98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB3113

 

Introduced , by Rep. Christian L Mitchell

 

SYNOPSIS AS INTRODUCED:
 
220 ILCS 5/16-111

    Amends the Public Utilities Act. Makes a technical change in a Section concerning rates and restructuring transactions during the mandatory transition period.


LRB098 09820 JLS 39973 b

 

 

A BILL FOR

 

HB3113LRB098 09820 JLS 39973 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Section 16-111 as follows:
 
6    (220 ILCS 5/16-111)
7    Sec. 16-111. Rates and restructuring transactions during
8mandatory transition period; restructuring and other
9transactions.
10    (a) During the the mandatory transition period,
11notwithstanding any provision of Article IX of this Act, and
12except as provided in subsections (b) and (f) of this Section,
13the Commission shall not (i) initiate, authorize or order any
14change by way of increase (other than in connection with a
15request for rate increase which was filed after September 1,
161997 but prior to October 15, 1997, by an electric utility
17serving less than 12,500 customers in this State), (ii)
18initiate or, unless requested by the electric utility,
19authorize or order any change by way of decrease, restructuring
20or unbundling (except as provided in Section 16-109A), in the
21rates of any electric utility that were in effect on October 1,
221996, or (iii) in any order approving any application for a
23merger pursuant to Section 7-204 that was pending as of May 16,

 

 

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11997, impose any condition requiring any filing for an
2increase, decrease, or change in, or other review of, an
3electric utility's rates or enforce any such condition of any
4such order; provided, however, that this subsection shall not
5prohibit the Commission from:
6        (1) approving the application of an electric utility to
7    implement an alternative to rate of return regulation or a
8    regulatory mechanism that rewards or penalizes the
9    electric utility through adjustment of rates based on
10    utility performance, pursuant to Section 9-244;
11        (2) authorizing an electric utility to eliminate its
12    fuel adjustment clause and adjust its base rate tariffs in
13    accordance with subsection (b), (d), or (f) of Section
14    9-220 of this Act, to fix its fuel adjustment factor in
15    accordance with subsection (c) of Section 9-220 of this
16    Act, or to eliminate its fuel adjustment clause in
17    accordance with subsection (e) of Section 9-220 of this
18    Act;
19        (3) ordering into effect tariffs for delivery services
20    and transition charges in accordance with Sections 16-104
21    and 16-108, for real-time pricing in accordance with
22    Section 16-107, or the options required by Section 16-110
23    and subsection (n) of 16-112, allowing a billing experiment
24    in accordance with Section 16-106, or modifying delivery
25    services tariffs in accordance with Section 16-109; or
26        (4) ordering or allowing into effect any tariff to

 

 

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1    recover charges pursuant to Sections 9-201.5, 9-220.1,
2    9-221, 9-222 (except as provided in Section 9-222.1),
3    16-108, and 16-114 of this Act, Section 5-5 of the
4    Electricity Infrastructure Maintenance Fee Law, Section
5    6-5 of the Renewable Energy, Energy Efficiency, and Coal
6    Resources Development Law of 1997, and Section 13 of the
7    Energy Assistance Act.
8    After December 31, 2004, the provisions of this subsection
9(a) shall not apply to an electric utility whose average
10residential retail rate was less than or equal to 90% of the
11average residential retail rate for the "Midwest Utilities", as
12that term is defined in subsection (b) of this Section, based
13on data reported on Form 1 to the Federal Energy Regulatory
14Commission for calendar year 1995, and which served between
15150,000 and 250,000 retail customers in this State on January
161, 1995 unless the electric utility or its holding company has
17been acquired by or merged with an affiliate of another
18electric utility subsequent to January 1, 2002. This exemption
19shall be limited to this subsection (a) and shall not extend to
20any other provisions of this Act.
21    (b) Notwithstanding the provisions of subsection (a), each
22Illinois electric utility serving more than 12,500 customers in
23Illinois shall file tariffs (i) reducing, effective August 1,
241998, each component of its base rates to residential retail
25customers by 15% from the base rates in effect immediately
26prior to January 1, 1998 and (ii) if the public utility

 

 

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1provides electric service to (A) more than 500,000 customers
2but less than 1,000,000 customers in this State on January 1,
31999, reducing, effective May 1, 2002, each component of its
4base rates to residential retail customers by an additional 5%
5from the base rates in effect immediately prior to January 1,
61998, or (B) at least 1,000,000 customers in this State on
7January 1, 1999, reducing, effective October 1, 2001, each
8component of its base rates to residential retail customers by
9an additional 5% from the base rates in effect immediately
10prior to January 1, 1998. Provided, however, that (A) if an
11electric utility's average residential retail rate is less than
12or equal to the average residential retail rate for a group of
13Midwest Utilities (consisting of all investor-owned electric
14utilities with annual system peaks in excess of 1000 megawatts
15in the States of Illinois, Indiana, Iowa, Kentucky, Michigan,
16Missouri, Ohio, and Wisconsin), based on data reported on Form
171 to the Federal Energy Regulatory Commission for calendar year
181995, then it shall only be required to file tariffs (i)
19reducing, effective August 1, 1998, each component of its base
20rates to residential retail customers by 5% from the base rates
21in effect immediately prior to January 1, 1998, (ii) reducing,
22effective October 1, 2000, each component of its base rates to
23residential retail customers by the lesser of 5% of the base
24rates in effect immediately prior to January 1, 1998 or the
25percentage by which the electric utility's average residential
26retail rate exceeds the average residential retail rate of the

 

 

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1Midwest Utilities, based on data reported on Form 1 to the
2Federal Energy Regulatory Commission for calendar year 1999,
3and (iii) reducing, effective October 1, 2002, each component
4of its base rates to residential retail customers by an
5additional amount equal to the lesser of 5% of the base rates
6in effect immediately prior to January 1, 1998 or the
7percentage by which the electric utility's average residential
8retail rate exceeds the average residential retail rate of the
9Midwest Utilities, based on data reported on Form 1 to the
10Federal Energy Regulatory Commission for calendar year 2001;
11and (B) if the average residential retail rate of an electric
12utility serving between 150,000 and 250,000 retail customers in
13this State on January 1, 1995 is less than or equal to 90% of
14the average residential retail rate for the Midwest Utilities,
15based on data reported on Form 1 to the Federal Energy
16Regulatory Commission for calendar year 1995, then it shall
17only be required to file tariffs (i) reducing, effective August
181, 1998, each component of its base rates to residential retail
19customers by 2% from the base rates in effect immediately prior
20to January 1, 1998; (ii) reducing, effective October 1, 2000,
21each component of its base rates to residential retail
22customers by 2% from the base rate in effect immediately prior
23to January 1, 1998; and (iii) reducing, effective October 1,
242002, each component of its base rates to residential retail
25customers by 1% from the base rates in effect immediately prior
26to January 1, 1998. Provided, further, that any electric

 

 

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1utility for which a decrease in base rates has been or is
2placed into effect between October 1, 1996 and the dates
3specified in the preceding sentences of this subsection, other
4than pursuant to the requirements of this subsection, shall be
5entitled to reduce the amount of any reduction or reductions in
6its base rates required by this subsection by the amount of
7such other decrease. The tariffs required under this subsection
8shall be filed 45 days in advance of the effective date.
9Notwithstanding anything to the contrary in Section 9-220 of
10this Act, no restatement of base rates in conjunction with the
11elimination of a fuel adjustment clause under that Section
12shall result in a lesser decrease in base rates than customers
13would otherwise receive under this subsection had the electric
14utility's fuel adjustment clause not been eliminated.
15    (c) Any utility reducing its base rates by 15% on August 1,
161998 pursuant to subsection (b) shall include the following
17statement on its bills for residential customers from August 1
18through December 31, 1998: "Effective August 1, 1998, your
19rates have been reduced by 15% by the Electric Service Customer
20Choice and Rate Relief Law of 1997 passed by the Illinois
21General Assembly.". Any utility reducing its base rates by 5%
22on August 1, 1998, pursuant to subsection (b) shall include the
23following statement on its bills for residential customers from
24August 1 through December 31, 1998: "Effective August 1, 1998,
25your rates have been reduced by 5% by the Electric Service
26Customer Choice and Rate Relief Law of 1997 passed by the

 

 

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1Illinois General Assembly.".
2    Any utility reducing its base rates by 2% on August 1, 1998
3pursuant to subsection (b) shall include the following
4statement on its bills for residential customers from August 1
5through December 31, 1998: "Effective August 1, 1998, your
6rates have been reduced by 2% by the Electric Service Customer
7Choice and Rate Relief Law of 1997 passed by the Illinois
8General Assembly.".
9    (d) (Blank.)
10    (e) (Blank.)
11    (f) During the mandatory transition period, an electric
12utility may file revised tariffs reducing the price of any
13tariffed service offered by the electric utility for all
14customers taking that tariffed service, which shall be
15effective 7 days after filing.
16    (g) Until all classes of tariffed services are declared
17competitive, an electric utility may, without obtaining any
18approval of the Commission other than that provided for in this
19subsection and notwithstanding any other provision of this Act
20or any rule or regulation of the Commission that would require
21such approval:
22        (1) implement a reorganization, other than a merger of
23    2 or more public utilities as defined in Section 3-105 or
24    their holding companies;
25        (2) retire generating plants from service;
26        (3) sell, assign, lease or otherwise transfer assets to

 

 

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1    an affiliated or unaffiliated entity and as part of such
2    transaction enter into service agreements, power purchase
3    agreements, or other agreements with the transferee;
4    provided, however, that the prices, terms and conditions of
5    any power purchase agreement must be approved or allowed
6    into effect by the Federal Energy Regulatory Commission; or
7        (4) use any accelerated cost recovery method including
8    accelerated depreciation, accelerated amortization or
9    other capital recovery methods, or record reductions to the
10    original cost of its assets.
11    In order to implement a reorganization, retire generating
12plants from service, or sell, assign, lease or otherwise
13transfer assets pursuant to this Section, the electric utility
14shall comply with subsections (c) and (d) of Section 16-128, if
15applicable, and subsection (k) of this Section, if applicable,
16and provide the Commission with at least 30 days notice of the
17proposed reorganization or transaction, which notice shall
18include the following information:
19         (i) a complete statement of the entries that the
20    electric utility will make on its books and records of
21    account to implement the proposed reorganization or
22    transaction together with a certification from an
23    independent certified public accountant that such entries
24    are in accord with generally accepted accounting
25    principles and, if the Commission has previously approved
26    guidelines for cost allocations between the utility and its

 

 

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1    affiliates, a certification from the chief accounting
2    officer of the utility that such entries are in accord with
3    those cost allocation guidelines;
4         (ii) a description of how the electric utility will
5    use proceeds of any sale, assignment, lease or transfer to
6    retire debt or otherwise reduce or recover the costs of
7    services provided by such electric utility;
8         (iii) a list of all federal approvals or approvals
9    required from departments and agencies of this State, other
10    than the Commission, that the electric utility has or will
11    obtain before implementing the reorganization or
12    transaction;
13         (iv) an irrevocable commitment by the electric utility
14    that it will not, as a result of the transaction, impose
15    any stranded cost charges that it might otherwise be
16    allowed to charge retail customers under federal law or
17    increase the transition charges that it is otherwise
18    entitled to collect under this Article XVI;
19         (v) if the electric utility proposes to sell, assign,
20    lease or otherwise transfer a generating plant that brings
21    the amount of net dependable generating capacity
22    transferred pursuant to this subsection to an amount equal
23    to or greater than 15% of the electric utility's net
24    dependable capacity as of the effective date of this
25    amendatory Act of 1997, and enters into a power purchase
26    agreement with the entity to which such generating plant is

 

 

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1    sold, assigned, leased, or otherwise transferred, the
2    electric utility also agrees, if its fuel adjustment clause
3    has not already been eliminated, to eliminate its fuel
4    adjustment clause in accordance with subsection (b) of
5    Section 9-220 for a period of time equal to the length of
6    any such power purchase agreement or successor agreement,
7    or until January 1, 2005, whichever is longer; if the
8    capacity of the generating plant so transferred and related
9    power purchase agreement does not result in the elimination
10    of the fuel adjustment clause under this subsection, and
11    the fuel adjustment clause has not already been eliminated,
12    the electric utility shall agree that the costs associated
13    with the transferred plant that are included in the
14    calculation of the rate per kilowatt-hour to be applied
15    pursuant to the electric utility's fuel adjustment clause
16    during such period shall not exceed the per kilowatt-hour
17    cost associated with such generating plant included in the
18    electric utility's fuel adjustment clause during the full
19    calendar year preceding the transfer, with such limit to be
20    adjusted each year thereafter by the Gross Domestic Product
21    Implicit Price Deflator; and
22         (vi) in addition, if the electric utility proposes to
23    sell, assign, or lease, (A) either (1) an amount of
24    generating plant that brings the amount of net dependable
25    generating capacity transferred pursuant to this
26    subsection to an amount equal to or greater than 15% of its

 

 

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1    net dependable capacity on the effective date of this
2    amendatory Act of 1997, or (2) one or more generating
3    plants with a total net dependable capacity of 1100
4    megawatts, or (B) transmission and distribution facilities
5    that either (1) bring the amount of transmission and
6    distribution facilities transferred pursuant to this
7    subsection to an amount equal to or greater than 15% of the
8    electric utility's total depreciated original cost
9    investment in such facilities, or (2) represent an
10    investment of $25,000,000 in terms of total depreciated
11    original cost, the electric utility shall provide, in
12    addition to the information listed in subparagraphs (i)
13    through (v), the following information: (A) a description
14    of how the electric utility will meet its service
15    obligations under this Act in a safe and reliable manner
16    and (B) the electric utility's projected earned rate of
17    return on common equity for each year from the date of the
18    notice through December 31, 2006 both with and without the
19    proposed transaction. If the Commission has not issued an
20    order initiating a hearing on the proposed transaction
21    within 30 days after the date the electric utility's notice
22    is filed, the transaction shall be deemed approved. The
23    Commission may, after notice and hearing, prohibit the
24    proposed transaction if it makes either or both of the
25    following findings: (1) that the proposed transaction will
26    render the electric utility unable to provide its tariffed

 

 

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1    services in a safe and reliable manner, or (2) that there
2    is a strong likelihood that consummation of the proposed
3    transaction will result in the electric utility being
4    entitled to request an increase in its base rates. Any
5    hearing initiated by the Commission into the proposed
6    transaction shall be completed, and the Commission's final
7    order approving or prohibiting the proposed transaction
8    shall be entered, within 90 days after the date the
9    electric utility's notice was filed. Provided, however,
10    that a sale, assignment, or lease of transmission
11    facilities to an independent system operator that meets the
12    requirements of Section 16-126 shall not be subject to
13    Commission approval under this Section.
14         In any proceeding conducted by the Commission pursuant
15    to this subparagraph (vi), intervention shall be limited to
16    parties with a direct interest in the transaction which is
17    the subject of the hearing and any statutory consumer
18    protection agency as defined in subsection (d) of Section
19    9-102.1. Notwithstanding the provisions of Section 10-113
20    of this Act, any application seeking rehearing of an order
21    issued under this subparagraph (vi), whether filed by the
22    electric utility or by an intervening party, shall be filed
23    within 10 days after service of the order.
24    The Commission shall not in any subsequent proceeding or
25otherwise, review such a reorganization or other transaction
26authorized by this Section, but shall retain the authority to

 

 

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1allocate costs as stated in Section 16-111(i). An entity to
2which an electric utility sells, assigns, leases or transfers
3assets pursuant to this subsection (g) shall not, as a result
4of the transactions specified in this subsection (g), be deemed
5a public utility as defined in Section 3-105. Nothing in this
6subsection (g) shall change any requirement under the
7jurisdiction of the Illinois Department of Nuclear Safety
8including, but not limited to, the payment of fees. Nothing in
9this subsection (g) shall exempt a utility from obtaining a
10certificate pursuant to Section 8-406 of this Act for the
11construction of a new electric generating facility. Nothing in
12this subsection (g) is intended to exempt the transactions
13hereunder from the operation of the federal or State antitrust
14laws. Nothing in this subsection (g) shall require an electric
15utility to use the procedures specified in this subsection for
16any of the transactions specified herein. Any other procedure
17available under this Act may, at the electric utility's
18election, be used for any such transaction.
19    (h) During the mandatory transition period, the Commission
20shall not establish or use any rates of depreciation, which for
21purposes of this subsection shall include amortization, for any
22electric utility other than those established pursuant to
23subsection (c) of Section 5-104 of this Act or utilized
24pursuant to subsection (g) of this Section. Provided, however,
25that in any proceeding to review an electric utility's rates
26for tariffed services pursuant to Section 9-201, 9-202, 9-250

 

 

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1or 16-111(d) of this Act, the Commission may establish new
2rates of depreciation for the electric utility in the same
3manner provided in subsection (d) of Section 5-104 of this Act.
4An electric utility implementing an accelerated cost recovery
5method including accelerated depreciation, accelerated
6amortization or other capital recovery methods, or recording
7reductions to the original cost of its assets, pursuant to
8subsection (g) of this Section, shall file a statement with the
9Commission describing the accelerated cost recovery method to
10be implemented or the reduction in the original cost of its
11assets to be recorded. Upon the filing of such statement, the
12accelerated cost recovery method or the reduction in the
13original cost of assets shall be deemed to be approved by the
14Commission as though an order had been entered by the
15Commission.
16    (i) Subsequent to the mandatory transition period, the
17Commission, in any proceeding to establish rates and charges
18for tariffed services offered by an electric utility, shall
19consider only (1) the then current or projected revenues,
20costs, investments and cost of capital directly or indirectly
21associated with the provision of such tariffed services; (2)
22collection of transition charges in accordance with Sections
2316-102 and 16-108 of this Act; (3) recovery of any employee
24transition costs as described in Section 16-128 which the
25electric utility is continuing to incur, including recovery of
26any unamortized portion of such costs previously incurred or

 

 

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1committed, with such costs to be equitably allocated among
2bundled services, delivery services, and contracts with
3alternative retail electric suppliers; and (4) recovery of the
4costs associated with the electric utility's compliance with
5decommissioning funding requirements; and shall not consider
6any other revenues, costs, investments or cost of capital of
7either the electric utility or of any affiliate of the electric
8utility that are not associated with the provision of tariffed
9services. In setting rates for tariffed services, the
10Commission shall equitably allocate joint and common costs and
11investments between the electric utility's competitive and
12tariffed services. In determining the justness and
13reasonableness of the electric power and energy component of an
14electric utility's rates for tariffed services subsequent to
15the mandatory transition period and prior to the time that the
16provision of such electric power and energy is declared
17competitive, the Commission shall consider the extent to which
18the electric utility's tariffed rates for such component for
19each customer class exceed the market value determined pursuant
20to Section 16-112, and, if the electric power and energy
21component of such tariffed rate exceeds the market value by
22more than 10% for any customer class, may establish such
23electric power and energy component at a rate equal to the
24market value plus 10%.
25    (j) During the mandatory transition period, an electric
26utility may elect to transfer to a non-operating income account

 

 

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1under the Commission's Uniform System of Accounts either or
2both of (i) an amount of unamortized investment tax credit that
3is in addition to the ratable amount which is credited to the
4electric utility's operating income account for the year in
5accordance with Section 46(f)(2) of the federal Internal
6Revenue Code of 1986, as in effect prior to P.L. 101-508, or
7(ii) "excess tax reserves", as that term is defined in Section
8203(e)(2)(A) of the federal Tax Reform Act of 1986, provided
9that (A) the amount transferred may not exceed the amount of
10the electric utility's assets that were created pursuant to
11Statement of Financial Accounting Standards No. 71 which the
12electric utility has written off during the mandatory
13transition period, and (B) the transfer shall not be effective
14until approved by the Internal Revenue Service. An electric
15utility electing to make such a transfer shall file a statement
16with the Commission stating the amount and timing of the
17transfer for which it intends to request approval of the
18Internal Revenue Service, along with a copy of its proposed
19request to the Internal Revenue Service for a ruling. The
20Commission shall issue an order within 14 days after the
21electric utility's filing approving, subject to receipt of
22approval from the Internal Revenue Service, the proposed
23transfer.
24    (k) If an electric utility is selling or transferring to a
25single buyer 5 or more generating plants located in this State
26with a total net dependable capacity of 5000 megawatts or more

 

 

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1pursuant to subsection (g) of this Section and has obtained a
2sale price or consideration that exceeds 200% of the book value
3of such plants, the electric utility must provide to the
4Governor, the President of the Illinois Senate, the Minority
5Leader of the Illinois Senate, the Speaker of the Illinois
6House of Representatives, and the Minority Leader of the
7Illinois House of Representatives no later than 15 days after
8filing its notice under subsection (g) of this Section or 5
9days after the date on which this subsection (k) becomes law,
10whichever is later, a written commitment in which such electric
11utility agrees to expend $2 billion outside the corporate
12limits of any municipality with 1,000,000 or more inhabitants
13within such electric utility's service area, over a 6-year
14period beginning with the calendar year in which the notice is
15filed, on projects, programs, and improvements within its
16service area relating to transmission and distribution
17including, without limitation, infrastructure expansion,
18repair and replacement, capital investments, operations and
19maintenance, and vegetation management.
20    (l) Notwithstanding any other provision of this Act or any
21rule, regulation, or prior order of the Commission, a public
22utility providing electric and gas service may do any one or
23more of the following: transfer assets to, reorganize with, or
24merge with one or more public utilities under common holding
25company ownership or control in the manner prescribed in
26subsection (g) of this Section. No merger transaction costs,

 

 

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1such as fees paid to attorneys, investment bankers, and other
2consultants, incurred in connection with a merger pursuant to
3this subsection (l) shall be recoverable in any subsequent rate
4proceeding. Approval of a merger pursuant to this subsection
5(l) shall not constitute approval of, or otherwise require,
6rate recovery of other costs incurred in connection with, or to
7implement the merger, such as the cost of restructuring,
8combining, or integrating debt, assets, or systems. Such other
9costs may be recovered only to the extent that the surviving
10utility can demonstrate that the cost savings produced by such
11restructuring, combination, or integration exceed the
12associated costs. Nothing in this subsection (l) shall impair
13the terms or conditions of employment or the collective
14bargaining rights of any employees of the utilities that are
15transferring assets, reorganizing, or merging.
16    (m) If an electric utility that on December 31, 2005
17provided electric service to at least 100,000 customers in
18Illinois transfers assets, reorganizes, or merges under this
19Section, then the same provisions apply that applied during the
20mandatory transition period under Section 16-128.
21(Source: P.A. 95-331, eff. 8-21-07; 95-481, eff. 8-28-07;
2295-876, eff. 8-21-08.)