HB1431ham001 95TH GENERAL ASSEMBLY

Public Utilities Committee

Filed: 3/20/2007

09500HB1431ham001 LRB095 09002 MJR 33730 a

AMENDMENT TO HOUSE BILL 1431

AMENDMENT NO. ______. Amend House Bill 1431 in Section 5, Sec. 9-220, by replacing subsec. (h) with the following:

"(h) A gas utility located in Jefferson County Any gas utility may enter into a 20-year supply contract with any company for synthetic natural gas produced from coal through the gasification process if the company has commenced construction of a coal gasification facility by July 1, 2008. The cost for the synthetic natural gas is reasonable and prudent and recoverable through the purchased gas adjustment clause for years one through 10 of the contract if: (i) the only coal used in the gasification process has high volatile bituminous rank and greater than 1.7 pounds of sulfur per million Btu content; (ii) at the time the contract term commences, the price per million Btu does not exceed $5 in 2004 dollars, adjusted annually based on the change in the Annual Consumer Price Index for All Urban Consumers for the Midwest Region as published in April by the United States Department of Labor, Bureau of Labor Statistics (or a suitable Consumer Price Index calculation if this Consumer Price Index is not available) for the previous calendar year; provided that the price per million Btu shall not exceed $5.50 at any time during the contract; (iii) the utility's aggregate long-term supply contracts for the purchase of synthetic natural gas produced from coal through the gasification process does not exceed 25% of the annual system supply requirements of the utility at the time the contract is entered into; and (iv) the contract is entered into within one year after the effective date of this amendatory Act of the 94th General Assembly and terminates 20 years after the commencement of the production of synthetic natural gas. The contract shall provide that if, at any time during years 11 through 20 of the contract, the Commission determines that the cost for the synthetic natural gas under the contract is not reasonable and prudent, then the company shall reimburse the utility for the difference between the cost deemed reasonable and prudent by the Commission and the cost imposed under the contract.

A gas utility other than a gas utility located in Jefferson County may enter into a 20-year supply contract with any company for synthetic natural gas produced from coal through the gasification process if the company has received all necessary permits for the construction and operation of a coal gasification facility by July 1, 2015. The cost for the synthetic natural gas is reasonable and prudent and recoverable through the purchased gas adjustment clause for years one through 20 of the contract if: (i) the only coal used in the gasification process has high volatile bituminous rank and greater than 1.7 pounds of sulfur per million Btu content; (ii) at the time the contract is signed, the price per million Btu shall be no greater than the long-term market price derived from the simple average of the Henry Hub monthly futures prices for natural gas as reported by the New York Mercantile Exchange (NYMEX) for the 60 months immediately following the effective date of the contract, adjusted annually based on the change in the Annual Consumer Price Index for All Urban Consumers for the Midwest Region as published in April by the United States Department of Labor, Bureau of Labor Statistics (or a suitable Consumer Price Index calculation if this Consumer Price Index is not available) for the previous calendar year; provided that the price per million Btu shall not increase by more than $1.50 per million Btu during the life of the contract; (iii) the utility's aggregate long-term supply contracts for the purchase of synthetic natural gas produced from coal through the gasification process does not exceed 10% of the annual system supply requirements of the utility at the time the contract is entered into; and (iv) the contract is entered into before December 31, 2009 and terminates 20 years after the commencement of the production of synthetic natural gas. The amount of gas a utility may sell under this Section is limited to 50% of its output.".