State of Illinois
91st General Assembly

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 1        AN ACT to amend the  Public  Utilities  Act  by  changing
 2    Section 8-403.1.

 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:

 5        Section 5.   The  Public  Utilities  Act  is  amended  by
 6    changing Section 8-403.1 as follows:

 7        (220 ILCS 5/8-403.1) (from Ch. 111 2/3, par. 8-403.1)
 8        Sec.  8-403.1. Electricity purchased from qualified solid
 9    waste energy facility; tax credit; distributions for economic
10    development.
11        (a)  It is hereby declared to be the policy of this State
12    to encourage the development of alternate  energy  production
13    facilities  in  order to conserve our energy resources and to
14    provide for their most efficient use.
15        (b)  For the purpose of this Section and Section 9-215.1,
16    "qualified solid waste  energy  facility"  means  a  facility
17    determined  by the Illinois Commerce Commission to qualify as
18    such under the Local Solid Waste Disposal Act, to use methane
19    gas generated from landfills as  its  primary  fuel,  and  to
20    possess  characteristics that would enable it to qualify as a
21    cogeneration or small power production facility under federal
22    law.  The Commission may not make a determination under  this
23    Section after July 1, 1999.
24        (c)  In  furtherance  of  the  policy  declared  in  this
25    Section,  the  Illinois  Commerce  Commission  shall  require
26    electric  utilities  to  enter  into  long-term  contracts to
27    purchase  electricity  from  qualified  solid  waste   energy
28    facilities  located  in  the electric utility's service area,
29    for a period beginning on the date that the  facility  begins
30    generating electricity and having a duration of not less than
31    10    years   in   the   case   of   facilities   fueled   by
                            -2-                LRB9101402JSpc
 1    landfill-generated methane,  or  20  years  in  the  case  of
 2    facilities  fueled by methane generated from a landfill owned
 3    by a forest preserve district.  The purchase  rate  contained
 4    in  such  contracts  shall be equal to the average amount per
 5    kilowatt-hour paid from time to time by the unit or units  of
 6    local   government   in   which  the  electricity  generating
 7    facilities are located, excluding  amounts  paid  for  street
 8    lighting and pumping service.
 9        (d)  Whenever  a  public  utility is required to purchase
10    electricity pursuant to subsection (c)  above,  it  shall  be
11    entitled to credits in respect of its obligations to remit to
12    the State taxes it has collected under the Electricity Excise
13    Tax  Law  equal to the amounts, if any, by which payments for
14    such electricity exceed (i) the then current  rate  at  which
15    the  utility must purchase the output of qualified facilities
16    pursuant to the federal Public  Utility  Regulatory  Policies
17    Act  of  1978, less (ii) any costs, expenses, losses, damages
18    or other amounts incurred by the utility,  or  for  which  it
19    becomes  liable,  arising  out  of its failure to obtain such
20    electricity from such other sources.  The amount of any  such
21    credit  shall,  in  the  first instance, be determined by the
22    utility, which shall make a monthly report of such credits to
23    the Illinois Commerce Commission  and,  on  its  monthly  tax
24    return,  to  the  Illinois  Department  of  Revenue. Under no
25    circumstances  shall  a  utility  be  required  to   purchase
26    electricity  from  a qualified solid waste energy facility at
27    the rate prescribed in subsection (c) of this Section if such
28    purchase would result in estimated tax credits  that  exceed,
29    on  a  monthly  basis,  the utility's estimated obligation to
30    remit  to  the  State  taxes  it  has  collected  under   the
31    Electricity  Excise  Tax  Law.  The  owner  or operator shall
32    negotiate facility operating conditions with  the  purchasing
33    utility  in  accordance  with  that utility's posted standard
34    terms and  conditions  for  small  power  producers.  If  the
                            -3-                LRB9101402JSpc
 1    Department of Revenue disputes the amount of any such credit,
 2    such  dispute  shall  be  decided  by  the  Illinois Commerce
 3    Commission.  Whenever a qualified solid waste energy facility
 4    has paid or otherwise satisfied in full the capital costs  or
 5    indebtedness  incurred  in  developing  and  implementing the
 6    qualified facility, the qualified  facility  shall  reimburse
 7    the  Public  Utility Fund and the General Revenue Fund in the
 8    State treasury for the actual reduction in payments to  those
 9    Funds  caused  by  this  subsection  (d)  in  a  manner to be
10    determined by the Illinois Commerce Commission and  based  on
11    the manner in which revenues for those Funds were reduced.
12        (e)  The  Illinois  Commerce Commission shall not require
13    an  electric  utility  to  purchase  electricity   from   any
14    qualified  solid  waste  energy  facility  which  is owned or
15    operated by an  entity  that  is  primarily  engaged  in  the
16    business  of producing or selling electricity, gas, or useful
17    thermal energy from a source other than one or more qualified
18    solid waste energy facilities.
19        (f)  This Section does not require an electric utility to
20    construct additional facilities unless those  facilities  are
21    paid  for  by the owner or operator of the affected qualified
22    solid waste energy facility.
23        (g)  The Illinois Commerce Commission shall require that:
24    (1) electric utilities use the electricity purchased  from  a
25    qualified solid waste energy facility to displace electricity
26    generated  from  nuclear  power  or  coal mined and purchased
27    outside the  boundaries  of  the  State  of  Illinois  before
28    displacing   electricity   generated   from  coal  mined  and
29    purchased  within  the  State  of  Illinois,  to  the  extent
30    possible, and (2) electric utilities report annually  to  the
31    Commission on the extent of such displacements.
32        (h)  Nothing  in  this  Section  is  intended to cause an
33    electric utility that is required to purchase power hereunder
34    to incur any economic loss as a result of its purchase.   All
                            -4-                LRB9101402JSpc
 1    amounts  paid  for  power  which  a  utility  is  required to
 2    purchase pursuant to subparagraph (c) shall be deemed  to  be
 3    costs  prudently  incurred  for purposes of computing charges
 4    under rates authorized by Section 9-220  of  this  Act.   Tax
 5    credits  provided  for  herein  shall be reflected in charges
 6    made pursuant to rates  so  authorized  to  the  extent  such
 7    credits are based upon a cost which is also reflected in such
 8    charges.
 9        (i)  Beginning in February 1999 and through January 2009,
10    each   qualified  solid  waste  energy  facility  that  sells
11    electricity to an  electric  utility  at  the  purchase  rate
12    described  in  subsection  (c)  shall  file  with  the  State
13    Treasurer  on  or  before  the  15th  of  each  month a form,
14    prescribed by the State Treasurer, that states the number  of
15    kilowatt  hours of electricity for which payment was received
16    at that purchase rate from  electric  utilities  in  Illinois
17    during  the  immediately  preceding month. This form shall be
18    accompanied by a  payment  from  the  qualified  solid  waste
19    energy  facility  in  an amount equal to six-tenths of a mill
20    ($0.0006) per kilowatt hour  of  electricity  stated  on  the
21    form.  Payments  received  by  the  State  Treasurer shall be
22    deposited into the Municipal  Economic  Development  Fund,  a
23    trust  fund  created  outside  the  State treasury. The State
24    Treasurer may invest the moneys in the Fund in any investment
25    authorized by the Public Funds Investment Act, and investment
26    income shall be deposited into and become part of  the  Fund.
27    Moneys  in  the  Fund shall be used by the State Treasurer as
28    provided in subsection (j).  The obligation  of  a  qualified
29    solid  waste  energy  facility  to  make  payments  into  the
30    Municipal  Economic  Development  Fund  shall  terminate upon
31    either:  (1)  expiration  or  termination  of  a   facility's
32    contract  to  sell  electricity to an electric utility at the
33    purchase rate described in subsection (c); or (2) entry of an
34    enforceable, final, and non-appealable order by  a  court  of
                            -5-                LRB9101402JSpc
 1    competent  jurisdiction  that  Public  Act 89-448 is invalid.
 2    Payments by a qualified solid waste energy facility into  the
 3    Municipal  Economic  Development  Fund  do  not  relieve  the
 4    qualified  solid  waste  energy facility of its obligation to
 5    reimburse the Public Utility Fund  and  the  General  Revenue
 6    Fund for the actual reduction in payments to those Funds as a
 7    result  of  credits  received  by  electric  utilities  under
 8    subsection (d).
 9        (j)  The  State  Treasurer,  without  appropriation, must
10    make distributions immediately after January  15,  April  15,
11    July 15, and October 15 of each year, up to maximum aggregate
12    distributions of $500,000 for the distributions made in the 4
13    quarters  beginning  with  the  April distribution and ending
14    with the January distribution, from  the  Municipal  Economic
15    Development  Fund to each city, village, or incorporated town
16    that has within its boundaries an incinerator that: (1)  uses
17    municipal  waste as its primary fuel to generate electricity;
18    (2) was determined by the  Illinois  Commerce  Commission  to
19    qualify  as  a qualified solid waste energy facility prior to
20    the effective date of Public Act 89-448;  and  (3)  commenced
21    operation  prior  to January 1, 1998.  Total distributions in
22    the  aggregate  to  all  qualified  cities,   villages,   and
23    incorporated towns in the 4 quarters beginning with the April
24    distribution  and  ending with the January distribution shall
25    not exceed $500,000.  The amount of each  distribution  shall
26    be  determined  pro rata based on the population of the city,
27    village,  or  incorporated  town  compared   to   the   total
28    population  of  all  cities, villages, and incorporated towns
29    eligible to receive a distribution.   Distributions  received
30    by  a  city,  village, or incorporated town must be held in a
31    separate account and may be used only to promote and  enhance
32    industrial, commercial, residential, service, transportation,
33    and   recreational   activities  and  facilities  within  its
34    boundaries, thereby enhancing the  employment  opportunities,
                            -6-                LRB9101402JSpc
 1    public  health  and general welfare, and economic development
 2    within the community, including  administrative  expenditures
 3    exclusively   to  further  these  activities.   These  funds,
 4    however,  shall  not  be  used  by  the  city,  village,   or
 5    incorporated  town,  directly  or  indirectly,  to  purchase,
 6    lease,  operate, or in any way subsidize the operation of any
 7    incinerator, and these funds shall not be paid,  directly  or
 8    indirectly, by the city, village, or incorporated town to the
 9    owner,  operator,  lessee,  shareholder, or bondholder of any
10    incinerator. Moreover, these funds shall not be used  to  pay
11    attorneys  fees in any litigation relating to the validity of
12    Public Act 89-448.  Nothing in this Section prevents a  city,
13    village,  or  incorporated  town  from  using other corporate
14    funds for any  legitimate  purpose.   For  purposes  of  this
15    subsection,  the  term  "municipal  waste"  has  the  meaning
16    ascribed   to   it  in  Section  3.21  of  the  Environmental
17    Protection Act.
18        (k)  If maximum aggregate distributions of $500,000 under
19    subsection (j) have been made after the January  distribution
20    from  the  Municipal  Economic  Development  Fund,  then  the
21    balance  in the Fund shall be refunded to the qualified solid
22    waste  energy  facilities  that  made  payments   that   were
23    deposited  into the Fund during the previous 12-month period.
24    The refunds shall  be  prorated  based  upon  the  facility's
25    payments  in  relation  to  total  payments for that 12-month
26    period.
27        (l)  Beginning  January  1,  2000,  and  each  January  1
28    thereafter, each city, village,  or  incorporated  town  that
29    received    distributions   from   the   Municipal   Economic
30    Development  Fund,   continued   to   hold   any   of   those
31    distributions,  or made expenditures from those distributions
32    during the immediately  preceding  year  shall  submit  to  a
33    financial   and   compliance   and  program  audit  of  those
34    distributions performed by the Auditor General at no cost  to
                            -7-                LRB9101402JSpc
 1    the  city,  village,  or  incorporated town that received the
 2    distributions.  The audit should be completed by June  30  or
 3    as soon thereafter as possible.  The audit shall be submitted
 4    to  the  State  Treasurer  and  those  officers enumerated in
 5    Section 3-14 of the Illinois State  Auditing  Act.    If  the
 6    Auditor  General  finds that distributions have been expended
 7    in violation of this Section, the Auditor General shall refer
 8    the matter to the Attorney General.  The Attorney General may
 9    recover, in a  civil  action,  3  times  the  amount  of  any
10    distributions   illegally  expended.  For  purposes  of  this
11    subsection, the terms "financial audit," "compliance  audit",
12    and  "program  audit"  have  the meanings ascribed to them in
13    Sections 1-13 and 1-15 of the Illinois State Auditing Act.
14    (Source: P.A. 89-448, eff. 3-14-96; 90-813, eff. 1-29-99.)

15        Section 99.  Effective date.  This Act takes effect  upon
16    becoming law.

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