SB3766ham001 97TH GENERAL ASSEMBLY

Rep. Joseph M. Lyons

Filed: 5/25/2012

 

 


 

 


 
09700SB3766ham001LRB097 19347 CEL 70165 a

1
AMENDMENT TO SENATE BILL 3766

2    AMENDMENT NO. ______. Amend Senate Bill 3766 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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1emission allowances created under the federal Clean Air Act
2Amendments of 1990, through such fuel adjustment clauses, as a
3cost of fuel. For the purposes of this paragraph, cost of fuel
4used in the generation or production of electric power shall
5include the amount of any fees paid by the utility for the
6implementation and operation of a process for the
7desulfurization of the flue gas when burning high sulfur coal
8at any location within the State of Illinois irrespective of
9the attainment status designation of such location; but shall
10not include transportation costs of coal (i) except to the
11extent that for contracts entered into on and after the
12effective date of this amendatory Act of 1997, the cost of the
13coal, including transportation costs, constitutes the lowest
14cost for adequate and reliable fuel supply reasonably available
15to the public utility in comparison to the cost, including
16transportation costs, of other adequate and reliable sources of
17fuel supply reasonably available to the public utility, or (ii)
18except as otherwise provided in the next 3 sentences of this
19paragraph. Such costs of fuel shall, when requested by a
20utility or at the conclusion of the utility's next general
21electric rate proceeding, whichever shall first occur, include
22transportation costs of coal purchased under existing coal
23purchase contracts. For purposes of this paragraph "existing
24coal purchase contracts" means contracts for the purchase of
25coal in effect on the effective date of this amendatory Act of
261991, as such contracts may thereafter be amended, but only to

 

 

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1the extent that any such amendment does not increase the
2aggregate quantity of coal to be purchased under such contract.
3Nothing herein shall authorize an electric utility to recover
4through its fuel adjustment clause any amounts of
5transportation costs of coal that were included in the revenue
6requirement used to set base rates in its most recent general
7rate proceeding. Cost shall be based upon uniformly applied
8accounting principles. Annually, the Commission shall initiate
9public hearings to determine whether the clauses reflect actual
10costs of fuel, gas, power, or coal transportation purchased to
11determine whether such purchases were prudent, and to reconcile
12any amounts collected with the actual costs of fuel, power,
13gas, or coal transportation prudently purchased. In each such
14proceeding, the burden of proof shall be upon the utility to
15establish the prudence of its cost of fuel, power, gas, or coal
16transportation purchases and costs. The Commission shall issue
17its final order in each such annual proceeding for an electric
18utility by December 31 of the year immediately following the
19year to which the proceeding pertains, provided, that the
20Commission shall issue its final order with respect to such
21annual proceeding for the years 1996 and earlier by December
2231, 1998.
23    (b) A public utility providing electric service, other than
24a public utility described in subsections (e) or (f) of this
25Section, may at any time during the mandatory transition period
26file with the Commission proposed tariff sheets that eliminate

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1purchased gas adjustment clause in accordance with any other
2applicable provisions of this Act.
3    (e) Notwithstanding any contrary or inconsistent
4provisions in Section 9-201 of this Act, in subsection (a) of
5this Section, or in any rules promulgated by the Commission
6pursuant to subsection (g) of this Section, a public utility
7providing electric service to more than 1,000,000 customers in
8this State may, within the first 6 months after the effective
9date of this amendatory Act of 1997, file with the Commission
10proposed tariff sheets that eliminate, effective January 1,
111997, the public utility's fuel adjustment clause without
12adjusting its base rates, and such tariff sheets shall be
13effective upon filing. To the extent the application of the
14fuel adjustment clause had resulted in net charges to customers
15after January 1, 1997, the utility shall also file a tariff
16sheet that provides for a refund stated on a per kilowatt-hour
17basis of such charges over a period not to exceed 6 months;
18provided however, that such refund shall not include the
19proportional amounts of taxes paid under the Use Tax Act,
20Service Use Tax Act, Service Occupation Tax Act, and Retailers'
21Occupation Tax Act on fuel used in generation. The Commission
22shall issue an order within 45 days after the date of the
23public utility's filing approving or approving as modified such
24tariff sheet. If the fuel adjustment clause is eliminated
25pursuant to this subsection, the Commission shall not conduct
26the annual hearings specified in the last 3 sentences of

 

 

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

 

 

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1actual jurisdictional kilowatt-hour sales for those 2 years,
2provided, that such tariff sheets shall be effective upon
3filing. To the extent the application of the fuel adjustment
4clause had resulted in net charges to customers after January
51, 1997, the utility shall also file a tariff sheet that
6provides for a refund stated on a per kilowatt-hour basis of
7such charges over a period not to exceed 6 months. Provided
8however, that such refund shall not include the proportional
9amounts of taxes paid under the Use Tax Act, Service Use Tax
10Act, Service Occupation Tax Act, and Retailers' Occupation Tax
11Act on fuel used in generation. The Commission shall issue an
12order within 45 days after the date of the public utility's
13filing approving or approving as modified such tariff sheet. If
14the fuel adjustment clause is eliminated pursuant to this
15subsection, the Commission shall not conduct the annual
16hearings specified in the last 3 sentences of subsection (a) of
17this Section for the utility for any period after December 31,
181996 and prior to any reinstatement of such clause. A public
19utility whose fuel adjustment clause has been eliminated
20pursuant to this subsection shall not file a proposed tariff
21sheet seeking, or otherwise petition the Commission for,
22reinstatement of the fuel adjustment clause prior to January 1,
232007.
24    (g) The Commission shall have authority to promulgate rules
25and regulations to carry out the provisions of this Section.
26    (h) Any Illinois gas utility may enter into a contract on

 

 

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1or before September 30, 2011 for up to 10 years of supply with
2any company for the purchase of substitute natural gas (SNG)
3produced from coal through the gasification process if the
4company has commenced construction of a clean coal SNG facility
5by July 1, 2012 and commencement of construction shall mean
6that material physical site work has occurred, such as site
7clearing and excavation, water runoff prevention, water
8retention reservoir preparation, or foundation development.
9The contract shall contain the following provisions: (i) at
10least 90% of feedstock to be used in the gasification process
11shall be coal with a high volatile bituminous rank and greater
12than 1.7 pounds of sulfur per million Btu content; (ii) at the
13time the contract term commences, the price per million Btu may
14not exceed $7.95 in 2008 dollars, adjusted annually based on
15the change in the Annual Consumer Price Index for All Urban
16Consumers for the Midwest Region as published in April by the
17United States Department of Labor, Bureau of Labor Statistics
18(or a suitable Consumer Price Index calculation if this
19Consumer Price Index is not available) for the previous
20calendar year; provided that the price per million Btu shall
21not exceed $9.95 at any time during the contract; (iii) the
22utility's supply contract for the purchase of SNG does not
23exceed 15% of the annual system supply requirements of the
24utility as of 2008; and (iv) the contract costs pursuant to
25subsection (h-10) of this Section shall not include any
26lobbying expenses, charitable contributions, advertising,

 

 

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1organizational memberships, carbon dioxide pipeline or
2sequestration expenses, or marketing expenses.
3    Any gas utility that is providing service to more than
4150,000 customers on August 2, 2011 (the effective date of
5Public Act 97-239) shall either elect to enter into a contract
6on or before September 30, 2011 for 10 years of SNG supply with
7the owner of a clean coal SNG facility or to file biennial rate
8proceedings before the Commission in the years 2012, 2014, and
92016, with such filings made after August 2, 2011 and no later
10than September 30 of the years 2012, 2014, and 2016 consistent
11with all requirements of 83 Ill. Adm. Code 255 and 285 as
12though the gas utility were filing for an increase in its
13rates, without regard to whether such filing would produce an
14increase, a decrease, or no change in the gas utility's rates,
15and the Commission shall review the gas utility's filing and
16shall issue its order in accordance with the provisions of
17Section 9-201 of this Act.
18    Within 7 days after August 2, 2011, the owner of the clean
19coal SNG facility shall submit to the Illinois Power Agency and
20each gas utility that is providing service to more than 150,000
21customers on August 2, 2011 a copy of a draft contract. Within
2230 days after the receipt of the draft contract, each such gas
23utility shall provide the Illinois Power Agency and the owner
24of the clean coal SNG facility with its comments and
25recommended revisions to the draft contract. Within 7 days
26after the receipt of the gas utility's comments and recommended

 

 

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

 

 

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1        (3) review and approve the amount of budgeted
2    miscellaneous net revenue after cost allowance, including
3    sale of SNG produced by the clean coal SNG facility above
4    the nameplate capacity of the facility and other
5    by-products produced by the facility, to be included in the
6    pricing formula; the Illinois Power Agency shall approve
7    the amount of budgeted miscellaneous net revenue to be
8    included in the pricing formula if it determines the
9    budgeted amount to be reasonable and accurate;
10        (4) review and confirm in writing that using the EIA
11    Annual Energy Outlook-2011 Henry Hub Spot Price, the
12    contract terms set out in subsection (h), the
13    reconciliation account terms as set out in subsection
14    (h-15), and an estimated inflation rate of 2.5% for each
15    corresponding year, that there will be no cumulative
16    estimated increase for residential customers; and
17        (5) allocate the nameplate capacity of the clean coal
18    SNG by total therms sold to ultimate customers by each gas
19    utility in 2008; provided, however, no utility shall be
20    required to purchase more than 42% of the projected annual
21    output of the facility; additionally, the Illinois Power
22    Agency shall further adjust the allocation only as required
23    to take into account (A) adverse consolidation,
24    derivative, or lease impacts to the balance sheet or income
25    statement of any gas utility or (B) the physical capacity
26    of the gas utility to accept SNG.

 

 

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1    If the parties to the contract do not agree on the terms
2therein, then the Illinois Power Agency shall retain an
3independent mediator to mediate the dispute between the
4parties. If the parties are in agreement on the terms of the
5contract, then the Illinois Power Agency shall approve the
6contract. If after mediation the parties have failed to come to
7agreement, then the Illinois Power Agency shall revise the
8draft contract as necessary to confirm that the contract
9contains only terms that are reasonable and equitable. The
10Illinois Power Agency may, in its discretion, retain an
11independent, qualified, and experienced expert to assist in its
12obligations under this subsection (h). The Illinois Power
13Agency shall adopt and make public policies detailing the
14processes for retaining a mediator and an expert under this
15subsection (h). Any mediator or expert retained under this
16subsection (h) shall be retained no later than 60 days after
17August 2, 2011.
18    The Illinois Power Agency shall complete all of its
19responsibilities under this subsection (h) within 60 days after
20August 2, 2011. The clean coal SNG facility shall pay a
21reasonable fee as required by the Illinois Power Agency for its
22services under this subsection (h) and shall pay the mediator's
23and expert's reasonable fees, if any. A gas utility and its
24customers shall have no obligation to reimburse the clean coal
25SNG facility or the Illinois Power Agency of any such costs.
26    Within 30 days after commercial production of SNG has

 

 

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

 

 

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1costs, then the Commission shall adjust the SNG price using the
2price formula in the contract approved by the Illinois Power
3Agency under this subsection (h) to reflect the disallowed
4costs and shall enter an order specifying the revised price. In
5addition, the Commission's order shall direct the clean coal
6SNG facility to issue refunds of such sums as shall represent
7the difference between actual gross revenues and the gross
8revenue that would have been obtained based upon the same
9volume, from the price revised by the Commission. Any refund
10shall include interest calculated at a rate determined by the
11Commission and shall be returned according to procedures
12prescribed by the Commission.
13    Nothing in this subsection (h) shall preclude any party
14affected by a decision of the Commission under this subsection
15(h) from seeking judicial review of the Commission's decision.
16    (h-1) Any Illinois gas utility may enter into a sourcing
17agreement for up to 30 years of supply with the clean coal SNG
18brownfield facility if the clean coal SNG brownfield facility
19has commenced construction. Any gas utility that is providing
20service to more than 150,000 customers on July 13, 2011 (the
21effective date of Public Act 97-096) shall either elect to file
22biennial rate proceedings before the Commission in the years
232012, 2014, and 2016 or enter into a sourcing agreement or
24sourcing agreements with a clean coal SNG brownfield facility
25with an initial term of 30 years for either (i) a percentage of
2643,500,000,000 cubic feet per year, such that the utilities

 

 

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1entering into sourcing agreements with the clean coal SNG
2brownfield facility purchase 100%, allocated by total therms
3sold to ultimate customers by each gas utility in 2008 or (ii)
4such lesser amount as may be available from the clean coal SNG
5brownfield facility; provided that no utility shall be required
6to purchase more than 42% of the projected annual output of the
7clean coal SNG brownfield facility (the projected annual output
8of which is 47,799,714 MMBtu), with the remainder of such
9utility's obligation to be divided proportionately between the
10other utilities, and provided that the Illinois Power Agency
11shall further adjust the allocation only as required to take
12into account adverse consolidation, derivative, or lease
13impacts to the balance sheet or income statement of any gas
14utility.
15    A gas utility electing to file biennial rate proceedings
16before the Commission must file a notice of its election with
17the Commission within 60 days after July 13, 2011 or its right
18to make the election is irrevocably waived. A gas utility
19electing to file biennial rate proceedings shall make such
20filings no later than August 1 of the years 2012, 2014, and
212016, consistent with all requirements of 83 Ill. Adm. Code 255
22and 285 as though the gas utility were filing for an increase
23in its rates, without regard to whether such filing would
24produce an increase, a decrease, or no change in the gas
25utility's rates, and notwithstanding any other provisions of
26this Act, the Commission shall fully review the gas utility's

 

 

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1filing and shall issue its order in accordance with the
2provisions of Section 9-201 of this Act, regardless of whether
3the Commission has approved a formula rate for the gas utility.
4If more than 2 gas utilities elect to file biennial rate
5proceedings before the Commission by July 13, 2011, then the
6requirement that the other utilities enter into a sourcing
7agreement with the clean coal SNG brownfield facility shall be
8waived.
9    Within 15 days after July 13, 2011, the owner of the clean
10coal SNG brownfield facility shall submit to the Illinois Power
11Agency and each gas utility that is providing service to more
12than 150,000 customers on July 13, 2011 a copy of a draft
13sourcing agreement. Within 45 days after receipt of the draft
14sourcing agreement, each such gas utility shall provide the
15Illinois Power Agency and the owner of a clean coal SNG
16brownfield facility with its verbal or written comments and
17recommended revisions to the draft sourcing agreement. Within
1815 days after the receipt of the gas utility's comments and
19recommended revisions, the owner of the clean coal SNG
20brownfield facility shall submit its responsive verbal or
21written comments and a further revised draft of the sourcing
22agreement to the Illinois Power Agency. The Illinois Power
23Agency shall review the draft sourcing agreement and comments.
24    If the parties to the sourcing agreement do not agree on
25the terms therein, then the Illinois Power Agency shall retain
26an independent mediator to mediate the dispute between the

 

 

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

 

 

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1    must be coal that has high volatile bituminous rank and
2    greater than 1.7 pounds of sulfur per million Btu content.
3        (2) Coal and petroleum coke are feedstocks for the
4    gasification process, with coal comprising at least 50% of
5    the total feedstock over the term of the sourcing agreement
6    unless the facility reasonably determines that it is
7    necessary to use additional petroleum coke to deliver net
8    consumer savings, in which case the facility shall use coal
9    for at least 35% of the total feedstock over the term of
10    any sourcing agreement and with the feedstocks to be
11    procured in accordance with requirements of Section 1-78 of
12    the Illinois Power Agency Act.
13        (3) The sourcing agreement has an initial term that
14    once entered into terminates no more than 30 years after
15    the commencement of the commercial production of SNG at the
16    clean coal SNG brownfield facility.
17        (4) The clean coal SNG brownfield facility guarantees a
18    minimum of $100,000,000 in consumer savings to customers of
19    the utilities that have entered into sourcing agreements
20    with the clean coal SNG brownfield facility, calculated in
21    real 2010 dollars at the conclusion of the term of the
22    sourcing agreement by comparing the delivered SNG price to
23    the Chicago City-gate price on a weighted daily basis for
24    each day over the entire term of the sourcing agreement, to
25    be provided in accordance with subsection (h-2) of this
26    Section.

 

 

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

 

 

09700SB3766ham001- 23 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 24 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 25 -LRB097 19347 CEL 70165 a

1    utility, the owner of the clean coal SNG brownfield
2    facility, and the third-party gas marketer.
3        (11) A utility may exit the sourcing agreement without
4    penalty if the clean coal SNG brownfield facility does not
5    commence construction by July 1, 2015.
6        (12) A utility is responsible to pay only the
7    Commission determined unit price cost of SNG that is
8    purchased by the utility, which unit price shall be set on
9    a per-mmbtu basis so as to fully recover the costs
10    enumerated in subsection (h-3) when multiplied by the
11    allocations determined in this subsection (h-1). Nothing
12    in the sourcing agreement will obligate a utility to invest
13    capital in a clean coal SNG brownfield facility.
14        (13) The quality of SNG must, at a minimum, be
15    equivalent to the quality required for interstate pipeline
16    gas before a utility is required to accept and pay for SNG
17    gas.
18        (14) Nothing in the sourcing agreement will require a
19    utility to construct any facilities to accept delivery of
20    SNG, but the sourcing agreement may require that the
21    utility mutually agree with the clean coal SNG brownfield
22    facility upon a receiving pipeline. Provided, however, if a
23    utility is required by law or otherwise elects to connect
24    the clean coal SNG brownfield facility to an interstate
25    pipeline, then the utility shall be entitled to recover
26    pursuant to its tariffs all just and reasonable costs that

 

 

09700SB3766ham001- 26 -LRB097 19347 CEL 70165 a

1    are prudently incurred. Any costs incurred by the utility
2    to receive, deliver, manage, or otherwise accommodate
3    purchases under the SNG sourcing agreement will be fully
4    recoverable through a utility's purchased gas adjustment
5    clause rider mechanism in conjunction with a SNG brownfield
6    facility rider mechanism. The SNG brownfield facility
7    rider mechanism (A) shall be applicable to all customers
8    who receive transportation service from the utility, (B)
9    shall be designed to have an equal percent impact on the
10    transportation services rates of each class of the
11    utility's customers, and (C) shall accurately reflect the
12    net consumer savings, if any, and above-market costs, if
13    any, associated with the utility receiving, delivering,
14    managing, or otherwise accommodating purchases under the
15    SNG sourcing agreement.
16        (15) Remedies for the clean coal SNG brownfield
17    facility's failure to deliver a designated amount for a
18    designated period; provided, however, that the designated
19    amount on any given day may be zero.
20        (16) The clean coal SNG brownfield facility shall make
21    a good faith effort to ensure that an amount equal to not
22    less than 15% of the value of its prime construction
23    contract for the facility shall be established as a goal to
24    be awarded to minority owned businesses, female owned
25    businesses, and businesses owned by a person with a
26    disability; provided that at least 75% of the amount of

 

 

09700SB3766ham001- 27 -LRB097 19347 CEL 70165 a

1    such total goal shall be for minority owned businesses.
2    "Minority owned business", "female owned business", and
3    "business owned by a person with a disability" shall have
4    the meanings ascribed to them in Section 2 of the Business
5    Enterprise for Minorities, Females and Persons with
6    Disabilities Act.
7        (17) Prior to the clean coal SNG brownfield facility
8    issuing a notice to proceed to construction, the clean coal
9    SNG brownfield facility shall file with the Commission a
10    certificate from an independent engineer that the clean
11    coal SNG brownfield facility has (A) obtained all
12    applicable State and federal environmental permits
13    required for construction; (B) obtained approval from the
14    Commission of a carbon capture and sequestration plan; and
15    (C) obtained all necessary permits required for
16    construction for the transportation and sequestration of
17    carbon dioxide as set forth in the Commission-approved
18    carbon capture and sequestration plan.
19    (h-2) Consumer protection reserve account. The clean coal
20SNG brownfield facility shall guarantee a minimum of
21$100,000,000 in consumer savings to customers of the utilities
22that have entered into sourcing agreements with the clean coal
23SNG brownfield facility, calculated in real 2010 dollars at the
24conclusion of the term of the sourcing agreement by comparing
25the delivered SNG price to the Chicago City-gate price on a
26weighted daily basis for each day over the entire term of the

 

 

09700SB3766ham001- 28 -LRB097 19347 CEL 70165 a

1sourcing agreement. Prior to the clean coal SNG brownfield
2facility issuing a notice to proceed to construction, the clean
3coal SNG brownfield facility shall establish a consumer
4protection reserve account for the benefit of the retail
5customers of the utilities that have entered into sourcing
6agreements with the clean coal SNG brownfield facility pursuant
7to subsection (h-1), with cash principal in the amount of
8$150,000,000. Such cash principal shall only be recovered
9through the consumer protection reserve account and not as a
10cost to be recovered in the delivered SNG price pursuant to
11subsection (h-3) of this Section. The consumer protection
12reserve account shall be maintained and administered by an
13independent trustee that is mutually agreed upon by the clean
14coal SNG brownfield facility, the utilities, and the Commission
15in an interest-bearing account in accordance with the
16following:
17        (1) The clean coal SNG brownfield facility monthly
18    shall calculate (A) the difference between the monthly
19    delivered SNG price and the Chicago City-gate price, by
20    comparing the delivered SNG price, which shall include the
21    cost of transportation to the delivery point, if any, to
22    the Chicago City-gate price on a weighted daily basis for
23    each day of the prior month based upon a mutually agreed
24    upon published index and (B) the overage amount, if any, by
25    calculating the annualized incremental additional cost, if
26    any, of the delivered SNG in excess of 2.015% of the

 

 

09700SB3766ham001- 29 -LRB097 19347 CEL 70165 a

1    average annual inflation-adjusted amounts paid by all gas
2    distribution customers in connection with natural gas
3    service during the 5 years ending May 31, 2010, as
4    determined by the Illinois Power Agency in the October 11,
5    2011 final draft sourcing agreement.
6        (2) During the first 2 years of operation of the
7    facility:
8            (A) to the extent there is an overage amount, the
9        consumer protection reserve account shall be used to
10        provide a credit to reduce the SNG price by an amount
11        equal to the overage amount; and
12            (B) to the extent the monthly delivered SNG price
13        is less than or equal to the Chicago City-gate price,
14        the utility shall credit the difference between the
15        monthly delivered SNG price and the monthly Chicago
16        City-gate price, if any, to the consumer protection
17        reserve account. Such credit issued pursuant to this
18        paragraph (B) shall be deemed prudent and reasonable
19        and not subject to a Commission prudence review;
20        (3) After 2 years of operation of the facility, and
21    monthly, on an on-going basis, thereafter:
22            (A) to the extent that the monthly delivered SNG
23        price is less than or equal to the Chicago City-gate
24        price, calculated using the weighted average of the
25        daily Chicago City-gate price on a daily basis over the
26        entire month, the utility shall credit the difference,

 

 

09700SB3766ham001- 30 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 31 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 32 -LRB097 19347 CEL 70165 a

1        (4) Fifty percent of all additional net revenue,
2    defined as miscellaneous net revenue after cost allowance
3    for costs associated with additional net revenue that are
4    not otherwise recoverable pursuant to subsection (h-3) of
5    this Section, including net revenue from sales of
6    substitute natural gas derived from the facility above the
7    nameplate capacity of the facility and other by-products
8    produced by the facility, shall be credited to the consumer
9    protection reserve account.
10        (5) At the conclusion of the term of the sourcing
11    agreement, to the extent retail customers have not saved
12    the minimum of $100,000,000 in consumer savings as
13    guaranteed in this subsection (h-2), amounts in the
14    consumer protection reserve account shall be credited to
15    retail customers to the extent the retail customers have
16    saved the minimum of $100,000,000; 50% of any additional
17    amounts in the consumer protection reserve account shall be
18    distributed to the company, and the remaining 50% shall be
19    distributed to retail customers.
20        (6) If, at the conclusion of the term of the sourcing
21    agreement, the customers have not saved the minimum
22    $100,000,000 in savings as guaranteed in this subsection
23    (h-2) and the consumer protection reserve account has been
24    depleted, then the clean coal SNG brownfield facility shall
25    be liable for any remaining amount owed to the retail
26    customers to the extent that the customers are provided

 

 

09700SB3766ham001- 33 -LRB097 19347 CEL 70165 a

1    with the $100,000,000 in savings as guaranteed in this
2    subsection (h-2). The retail customers shall have first
3    priority in recovering that debt above any creditors,
4    except the original senior secured lender to the extent
5    that the original senior secured lender has any senior
6    secured debt outstanding, including any clean coal SNG
7    brownfield facility parent companies or affiliates.
8        (7) The clean coal SNG brownfield facility, the
9    utilities, and the trustee shall work together to take
10    commercially reasonable steps to minimize the tax impact of
11    these transactions, while preserving the consumer
12    benefits.
13        (8) The clean coal SNG brownfield facility shall each
14    month, starting in the facility's first year of commercial
15    operation, file with the Commission, in such form as the
16    Commission shall require, a report as to the consumer
17    protection reserve account. The monthly report must
18    contain the following information:
19            (A) the extent the monthly delivered SNG price is
20        greater than, less than, or equal to the Chicago
21        City-gate price;
22            (B) the amount credited or debited to the consumer
23        protection reserve account during the month;
24            (C) the amounts credited to consumers and
25        distributed to the clean coal SNG brownfield facility
26        during the month;

 

 

09700SB3766ham001- 34 -LRB097 19347 CEL 70165 a

1            (D) the total amount of the consumer protection
2        reserve account at the beginning and end of the month;
3            (E) the total amount of consumer savings to date;
4            (F) a confidential summary of the inputs used to
5        calculate the additional net revenue; and
6            (G) any other additional information the
7        Commission shall require.
8        When any report is erroneous or defective or appears to
9    the Commission to be erroneous or defective, the Commission
10    may notify the clean coal SNG brownfield facility to amend
11    the report within 30 days, and, before or after the
12    termination of the 30-day period, the Commission may
13    examine the trustee of the consumer protection reserve
14    account or the officers, agents, employees, books,
15    records, or accounts of the clean coal SNG brownfield
16    facility and correct such items in the report as upon such
17    examination the Commission may find defective or
18    erroneous. All reports shall be under oath.
19        All reports made to the Commission by the clean coal
20    SNG brownfield facility and the contents of the reports
21    shall be open to public inspection and shall be deemed a
22    public record under the Freedom of Information Act. Such
23    reports shall be preserved in the office of the Commission.
24    The Commission shall publish an annual summary of the
25    reports prior to February 1 of the following year. The
26    annual summary shall be made available to the public on the

 

 

09700SB3766ham001- 35 -LRB097 19347 CEL 70165 a

1    Commission's website and shall be submitted to the General
2    Assembly.
3        Any facility that fails to file a report required under
4    this paragraph (8) to the Commission within the time
5    specified or to make specific answer to any question
6    propounded by the Commission within 30 days from the time
7    it is lawfully required to do so, or within such further
8    time not to exceed 90 days as may in its discretion be
9    allowed by the Commission, shall pay a penalty of $500 to
10    the Commission for each day it is in default.
11        Any person who willfully makes any false report to the
12    Commission or to any member, officer, or employee thereof,
13    any person who willfully in a report withholds or fails to
14    provide material information to which the Commission is
15    entitled under this paragraph (8) and which information is
16    either required to be filed by statute, rule, regulation,
17    order, or decision of the Commission or has been requested
18    by the Commission, and any person who willfully aids or
19    abets such person shall be guilty of a Class A misdemeanor.
20    (h-3) Recoverable costs and revenue by the clean coal SNG
21brownfield facility.
22        (1) A capital recovery charge approved by the
23    Commission shall be recoverable by the clean coal SNG
24    brownfield facility under a sourcing agreement. The
25    capital recovery charge shall be comprised of capital costs
26    and a reasonable rate of return. "Capital costs" means

 

 

09700SB3766ham001- 36 -LRB097 19347 CEL 70165 a

1    costs to be incurred in connection with the construction
2    and development of a facility, as defined in Section 1-10
3    of the Illinois Power Agency Act, and such other costs as
4    the Capital Development Board deems appropriate to be
5    recovered in the capital recovery charge.
6            (A) Capital costs. The Capital Development Board
7        shall calculate a range of capital costs that it
8        believes would be reasonable for the clean coal SNG
9        brownfield facility to recover under the sourcing
10        agreement. In making this determination, the Capital
11        Development Board shall review the facility cost
12        report, if any, of the clean coal SNG brownfield
13        facility, adjusting the results based on the change in
14        the Annual Consumer Price Index for All Urban Consumers
15        for the Midwest Region as published in April by the
16        United States Department of Labor, Bureau of Labor
17        Statistics, the final draft of the sourcing agreement,
18        and the rate of return approved by the Commission. In
19        addition, the Capital Development Board may consult as
20        much as it deems necessary with the clean coal SNG
21        brownfield facility and conduct whatever research and
22        investigation it deems necessary.
23            The Capital Development Board shall retain an
24        engineering expert to assist in determining both the
25        range of capital costs and the range of operations and
26        maintenance costs that it believes would be reasonable

 

 

09700SB3766ham001- 37 -LRB097 19347 CEL 70165 a

1        for the clean coal SNG brownfield facility to recover
2        under the sourcing agreement. Provided, however, that
3        such expert shall: (i) not have been involved in the
4        clean coal SNG brownfield facility's facility cost
5        report, if any, (ii) not own or control any direct or
6        indirect interest in the initial clean coal facility,
7        and (iii) have no contractual relationship with the
8        clean coal SNG brownfield facility. In order to qualify
9        as an independent expert, a person or company must
10        have:
11                (i) direct previous experience conducting
12            front-end engineering and design studies for
13            large-scale energy facilities and administering
14            large-scale energy operations and maintenance
15            contracts, which may be particularized to the
16            specific type of financing associated with the
17            clean coal SNG brownfield facility;
18                (ii) an advanced degree in economics,
19            mathematics, engineering, or a related area of
20            study;
21                (iii) ten years of experience in the energy
22            sector, including construction and risk management
23            experience;
24                (iv) expertise in assisting companies with
25            obtaining financing for large-scale energy
26            projects, which may be particularized to the

 

 

09700SB3766ham001- 38 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 39 -LRB097 19347 CEL 70165 a

1        Only after the clean coal SNG brownfield facility has
2        submitted this estimate shall the Commission publicly
3        announce the range of capital costs submitted by the
4        Capital Development Board.
5            In the event that the estimate submitted by the
6        clean coal SNG brownfield facility is within or below
7        the range submitted by the Capital Development Board,
8        the clean coal SNG brownfield facility's estimate
9        shall be approved by the Commission as the amount of
10        capital costs to be recovered under the sourcing
11        agreement. In the event that the estimate submitted by
12        the clean coal SNG brownfield facility is above the
13        range submitted by the Capital Development Board, the
14        amount of capital costs at the lowest end of the range
15        submitted by the Capital Development Board shall be
16        approved by the Commission as the amount of capital
17        costs to be recovered under the sourcing agreement.
18        Within 15 days after the Capital Development Board has
19        submitted its range and the clean coal SNG brownfield
20        facility has submitted its estimate, the Commission
21        shall approve the capital costs for the clean coal SNG
22        brownfield facility.
23            The Capital Development Board shall monitor the
24        construction of the clean coal SNG brownfield facility
25        for the full duration of construction to assess
26        potential cost overruns. The Capital Development

 

 

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1        Board, in its discretion, may retain an expert to
2        facilitate such monitoring. The clean coal SNG
3        brownfield facility shall pay a reasonable fee as
4        required by the Capital Development Board for the
5        Capital Development Board's services under this
6        subsection (h-3) to be deposited into the Capital
7        Development Board Revolving Fund, and such fee shall
8        not be passed through to a utility or its customers. If
9        an expert is retained by the Capital Development Board
10        for monitoring of construction, then the clean coal SNG
11        brownfield facility must pay for the expert's
12        reasonable fees and such costs shall not be passed
13        through to a utility or its customers.
14            (B) Rate of Return. No later than 30 days after the
15        date on which the Illinois Power Agency submits a final
16        draft sourcing agreement, the Commission shall hold a
17        public hearing to determine the rate of return to be
18        recovered under the sourcing agreement. Rate of return
19        shall be comprised of the clean coal SNG brownfield
20        facility's actual cost of debt, including
21        mortgage-style amortization, and a reasonable return
22        on equity. The Commission shall post notice of the
23        hearing on its website no later than 10 days prior to
24        the date of the hearing. The Commission shall provide
25        the public and all interested parties, including the
26        gas utilities, the Attorney General, and the Illinois

 

 

09700SB3766ham001- 41 -LRB097 19347 CEL 70165 a

1        Power Agency, an opportunity to be heard.
2            In determining the return on equity, the
3        Commission shall select a commercially reasonable
4        return on equity taking into account the return on
5        equity being received by developers of similar
6        facilities in or outside of Illinois, the need to
7        balance an incentive for clean-coal technology with
8        the need to protect ratepayers from high gas prices,
9        the risks being borne by the clean coal SNG brownfield
10        facility in the final draft sourcing agreement, and any
11        other information that the Commission may deem
12        relevant. The Commission may establish a return on
13        equity that varies with the amount of savings, if any,
14        to customers during the term of the sourcing agreement,
15        comparing the delivered SNG price to a daily weighted
16        average price of natural gas, based upon an index. The
17        Illinois Power Agency shall recommend a return on
18        equity to the Commission using the same criteria.
19        Within 60 days after receiving the final draft sourcing
20        agreement from the Illinois Power Agency, the
21        Commission shall approve the rate of return for the
22        clean coal brownfield facility. Within 30 days after
23        obtaining debt financing for the clean coal SNG
24        brownfield facility, the clean coal SNG brownfield
25        facility shall file a notice with the Commission
26        identifying the actual cost of debt. The filing of such

 

 

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1        notice shall not provide the Commission with
2        authorization to make modifications to the sourcing
3        agreement at the time of debt financing.
4        (2) Operations and maintenance costs approved by the
5    Commission shall be recoverable by the clean coal SNG
6    brownfield facility under the sourcing agreement. The
7    operations and maintenance costs mean costs that have been
8    incurred for the administration, supervision, operation,
9    maintenance, preservation, and protection of the clean
10    coal SNG brownfield facility's physical plant.
11        The Capital Development Board shall calculate a range
12    of operations and maintenance costs that it believes would
13    be reasonable for the clean coal SNG brownfield facility to
14    recover under the sourcing agreement, incorporating an
15    inflation index or combination of inflation indices to most
16    accurately reflect the actual costs of operating the clean
17    coal SNG brownfield facility. In making this
18    determination, the Capital Development Board shall review
19    the facility cost report, if any, of the clean coal SNG
20    brownfield facility, adjusting the results for inflation
21    based on the change in the Annual Consumer Price Index for
22    All Urban Consumers for the Midwest Region as published in
23    April by the United States Department of Labor, Bureau of
24    Labor Statistics, the final draft of the sourcing
25    agreement, and the rate of return approved by the
26    Commission. In addition, the Capital Development Board may

 

 

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1    consult as much as it deems necessary with the clean coal
2    SNG brownfield facility and conduct whatever research and
3    investigation it deems necessary. As set forth in
4    subparagraph (A) of paragraph (1) of this subsection (h-3),
5    the Capital Development Board shall retain an independent
6    engineering expert to assist in determining both the range
7    of operations and maintenance costs that it believes would
8    be reasonable for the clean coal SNG brownfield facility to
9    recover under the sourcing agreement. The clean coal SNG
10    brownfield facility and the Illinois Power Agency shall
11    cooperate with the Capital Development Board in any
12    investigation it deems necessary. The Capital Development
13    Board shall make its final determination of the range of
14    operations and maintenance costs confidentially and shall
15    submit that range to the Commission in a confidential
16    filing within 120 days after July 13, 2011.
17        The clean coal SNG brownfield facility shall submit to
18    the Commission its estimate of the operations and
19    maintenance costs to be recovered under the sourcing
20    agreement. Only after the clean coal SNG brownfield
21    facility has submitted this estimate shall the Commission
22    publicly announce the range of operations and maintenance
23    costs submitted by the Capital Development Board. In the
24    event that the estimate submitted by the clean coal SNG
25    brownfield facility is within or below the range submitted
26    by the Capital Development Board, the clean coal SNG

 

 

09700SB3766ham001- 44 -LRB097 19347 CEL 70165 a

1    brownfield facility's estimate shall be approved by the
2    Commission as the amount of operations and maintenance
3    costs to be recovered under the sourcing agreement. In the
4    event that the estimate submitted by the clean coal SNG
5    brownfield facility is above the range submitted by the
6    Capital Development Board, the amount of operations and
7    maintenance costs at the lowest end of the range submitted
8    by the Capital Development Board shall be approved by the
9    Commission as the amount of operations and maintenance
10    costs to be recovered under the sourcing agreement. Within
11    15 days after the Capital Development Board has submitted
12    its range and the clean coal SNG brownfield facility has
13    submitted its estimate, the Commission shall approve the
14    operations and maintenance costs for the clean coal SNG
15    brownfield facility.
16        The clean coal SNG brownfield facility shall pay for
17    the independent engineering expert's reasonable fees and
18    such costs shall not be passed through to a utility or its
19    customers. The clean coal SNG brownfield facility shall pay
20    a reasonable fee as required by the Capital Development
21    Board for the Capital Development Board's services under
22    this subsection (h-3) to be deposited into the Capital
23    Development Board Revolving Fund, and such fee shall not be
24    passed through to a utility or its customers.
25        (3) Sequestration costs approved by the Commission
26    shall be recoverable by the clean coal SNG brownfield

 

 

09700SB3766ham001- 45 -LRB097 19347 CEL 70165 a

1    facility. "Sequestration costs" means costs to be incurred
2    by the clean coal SNG brownfield facility in accordance
3    with its Commission-approved carbon capture and
4    sequestration plan to:
5            (A) capture carbon dioxide;
6            (B) build, operate, and maintain a sequestration
7        site in which carbon dioxide may be injected;
8            (C) build, operate, and maintain a carbon dioxide
9        pipeline; and
10            (D) transport the carbon dioxide to the
11        sequestration site or a pipeline.
12        The Commission shall assess the prudency of the
13    sequestration costs for the clean coal SNG brownfield
14    facility before construction commences at the
15    sequestration site or pipeline. Any revenues the clean coal
16    SNG brownfield facility receives as a result of the
17    capture, transportation, or sequestration of carbon
18    dioxide shall be first credited against all sequestration
19    costs, with the positive balance, if any, treated as
20    additional net revenue.
21        The Commission may, in its discretion, retain an expert
22    to assist in its review of sequestration costs. The clean
23    coal SNG brownfield facility shall pay for the expert's
24    reasonable fees if an expert is retained by the Commission,
25    and such costs shall not be passed through to a utility or
26    its customers. Once made, the Commission's determination

 

 

09700SB3766ham001- 46 -LRB097 19347 CEL 70165 a

1    of the amount of recoverable sequestration costs shall not
2    be increased unless the clean coal SNG brownfield facility
3    can show by clear and convincing evidence that (i) the
4    costs were not reasonably foreseeable; (ii) the costs were
5    due to circumstances beyond the clean coal SNG brownfield
6    facility's control; and (iii) the clean coal SNG brownfield
7    facility took all reasonable steps to mitigate the costs.
8    If the Commission determines that sequestration costs may
9    be increased, the Commission shall provide for notice and a
10    public hearing for approval of the increased sequestration
11    costs.
12        (4) Actual delivered and processed fuel costs shall be
13    set by the Illinois Power Agency through a SNG feedstock
14    procurement, pursuant to Sections 1-20, 1-77, and 1-78 of
15    the Illinois Power Agency Act, to be performed at least
16    every 5 years and purchased by the clean coal SNG
17    brownfield facility pursuant to feedstock procurement
18    contracts developed by the Illinois Power Agency, with coal
19    comprising at least 50% of the total feedstock over the
20    term of the sourcing agreement and petroleum coke
21    comprising the remainder of the SNG feedstock. If the
22    Commission fails to approve a feedstock procurement plan or
23    fails to approve the results of a feedstock procurement
24    event, then the fuel shall be purchased by the company
25    month-by-month on the spot market and those actual
26    delivered and processed fuel costs shall be recoverable

 

 

09700SB3766ham001- 47 -LRB097 19347 CEL 70165 a

1    under the sourcing agreement. If a supplier defaults under
2    the terms of a procurement contract, then the Illinois
3    Power Agency shall immediately initiate a feedstock
4    procurement process to obtain a replacement supply, and,
5    prior to the conclusion of that process, fuel shall be
6    purchased by the company month-by-month on the spot market
7    and those actual delivered and processed fuel costs shall
8    be recoverable under the sourcing agreement.
9        (5) Taxes and fees imposed by the federal government,
10    the State, or any unit of local government applicable to
11    the clean coal SNG brownfield facility, excluding income
12    tax, shall be recoverable by the clean coal SNG brownfield
13    facility under the sourcing agreement to the extent such
14    taxes and fees were not applicable to the facility on July
15    13, 2011.
16        (6) The actual transportation costs, in accordance
17    with the applicable utility's tariffs, and third-party
18    marketer costs incurred by the company, if any, associated
19    with transporting the SNG from the clean coal SNG
20    brownfield facility to the Chicago City-gate to sell such
21    SNG into the natural gas markets shall be recoverable under
22    the sourcing agreement.
23        (7) Unless otherwise provided, within 30 days after a
24    decision of the Commission on recoverable costs under this
25    Section, any interested party to the Commission's decision
26    may apply for a rehearing with respect to the decision. The

 

 

09700SB3766ham001- 48 -LRB097 19347 CEL 70165 a

1    Commission shall receive and consider the application for
2    rehearing and shall grant or deny the application in whole
3    or in part within 20 days after the date of the receipt of
4    the application by the Commission. If no rehearing is
5    applied for within the required 30 days or an application
6    for rehearing is denied, then the Commission decision shall
7    be final. If an application for rehearing is granted, then
8    the Commission shall hold a rehearing within 30 days after
9    granting the application. The decision of the Commission
10    upon rehearing shall be final.
11        Any person affected by a decision of the Commission
12    under this subsection (h-3) may have the decision reviewed
13    only under and in accordance with the Administrative Review
14    Law. Unless otherwise provided, the provisions of the
15    Administrative Review Law, all amendments and
16    modifications to that Law, and the rules adopted pursuant
17    to that Law shall apply to and govern all proceedings for
18    the judicial review of final administrative decisions of
19    the Commission under this subsection (h-3). The term
20    "administrative decision" is defined as in Section 3-101 of
21    the Code of Civil Procedure.
22        (8) The Capital Development Board shall adopt and make
23    public a policy detailing the process for retaining experts
24    under this Section. Any experts retained to assist with
25    calculating the range of capital costs or operations and
26    maintenance costs shall be retained no later than 45 days

 

 

09700SB3766ham001- 49 -LRB097 19347 CEL 70165 a

1    after July 13, 2011.
2    (h-4) No later than 90 days after the Illinois Power Agency
3submits the final draft sourcing agreement pursuant to
4subsection (h-1), the Commission shall approve a sourcing
5agreement containing (i) the capital costs, rate of return, and
6operations and maintenance costs established pursuant to
7subsection (h-3) and (ii) all other terms and conditions,
8rights, provisions, exceptions, and limitations contained in
9the final draft sourcing agreement; provided, however, the
10Commission shall correct typographical and scrivener's errors
11and modify the contract only as necessary to provide that the
12gas utility does not have the right to terminate the sourcing
13agreement due to any future events that may occur other than
14the clean coal SNG brownfield facility's failure to timely meet
15milestones, uncured default, extended force majeure, or
16abandonment. Once the sourcing agreement is approved, then the
17gas utility subject to that sourcing agreement shall have 45
18days after the date of the Commission's approval to enter into
19the sourcing agreement.
20    (h-4.5) Notwithstanding any other provisions of this Act,
21any sourcing agreement approved by the Commission prior to the
22effective date of this amendatory Act of the 97th General
23Assembly is void and shall not be further considered by the
24Commission, except in accordance with this subsection (h-4.5).
25The Commission shall issue an Order within 30 days after the
26effective date of this amendatory Act of the 97th General

 

 

09700SB3766ham001- 50 -LRB097 19347 CEL 70165 a

1Assembly to approve a revised version of any such sourcing
2agreement, incorporating only the following modifications to
3the sourcing agreement endorsed in the Proposed Order on
4Rehearing, as reflected in the form of sourcing agreement
5attached to the brief on exceptions of the clean coal SNG
6brownfield facility:
7        (1) Fill in the following blanks in Schedule 5.2A:
8            (A) Row (C), the word "Actual" shall be replaced
9        with "Fixed" in each instance, and the value shall be
10        set to 70%.
11            (B) Row (M), the value shall be set to 95.452838%
12        if the sourcing agreement is signed by the utility
13        within 30 days after the ICC Order to approve it,
14        otherwise the value shall be set to 100%.
15            (C) Rows (D), (G), (I), (N), and (P) shall be
16        calculated and filled in according to the formulas
17        shown in Schedule 5.2A.
18        (2) Fill in the following blanks on Schedule 5.2B:
19            (A) Row (E), the value shall be set to 95.452838%
20        if the sourcing agreement is signed by the utility
21        within 30 days after the ICC Order to approve it,
22        otherwise the value shall be set to 100%.
23            (B) Rows (F) and (G) shall be calculated and filled
24        in according to the formula in Schedule 5.2B, and the
25        same value from Row (G) shall replace the "$[X.XX]" in
26        Section 5.2, component "B".

 

 

09700SB3766ham001- 51 -LRB097 19347 CEL 70165 a

1        (3) Correct the following scrivener's and
2    typographical errors:
3            (A) In Sections 2.1(b), 2.2(b), 2.2(c), 2.2(e),
4        and 5.1 and in the definition of "Monthly Delivered
5        Quantity", the term "MCQ" shall be replaced with
6        "Applicable MCQ".
7            (B) In the last sentence of Section 2.2(c),
8        "Maximum DCQ" shall be replaced with "Buyer's
9        Allocated Percentage of the Maximum DCQ".
10            (C) In Section 4.2, the last "at" shall be replaced
11        with "or is not delivered to".
12            (D) In Section 4.8, the word "designated" shall be
13        inserted before the phrase "point of interconnection".
14            (E) In Section 5.1, the phrase "accepted at" shall
15        be replaced with "delivered to".
16            (F) In the definitions of "Title Transfer Point"
17        and "Transportation and Marketing Component", the
18        phrase "is defined" shall be replaced with "has the
19        meaning specified".
20    The Commission shall make no other modifications to the
21sourcing agreement endorsed in the Proposed Order on Rehearing,
22as reflected in the form of sourcing agreement attached to the
23brief on exceptions of the clean coal SNG brownfield facility,
24other than those listed in this subsection (h-4.5), and shall
25impose no additional terms and conditions on the clean coal SNG
26brownfield facility. A gas utility subject to the obligation

 

 

09700SB3766ham001- 52 -LRB097 19347 CEL 70165 a

1set forth in subsection (h-1) to enter into a sourcing
2agreement shall satisfy this obligation only by entering into
3the sourcing agreement approved under the provisions of this
4subsection (h-4.5) within 45 days after the date of the
5Commission's approval of such sourcing agreement.
6    (h-5) Sequestration enforcement.
7        (A) All contracts entered into under subsection (h) of
8    this Section and all sourcing agreements under subsection
9    (h-1) of this Section, regardless of duration, shall
10    require the owner of any facility supplying SNG under the
11    contract or sourcing agreement to provide certified
12    documentation to the Commission each year, starting in the
13    facility's first year of commercial operation, accurately
14    reporting the quantity of carbon dioxide emissions from the
15    facility that have been captured and sequestered and
16    reporting any quantities of carbon dioxide released from
17    the site or sites at which carbon dioxide emissions were
18    sequestered in prior years, based on continuous monitoring
19    of those sites.
20        (B) If, in any year, the owner of the clean coal SNG
21    facility fails to demonstrate that the SNG facility
22    captured and sequestered at least 90% of the total carbon
23    dioxide emissions that the facility would otherwise emit or
24    that sequestration of emissions from prior years has
25    failed, resulting in the release of carbon dioxide into the
26    atmosphere, then the owner of the clean coal SNG facility

 

 

09700SB3766ham001- 53 -LRB097 19347 CEL 70165 a

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

 

 

09700SB3766ham001- 54 -LRB097 19347 CEL 70165 a

1    of the facility described in subsection (h) of this Section
2    shall not be subject to a penalty if and only if (i) it
3    promptly provides notice of its failure to the Commission;
4    (ii) as soon as practicable and consistent with any order
5    or direction from the Commission, it submits to the
6    Commission proposed modifications to its carbon capture
7    and sequestration plan; and (iii) it carries out its
8    proposed modifications in the manner and time directed by
9    the Commission.
10        If the Commission finds that the facility has not
11    satisfied each of these requirements, then the facility
12    shall be subject to the penalty. If the owner of the clean
13    coal SNG facility captured and sequestered more than 90% of
14    the total carbon dioxide emissions that the facility would
15    otherwise emit, then the owner of the facility may credit
16    such additional amounts to reduce the amount of any future
17    penalty to be paid. The penalty resulting from the failure
18    to capture and sequester at least the minimum amount of
19    carbon dioxide shall not be passed on to a utility or its
20    customers.
21        If the clean coal SNG facility fails to meet the
22    requirements specified in this subsection (h-5), then the
23    Attorney General, on behalf of the People of the State of
24    Illinois, shall bring an action to enforce the obligations
25    related to the facility set forth in this subsection (h-5),
26    including any penalty payments owed, but not including the

 

 

09700SB3766ham001- 55 -LRB097 19347 CEL 70165 a

1    physical obligation to capture and sequester at least 90%
2    of the total carbon dioxide emissions that the facility
3    would otherwise emit. Such action may be filed in any
4    circuit court in Illinois. By entering into a contract
5    pursuant to subsection (h) of this Section, the clean coal
6    SNG facility agrees to waive any objections to venue or to
7    the jurisdiction of the court with regard to the Attorney
8    General's action under this subsection (h-5).
9        Compliance with the sequestration requirements and any
10    penalty requirements specified in this subsection (h-5)
11    for the clean coal SNG facility shall be assessed annually
12    by the Commission, which may in its discretion retain an
13    expert to facilitate its assessment. If any expert is
14    retained by the Commission, then the clean coal SNG
15    facility shall pay for the expert's reasonable fees, and
16    such costs shall not be passed through to the utility or
17    its customers.
18        In addition, carbon dioxide emission credits received
19    by the clean coal SNG facility in connection with
20    sequestration of carbon dioxide from the facility must be
21    sold in a timely fashion with any revenue, less applicable
22    fees and expenses and any expenses required to be paid by
23    facility for carbon dioxide transportation or
24    sequestration, deposited into the reconciliation account
25    within 30 days after receipt of such funds by the owner of
26    the clean coal SNG facility.

 

 

09700SB3766ham001- 56 -LRB097 19347 CEL 70165 a

1        The clean coal SNG facility is prohibited from
2    transporting or sequestering carbon dioxide unless the
3    owner of the carbon dioxide pipeline that transfers the
4    carbon dioxide from the facility and the owner of the
5    sequestration site where the carbon dioxide captured by the
6    facility is stored has acquired all applicable permits
7    under applicable State and federal laws, statutes, rules,
8    or regulations prior to the transfer or sequestration of
9    carbon dioxide. The responsibility for compliance with the
10    sequestration requirements specified in this subsection
11    (h-5) for the clean coal SNG facility shall reside solely
12    with the clean coal SNG facility, regardless of whether the
13    facility has contracted with another party to capture,
14    transport, or sequester carbon dioxide.
15        (C) If, in any year, the owner of a clean coal SNG
16    brownfield facility fails to demonstrate that the clean
17    coal SNG brownfield facility captured and sequestered at
18    least 85% of the total carbon dioxide emissions that the
19    facility would otherwise emit, then the owner of the clean
20    coal SNG brownfield facility must pay a penalty of $20 per
21    ton of excess carbon emissions up to $20,000,000, which
22    shall be deposited into the Energy Efficiency Trust Fund
23    and distributed pursuant to subsection (b) of Section 6-6
24    of the Renewable Energy, Energy Efficiency, and Coal
25    Resources Development Law of 1997. Provided, however, to
26    the extent that the owner of the clean coal SNG brownfield

 

 

09700SB3766ham001- 57 -LRB097 19347 CEL 70165 a

1    facility can demonstrate that the failure was as a result
2    of acts of God (including fire, flood, earthquake, tornado,
3    lightning, hurricane, or other natural disaster); any
4    amendment, modification, or abrogation of any applicable
5    law or regulation that would prevent performance; war;
6    invasion; act of foreign enemies; hostilities (regardless
7    of whether war is declared); civil war; rebellion;
8    revolution; insurrection; military or usurped power or
9    confiscation; terrorist activities; civil disturbances;
10    riots; nationalization; sabotage; blockage; or embargo,
11    the owner of the clean coal SNG brownfield facility shall
12    not be subject to a penalty if and only if (i) it promptly
13    provides notice of its failure to the Commission; (ii) as
14    soon as practicable and consistent with any order or
15    direction from the Commission, it submits to the Commission
16    proposed modifications to its carbon capture and
17    sequestration plan; and (iii) it carries out its proposed
18    modifications in the manner and time directed by the
19    Commission. If the Commission finds that the facility has
20    not satisfied each of these requirements, then the facility
21    shall be subject to the penalty. If the owner of a clean
22    coal SNG brownfield facility demonstrates that the clean
23    coal SNG brownfield facility captured and sequestered more
24    than 85% of the total carbon emissions that the facility
25    would otherwise emit, the owner of the clean coal SNG
26    brownfield facility may credit such additional amounts to

 

 

09700SB3766ham001- 58 -LRB097 19347 CEL 70165 a

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

 

 

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1    requirements specified in this subsection (h-5) for the
2    clean coal SNG brownfield facility shall reside solely with
3    the clean coal SNG brownfield facility regardless of
4    whether the facility has contracted with another party to
5    capture, transport, or sequester carbon dioxide.
6    (h-7) Sequestration permitting, oversight, and
7investigations.
8        (1) No clean coal facility or clean coal SNG brownfield
9    facility may transport or sequester carbon dioxide unless
10    the Commission approves the method of carbon dioxide
11    transportation or sequestration. Such approval shall be
12    required regardless of whether the facility has contracted
13    with another to transport or sequester the carbon dioxide.
14    Nothing in this subsection (h-7) shall release the owner or
15    operator of a carbon dioxide sequestration site or carbon
16    dioxide pipeline from any other permitting requirements
17    under applicable State and federal laws, statutes, rules,
18    or regulations.
19        (2) The Commission shall review carbon dioxide
20    transportation and sequestration methods proposed by a
21    clean coal facility or a clean coal SNG brownfield facility
22    and shall approve those methods it deems reasonable and
23    cost-effective. For purposes of this review,
24    "cost-effective" means a commercially reasonable price for
25    similar carbon dioxide transportation or sequestration
26    techniques. In determining whether sequestration is

 

 

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1    reasonable and cost-effective, the Commission may consult
2    with the Illinois State Geological Survey and retain third
3    parties to assist in its determination, provided that such
4    third parties shall not own or control any direct or
5    indirect interest in the facility that is proposing the
6    carbon dioxide transportation or the carbon dioxide
7    sequestration method and shall have no contractual
8    relationship with that facility. If a third party is
9    retained by the Commission, then the facility proposing the
10    carbon dioxide transportation or sequestration method
11    shall pay for the expert's reasonable fees, and these costs
12    shall not be passed through to a utility or its customers.
13        No later than 6 months prior to the date upon which the
14    owner intends to commence construction of a clean coal
15    facility or the clean coal SNG brownfield facility, the
16    owner of the facility shall file with the Commission a
17    carbon dioxide transportation or sequestration plan. The
18    Commission shall hold a public hearing within 30 days after
19    receipt of the facility's carbon dioxide transportation or
20    sequestration plan. The Commission shall post notice of the
21    review on its website upon submission of a carbon dioxide
22    transportation or sequestration method and shall accept
23    written public comments. The Commission shall take the
24    comments into account when making its decision.
25        The Commission may not approve a carbon dioxide
26    sequestration method if the owner or operator of the

 

 

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1    sequestration site has not received (i) an Underground
2    Injection Control permit from the Illinois Environmental
3    Protection Agency pursuant to the Environmental Protection
4    Act; (ii) an Underground Injection Control permit from the
5    Illinois Department of Natural Resources pursuant to the
6    Illinois Oil and Gas Act; or (iii) a permit similar to
7    items (i) or (ii) from the state in which the sequestration
8    site is located if the sequestration will take place
9    outside of Illinois. The Commission shall approve or deny
10    the carbon dioxide transportation or sequestration method
11    within 90 days after the receipt of all required
12    information.
13        (3) At least annually, the Illinois Environmental
14    Protection Agency shall inspect all carbon dioxide
15    sequestration sites in Illinois. The Illinois
16    Environmental Protection Agency may, as often as deemed
17    necessary, monitor and conduct investigations of those
18    sites. The owner or operator of the sequestration site must
19    cooperate with the Illinois Environmental Protection
20    Agency investigations of carbon dioxide sequestration
21    sites.
22        If the Illinois Environmental Protection Agency
23    determines at any time a site creates conditions that
24    warrant the issuance of a seal order under Section 34 of
25    the Environmental Protection Act, then the Illinois
26    Environmental Protection Agency shall seal the site

 

 

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

 

 

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1    State's Attorney or Attorney General, upon the request of
2    the Commission or on his or her own motion, may institute a
3    civil action for an immediate injunction to halt any
4    discharge or other activity causing or contributing to the
5    danger or to require such other action as may be necessary.
6    The court may issue an ex parte order and shall schedule a
7    hearing on the matter not later than 3 working days after
8    the date of injunction. The Commission shall provide notice
9    of any such actions as soon as possible on its website. The
10    SNG facility shall incur all reasonable costs associated
11    with any such inspection or monitoring of the sequestration
12    sites, and these costs shall not be recoverable from a
13    utility or its customers.
14    (h-9) The clean coal SNG brownfield facility shall have the
15right to recover prudently incurred increased costs or reduced
16revenue resulting from any new or amendatory legislation or
17other action. The State of Illinois pledges that the State will
18not enact any law or take any action to:
19        (1) break, or repeal the authority for, sourcing
20    agreements approved by the Commission and entered into
21    between public utilities and the clean coal SNG brownfield
22    facility;
23        (2) deny public utilities full cost recovery for their
24    costs incurred under those sourcing agreements; or
25        (3) deny the clean coal SNG brownfield facility full
26    cost and revenue recovery as provided under those sourcing

 

 

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1    agreements that are recoverable pursuant to subsection
2    (h-3) of this Section.
3    These pledges are for the benefit of the parties to those
4sourcing agreements and the issuers and holders of bonds or
5other obligations issued or incurred to finance or refinance
6the clean coal SNG brownfield facility. The clean coal SNG
7brownfield facility is authorized to include and refer to these
8pledges in any financing agreement into which it may enter in
9regard to those sourcing agreements.
10    The State of Illinois retains and reserves all other rights
11to enact new or amendatory legislation or take any other
12action, without impairment of the right of the clean coal SNG
13brownfield facility to recover prudently incurred increased
14costs or reduced revenue resulting from the new or amendatory
15legislation or other action, including, but not limited to,
16such legislation or other action that would (i) directly or
17indirectly raise the costs the clean coal SNG brownfield
18facility must incur; (ii) directly or indirectly place
19additional restrictions, regulations, or requirements on the
20clean coal SNG brownfield facility; (iii) prohibit
21sequestration in general or prohibit a specific sequestration
22method or project; or (iv) increase minimum sequestration
23requirements for the clean coal SNG brownfield facility to the
24extent technically feasible. The clean coal SNG brownfield
25facility shall have the right to recover prudently incurred
26increased costs or reduced revenue resulting from the new or

 

 

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1amendatory legislation or other action as described in this
2subsection (h-9).
3    (h-10) Contract costs for SNG incurred by an Illinois gas
4utility are reasonable and prudent and recoverable through the
5purchased gas adjustment clause and are not subject to review
6or disallowance by the Commission. Contract costs are costs
7incurred by the utility under the terms of a contract that
8incorporates the terms stated in subsection (h) of this Section
9as confirmed in writing by the Illinois Power Agency as set
10forth in subsection (h) of this Section, which confirmation
11shall be deemed conclusive, or as a consequence of or condition
12to its performance under the contract, including (i) amounts
13paid for SNG under the SNG contract and (ii) costs of
14transportation and storage services of SNG purchased from
15interstate pipelines under federally approved tariffs. The
16Illinois gas utility shall initiate a clean coal SNG facility
17rider mechanism that (A) shall be applicable to all customers
18who receive transportation service from the utility, (B) shall
19be designed to have an equal percentage impact on the
20transportation services rates of each class of the utility's
21total customers, and (C) shall accurately reflect the net
22customer savings, if any, and above market costs, if any, under
23the SNG contract. Any contract, the terms of which have been
24confirmed in writing by the Illinois Power Agency as set forth
25in subsection (h) of this Section and the performance of the
26parties under such contract cannot be grounds for challenging

 

 

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1prudence or cost recovery by the utility through the purchased
2gas adjustment clause, and in such cases, the Commission is
3directed not to consider, and has no authority to consider, any
4attempted challenges.
5    The contracts entered into by Illinois gas utilities
6pursuant to subsection (h) of this Section shall provide that
7the utility retains the right to terminate the contract without
8further obligation or liability to any party if the contract
9has been impaired as a result of any legislative,
10administrative, judicial, or other governmental action that is
11taken that eliminates all or part of the prudence protection of
12this subsection (h-10) or denies the recoverability of all or
13part of the contract costs through the purchased gas adjustment
14clause. Should any Illinois gas utility exercise its right
15under this subsection (h-10) to terminate the contract, all
16contract costs incurred prior to termination are and will be
17deemed reasonable, prudent, and recoverable as and when
18incurred and not subject to review or disallowance by the
19Commission. Any order, issued by the State requiring or
20authorizing the discontinuation of the merchant function,
21defined as the purchase and sale of natural gas by an Illinois
22gas utility for the ultimate consumer in its service territory
23shall include provisions necessary to prevent the impairment of
24the value of any contract hereunder over its full term.
25    (h-11) All costs incurred by an Illinois gas utility in
26procuring SNG from a clean coal SNG brownfield facility

 

 

09700SB3766ham001- 67 -LRB097 19347 CEL 70165 a

1pursuant to subsection (h-1) or a third-party marketer pursuant
2to subsection (h-1) are reasonable and prudent and recoverable
3through the purchased gas adjustment clause in conjunction with
4a SNG brownfield facility rider mechanism and are not subject
5to review or disallowance by the Commission; provided that if a
6utility is required by law or otherwise elects to connect the
7clean coal SNG brownfield facility to an interstate pipeline,
8then the utility shall be entitled to recover pursuant to its
9tariffs all just and reasonable costs that are prudently
10incurred. Sourcing agreement costs are costs incurred by the
11utility under the terms of a sourcing agreement that
12incorporates the terms stated in subsection (h-1) of this
13Section as approved by the Commission as set forth in
14subsection (h-4) of this Section, which approval shall be
15deemed conclusive, or as a consequence of or condition to its
16performance under the contract, including (i) amounts paid for
17SNG under the SNG contract and (ii) costs of transportation and
18storage services of SNG purchased from interstate pipelines
19under federally approved tariffs. Any sourcing agreement, the
20terms of which have been approved by the Commission as set
21forth in subsection (h-4) of this Section, and the performance
22of the parties under the sourcing agreement cannot be grounds
23for challenging prudence or cost recovery by the utility, and
24in these cases, the Commission is directed not to consider, and
25has no authority to consider, any attempted challenges.
26    (h-15) Reconciliation account. The clean coal SNG facility

 

 

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1shall establish a reconciliation account for the benefit of the
2retail customers of the utilities that have entered into
3contracts with the clean coal SNG facility pursuant to
4subsection (h). The reconciliation account shall be maintained
5and administered by an independent trustee that is mutually
6agreed upon by the owners of the clean coal SNG facility, the
7utilities, and the Commission in an interest-bearing account in
8accordance with the following:
9        (1) The clean coal SNG facility shall conduct an
10    analysis annually within 60 days after receiving the
11    necessary cost information, which shall be provided by the
12    gas utility within 6 months after the end of the preceding
13    calendar year, to determine (i) the average annual contract
14    SNG cost, which shall be calculated as the total amount
15    paid for SNG purchased from the clean coal SNG facility
16    over the preceding 12 months, plus the cost to the utility
17    of the required transportation and storage services of SNG,
18    divided by the total number of MMBtus of SNG actually
19    purchased from the clean coal SNG facility in the preceding
20    12 months under the utility contract; (ii) the average
21    annual natural gas purchase cost, which shall be calculated
22    as the total annual supply costs paid for baseload natural
23    gas (excluding any SNG) purchased by such utility over the
24    preceding 12 months plus the costs of transportation and
25    storage services of such natural gas (excluding such costs
26    for SNG), divided by the total number of MMbtus of baseload

 

 

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1    natural gas (excluding SNG) actually purchased by the
2    utility during the year; (iii) the cost differential, which
3    shall be the difference between the average annual contract
4    SNG cost and the average annual natural gas purchase cost;
5    and (iv) the revenue share target which shall be the cost
6    differential multiplied by the total amount of SNG
7    purchased over the preceding 12 months under such utility
8    contract.
9            (A) To the extent the annual average contract SNG
10        cost is less than the annual average natural gas
11        purchase cost, the utility shall credit an amount equal
12        to the revenue share target to the reconciliation
13        account. Such credit payment shall be made monthly
14        starting within 30 days after the completed analysis in
15        this subsection (h-15) and based on collections from
16        all customers via a line item charge in all customer
17        bills designed to have an equal percentage impact on
18        the transportation services of each class of
19        customers. Credit payments made pursuant to this
20        subparagraph (A) shall be deemed prudent and
21        reasonable and not subject to Commission prudence
22        review.
23            (B) To the extent the annual average contract SNG
24        cost is greater than the annual average natural gas
25        purchase cost, the reconciliation account shall be
26        used to provide a credit equal to the revenue share

 

 

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

 

 

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1    annual analysis pursuant to this subsection (h-15), the
2    facility owes any amount to retail customers and the
3    account has been depleted, then the clean coal SNG facility
4    shall be liable for any remaining amount owed to the retail
5    customers. The clean coal SNG facility shall market the
6    daily production of SNG and distribute on a monthly basis
7    5% of the amounts collected with respect to such future
8    sales to the utilities in proportion to each utility's SNG
9    contract to be used to reduce the utility's natural gas
10    costs through the purchase gas adjustment clause; such
11    payments to the utility shall continue until either 15
12    years after the conclusion of the contract or such time as
13    the sum of such payments equals the remaining amount owed
14    to the retail customers at the end of the contract,
15    whichever is earlier. If the debt to the retail customers
16    is not repaid within 15 years after the conclusion of the
17    contract, then the owner of the clean coal SNG facility
18    must sell the facility, and all proceeds from that sale
19    must be used to repay any amount owed to the retail
20    customers under this subsection (h-15).
21        The retail customers shall have first priority in
22    recovering that debt above any creditors, except the
23    secured lenders to the extent that the secured lenders have
24    any secured debt outstanding, including any parent
25    companies or affiliates of the clean coal SNG facility.
26        (3) 50% of all additional net revenue, defined as

 

 

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1    miscellaneous net revenue after cost allowance and above
2    the budgeted estimate established for revenue pursuant to
3    subsection (h), including sale of substitute natural gas
4    derived from the clean coal SNG facility above the
5    nameplate capacity of the facility and other by-products
6    produced by the facility, shall be credited to the
7    reconciliation account on an annual basis with such payment
8    made within 30 days after the end of each calendar year
9    during the term of the contract.
10        (4) The clean coal SNG facility shall each year,
11    starting in the facility's first year of commercial
12    operation, file with the Commission, in such form as the
13    Commission shall require, a report as to the reconciliation
14    account. The annual report must contain the following
15    information:
16            (A) the revenue share target amount;
17            (B) the amount credited or debited to the
18        reconciliation account during the year;
19            (C) the amount credited to the utilities to be used
20        to reduce the utilities natural gas costs though the
21        purchase gas adjustment clause;
22            (D) the total amount of reconciliation account at
23        the beginning and end of the year;
24            (E) the total amount of consumer savings to date;
25        and
26            (F) any additional information the Commission may

 

 

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

 

 

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1is in default.
2    Any person who willfully makes any false report to the
3Commission or to any member, officer, or employee thereof, any
4person who willfully in a report withholds or fails to provide
5material information to which the Commission is entitled under
6this paragraph (4) and which information is either required to
7be filed by statute, rule, regulation, order, or decision of
8the Commission or has been requested by the Commission, and any
9person who willfully aids or abets such person shall be guilty
10of a Class A misdemeanor.
11    (h-20) The General Assembly authorizes the Illinois
12Finance Authority to issue bonds to the maximum extent
13permitted to finance coal gasification facilities described in
14this Section, which constitute both "industrial projects"
15under Article 801 of the Illinois Finance Authority Act and
16"clean coal and energy projects" under Sections 825-65 through
17825-75 of the Illinois Finance Authority Act.
18    Administrative costs incurred by the Illinois Finance
19Authority in performance of this subsection (h-20) shall be
20subject to reimbursement by the clean coal SNG facility on
21terms as the Illinois Finance Authority and the clean coal SNG
22facility may agree. The utility and its customers shall have no
23obligation to reimburse the clean coal SNG facility or the
24Illinois Finance Authority for any such costs.
25    (h-25) The State of Illinois pledges that the State may not
26enact any law or take any action to (1) break or repeal the

 

 

09700SB3766ham001- 75 -LRB097 19347 CEL 70165 a

1authority for SNG purchase contracts entered into between
2public gas utilities and the clean coal SNG facility pursuant
3to subsection (h) of this Section or (2) deny public gas
4utilities their full cost recovery for contract costs, as
5defined in subsection (h-10), that are incurred under such SNG
6purchase contracts. These pledges are for the benefit of the
7parties to such SNG purchase contracts and the issuers and
8holders of bonds or other obligations issued or incurred to
9finance or refinance the clean coal SNG facility. The
10beneficiaries are authorized to include and refer to these
11pledges in any finance agreement into which they may enter in
12regard to such contracts.
13    (h-30) The State of Illinois retains and reserves all other
14rights to enact new or amendatory legislation or take any other
15action, including, but not limited to, such legislation or
16other action that would (1) directly or indirectly raise the
17costs that the clean coal SNG facility must incur; (2) directly
18or indirectly place additional restrictions, regulations, or
19requirements on the clean coal SNG facility; (3) prohibit
20sequestration in general or prohibit a specific sequestration
21method or project; or (4) increase minimum sequestration
22requirements.
23    (i) If a gas utility or an affiliate of a gas utility has
24an ownership interest in any entity that produces or sells
25synthetic natural gas, Article VII of this Act shall apply.
26(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;

 

 

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197-239, eff. 8-2-11; 97-630, eff. 12-8-11.)
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.".