by the facility, shall be credited to the
26    reconciliation account on an annual basis with such payment

 

 

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1    made within 30 days after the end of each calendar year
2    during the term of the contract.
3        (4) The clean coal SNG facility shall each year,
4    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 reconciliation
7    account. The annual report must contain the following
8    information:
9            (A) the revenue share target amount;
10            (B) the amount credited or debited to the
11        reconciliation account during the year;
12            (C) the amount credited to the utilities to be used
13        to reduce the utilities natural gas costs though the
14        purchase gas adjustment clause;
15            (D) the total amount of reconciliation account at
16        the beginning and end of the year;
17            (E) the total amount of consumer savings to date;
18        and
19            (F) any additional information the Commission may
20        require.
21    When any report is erroneous or defective or appears to the
22Commission to be erroneous or defective, the Commission may
23notify the clean coal SNG facility to amend the report within
2430 days; before or after the termination of the 30-day period,
25the Commission may examine the trustee of the reconciliation
26account or the officers, agents, employees, books, records, or

 

 

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1accounts of the clean coal SNG facility and correct such items
2in the report as upon such examination the Commission may find
3defective or erroneous. All reports shall be under oath.
4    All reports made to the Commission by the clean coal SNG
5facility and the contents of the reports shall be open to
6public inspection and shall be deemed a public record under the
7Freedom of Information Act. Such reports shall be preserved in
8the office of the Commission. The Commission shall publish an
9annual summary of the reports prior to February 1 of the
10following year. The annual summary shall be made available to
11the public on the Commission's website and shall be submitted
12to the General Assembly.
13    Any facility that fails to file the report required under
14this paragraph (4) to the Commission within the time specified
15or to make specific answer to any question propounded by the
16Commission within 30 days after the time it is lawfully
17required to do so, or within such further time not to exceed 90
18days as may be allowed by the Commission in its discretion,
19shall pay a penalty of $500 to the Commission for each day it
20is in default.
21    Any person who willfully makes any false report to the
22Commission or to any member, officer, or employee thereof, any
23person who willfully in a report withholds or fails to provide
24material information to which the Commission is entitled under
25this paragraph (4) and which information is either required to
26be filed by statute, rule, regulation, order, or decision of

 

 

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1the Commission or has been requested by the Commission, and any
2person who willfully aids or abets such person shall be guilty
3of a Class A misdemeanor.
4    (h-20) The General Assembly authorizes the Illinois
5Finance Authority to issue bonds to the maximum extent
6permitted to finance coal gasification facilities described in
7this Section, which constitute both "industrial projects"
8under Article 801 of the Illinois Finance Authority Act and
9"clean coal and energy projects" under Sections 825-65 through
10825-75 of the Illinois Finance Authority Act.
11    Administrative costs incurred by the Illinois Finance
12Authority in performance of this subsection (h-20) shall be
13subject to reimbursement by the clean coal SNG facility on
14terms as the Illinois Finance Authority and the clean coal SNG
15facility may agree. The utility and its customers shall have no
16obligation to reimburse the clean coal SNG facility or the
17Illinois Finance Authority for any such costs.
18    (h-25) The State of Illinois pledges that the State may not
19enact any law or take any action to (1) break or repeal the
20authority for SNG purchase contracts entered into between
21public gas utilities and the clean coal SNG facility pursuant
22to subsection (h) of this Section or (2) deny public gas
23utilities their full cost recovery for contract costs, as
24defined in subsection (h-10), that are incurred under such SNG
25purchase contracts. These pledges are for the benefit of the
26parties to such SNG purchase contracts and the issuers and

 

 

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1holders of bonds or other obligations issued or incurred to
2finance or refinance the clean coal SNG facility. The
3beneficiaries are authorized to include and refer to these
4pledges in any finance agreement into which they may enter in
5regard to such contracts.
6    (h-30) The State of Illinois retains and reserves all other
7rights to enact new or amendatory legislation or take any other
8action, including, but not limited to, such legislation or
9other action that would (1) directly or indirectly raise the
10costs that the clean coal SNG facility must incur; (2) directly
11or indirectly place additional restrictions, regulations, or
12requirements on the clean coal SNG facility; (3) prohibit
13sequestration in general or prohibit a specific sequestration
14method or project; or (4) increase minimum sequestration
15requirements.
16    (i) If a gas utility or an affiliate of a gas utility has
17an ownership interest in any entity that produces or sells
18synthetic natural gas, Article VII of this Act shall apply.
19(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;
2097-239, eff. 8-2-11; 97-630, eff. 12-8-11.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.