Public Act 096-1364
 
SB2660 EnrolledLRB096 17322 MJR 32673 b

    AN ACT concerning utilities.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Public Utilities Act is amended by changing
Section 9-220 as follows:
 
    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)
    Sec. 9-220. Rate changes based on changes in fuel costs.
    (a) Notwithstanding the provisions of Section 9-201, the
Commission may authorize the increase or decrease of rates and
charges based upon changes in the cost of fuel used in the
generation or production of electric power, changes in the cost
of purchased power, or changes in the cost of purchased gas
through the application of fuel adjustment clauses or purchased
gas adjustment clauses. The Commission may also authorize the
increase or decrease of rates and charges based upon
expenditures or revenues resulting from the purchase or sale of
emission allowances created under the federal Clean Air Act
Amendments of 1990, through such fuel adjustment clauses, as a
cost of fuel. For the purposes of this paragraph, cost of fuel
used in the generation or production of electric power shall
include the amount of any fees paid by the utility for the
implementation and operation of a process for the
desulfurization of the flue gas when burning high sulfur coal
at any location within the State of Illinois irrespective of
the attainment status designation of such location; but shall
not include transportation costs of coal (i) except to the
extent that for contracts entered into on and after the
effective date of this amendatory Act of 1997, the cost of the
coal, including transportation costs, constitutes the lowest
cost for adequate and reliable fuel supply reasonably available
to the public utility in comparison to the cost, including
transportation costs, of other adequate and reliable sources of
fuel supply reasonably available to the public utility, or (ii)
except as otherwise provided in the next 3 sentences of this
paragraph. Such costs of fuel shall, when requested by a
utility or at the conclusion of the utility's next general
electric rate proceeding, whichever shall first occur, include
transportation costs of coal purchased under existing coal
purchase contracts. For purposes of this paragraph "existing
coal purchase contracts" means contracts for the purchase of
coal in effect on the effective date of this amendatory Act of
1991, as such contracts may thereafter be amended, but only to
the extent that any such amendment does not increase the
aggregate quantity of coal to be purchased under such contract.
Nothing herein shall authorize an electric utility to recover
through its fuel adjustment clause any amounts of
transportation costs of coal that were included in the revenue
requirement used to set base rates in its most recent general
rate proceeding. Cost shall be based upon uniformly applied
accounting principles. Annually, the Commission shall initiate
public hearings to determine whether the clauses reflect actual
costs of fuel, gas, power, or coal transportation purchased to
determine whether such purchases were prudent, and to reconcile
any amounts collected with the actual costs of fuel, power,
gas, or coal transportation prudently purchased. In each such
proceeding, the burden of proof shall be upon the utility to
establish the prudence of its cost of fuel, power, gas, or coal
transportation purchases and costs. The Commission shall issue
its final order in each such annual proceeding for an electric
utility by December 31 of the year immediately following the
year to which the proceeding pertains, provided, that the
Commission shall issue its final order with respect to such
annual proceeding for the years 1996 and earlier by December
31, 1998.
    (b) A public utility providing electric service, other than
a public utility described in subsections (e) or (f) of this
Section, may at any time during the mandatory transition period
file with the Commission proposed tariff sheets that eliminate
the public utility's fuel adjustment clause and adjust the
public utility's base rate tariffs by the amount necessary for
the base fuel component of the base rates to recover the public
utility's average fuel and power supply costs per kilowatt-hour
for the 2 most recent years for which the Commission has issued
final orders in annual proceedings pursuant to subsection (a),
where the average fuel and power supply costs per kilowatt-hour
shall be calculated as the sum of the public utility's prudent
and allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years.
Notwithstanding any contrary or inconsistent provisions in
Section 9-201 of this Act, in subsection (a) of this Section or
in any rules or regulations promulgated by the Commission
pursuant to subsection (g) of this Section, the Commission
shall review and shall by order approve, or approve as
modified, the proposed tariff sheets within 60 days after the
date of the public utility's filing. The Commission may modify
the public utility's proposed tariff sheets only to the extent
the Commission finds necessary to achieve conformance to the
requirements of this subsection (b). During the 5 years
following the date of the Commission's order, but in any event
no earlier than January 1, 2007, a public utility whose fuel
adjustment clause has been eliminated pursuant to this
subsection shall not file proposed tariff sheets seeking, or
otherwise petition the Commission for, reinstatement of a fuel
adjustment clause.
    (c) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service, other than a public utility
described in subsection (e) or (f) of this Section, may at any
time during the mandatory transition period file with the
Commission proposed tariff sheets that establish the rate per
kilowatt-hour to be applied pursuant to the public utility's
fuel adjustment clause at the average value for such rate
during the preceding 24 months, provided that such average rate
results in a credit to customers' bills, without making any
revisions to the public utility's base rate tariffs. The
proposed tariff sheets shall establish the fuel adjustment rate
for a specific time period of at least 3 years but not more
than 5 years, provided that the terms and conditions for any
reinstatement earlier than 5 years shall be set forth in the
proposed tariff sheets and subject to modification or approval
by the Commission. The Commission shall review and shall by
order approve the proposed tariff sheets if it finds that the
requirements of this subsection are met. The Commission shall
not conduct the annual hearings specified in the last 3
sentences of subsection (a) of this Section for the utility for
the period that the factor established pursuant to this
subsection is in effect.
    (d) A public utility providing electric service, or a
public utility providing gas service may file with the
Commission proposed tariff sheets that eliminate the public
utility's fuel or purchased gas adjustment clause and adjust
the public utility's base rate tariffs to provide for recovery
of power supply costs or gas supply costs that would have been
recovered through such clause; provided, that the provisions of
this subsection (d) shall not be available to a public utility
described in subsections (e) or (f) of this Section to
eliminate its fuel adjustment clause. Notwithstanding any
contrary or inconsistent provisions in Section 9-201 of this
Act, in subsection (a) of this Section, or in any rules or
regulations promulgated by the Commission pursuant to
subsection (g) of this Section, the Commission shall review and
shall by order approve, or approve as modified in the
Commission's order, the proposed tariff sheets within 240 days
after the date of the public utility's filing. The Commission's
order shall approve rates and charges that the Commission,
based on information in the public utility's filing or on the
record if a hearing is held by the Commission, finds will
recover the reasonable, prudent and necessary jurisdictional
power supply costs or gas supply costs incurred or to be
incurred by the public utility during a 12 month period found
by the Commission to be appropriate for these purposes,
provided, that such period shall be either (i) a 12 month
historical period occurring during the 15 months ending on the
date of the public utility's filing, or (ii) a 12 month future
period ending no later than 15 months following the date of the
public utility's filing. The public utility shall include with
its tariff filing information showing both (1) its actual
jurisdictional power supply costs or gas supply costs for a 12
month historical period conforming to (i) above and (2) its
projected jurisdictional power supply costs or gas supply costs
for a future 12 month period conforming to (ii) above. If the
Commission's order requires modifications in the tariff sheets
filed by the public utility, the public utility shall have 7
days following the date of the order to notify the Commission
whether the public utility will implement the modified tariffs
or elect to continue its fuel or purchased gas adjustment
clause in force as though no order had been entered. The
Commission's order shall provide for any reconciliation of
power supply costs or gas supply costs, as the case may be, and
associated revenues through the date that the public utility's
fuel or purchased gas adjustment clause is eliminated. During
the 5 years following the date of the Commission's order, a
public utility whose fuel or purchased gas adjustment clause
has been eliminated pursuant to this subsection shall not file
proposed tariff sheets seeking, or otherwise petition the
Commission for, reinstatement or adoption of a fuel or
purchased gas adjustment clause. Nothing in this subsection (d)
shall be construed as limiting the Commission's authority to
eliminate a public utility's fuel adjustment clause or
purchased gas adjustment clause in accordance with any other
applicable provisions of this Act.
    (e) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules promulgated by the Commission
pursuant to subsection (g) of this Section, a public utility
providing electric service to more than 1,000,000 customers in
this State may, within the first 6 months after the effective
date of this amendatory Act of 1997, file with the Commission
proposed tariff sheets that eliminate, effective January 1,
1997, the public utility's fuel adjustment clause without
adjusting its base rates, and such tariff sheets shall be
effective upon filing. To the extent the application of the
fuel adjustment clause had resulted in net charges to customers
after January 1, 1997, the utility shall also file a tariff
sheet that provides for a refund stated on a per kilowatt-hour
basis of such charges over a period not to exceed 6 months;
provided however, that such refund shall not include the
proportional amounts of taxes paid under the Use Tax Act,
Service Use Tax Act, Service Occupation Tax Act, and Retailers'
Occupation Tax Act on fuel used in generation. The Commission
shall issue an order within 45 days after the date of the
public utility's filing approving or approving as modified such
tariff sheet. If the fuel adjustment clause is eliminated
pursuant to this subsection, the Commission shall not conduct
the annual hearings specified in the last 3 sentences of
subsection (a) of this Section for the utility for any period
after December 31, 1996 and prior to any reinstatement of such
clause. A public utility whose fuel adjustment clause has been
eliminated pursuant to this subsection shall not file a
proposed tariff sheet seeking, or otherwise petition the
Commission for, reinstatement of the fuel adjustment clause
prior to January 1, 2007.
    (f) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service to more than 500,000
customers but fewer than 1,000,000 customers in this State may,
within the first 6 months after the effective date of this
amendatory Act of 1997, file with the Commission proposed
tariff sheets that eliminate, effective January 1, 1997, the
public utility's fuel adjustment clause and adjust its base
rates by the amount necessary for the base fuel component of
the base rates to recover 91% of the public utility's average
fuel and power supply costs for the 2 most recent years for
which the Commission, as of January 1, 1997, has issued final
orders in annual proceedings pursuant to subsection (a), where
the average fuel and power supply costs per kilowatt-hour shall
be calculated as the sum of the public utility's prudent and
allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years,
provided, that such tariff sheets shall be effective upon
filing. To the extent the application of the fuel adjustment
clause had resulted in net charges to customers after January
1, 1997, the utility shall also file a tariff sheet that
provides for a refund stated on a per kilowatt-hour basis of
such charges over a period not to exceed 6 months. Provided
however, that such refund shall not include the proportional
amounts of taxes paid under the Use Tax Act, Service Use Tax
Act, Service Occupation Tax Act, and Retailers' Occupation Tax
Act on fuel used in generation. The Commission shall issue an
order within 45 days after the date of the public utility's
filing approving or approving as modified such tariff sheet. If
the fuel adjustment clause is eliminated pursuant to this
subsection, the Commission shall not conduct the annual
hearings specified in the last 3 sentences of subsection (a) of
this Section for the utility for any period after December 31,
1996 and prior to any reinstatement of such clause. A public
utility whose fuel adjustment clause has been eliminated
pursuant to this subsection shall not file a proposed tariff
sheet seeking, or otherwise petition the Commission for,
reinstatement of the fuel adjustment clause prior to January 1,
2007.
    (g) The Commission shall have authority to promulgate rules
and regulations to carry out the provisions of this Section.
    (h) Any Illinois gas utility may enter into a contract on
or before March 31, 2011 for up to 10 20 years of supply with
any company for the purchase of substitute natural gas (SNG)
produced from coal through the gasification process if the
company has commenced construction of a coal gasification
facility by July 1, 2012 in Jefferson County and commencement
of construction shall mean that material physical site work has
occurred, such as site clearing and excavation, water runoff
prevention, water retention reservoir preparation, or
foundation development 2010. The contract shall contain the
following provisions cost for the SNG is reasonable and prudent
and recoverable through the purchased gas adjustment clause for
years one through 10 of the contract if: (i) the only coal to
be used in the gasification process has high volatile
bituminous rank and greater than 1.7 pounds of sulfur per
million Btu content; (ii) at the time the contract term
commences, the price per million Btu may does not exceed $7.95
in 2008 dollars, adjusted annually based on the change in the
Annual Consumer Price Index for All Urban Consumers for the
Midwest Region as published in April by the United States
Department of Labor, Bureau of Labor Statistics (or a suitable
Consumer Price Index calculation if this Consumer Price Index
is not available) for the previous calendar year; provided that
the price per million Btu shall not exceed $9.95 at any time
during the contract; (iii) the utility's aggregate long-term
supply contracts for the purchase of SNG does not exceed 25% of
the annual system supply requirements of the utility as of 2008
at the time the contract is entered into and the quantity of
SNG supplied to a utility may not exceed 16 million MMBtus; and
(iv) contract costs pursuant to subsection (h-10) of this
Section shall not include any lobbying expenses, charitable
contributions, advertising, organizational memberships, or
marketing expenses by any one producer may not exceed 20
billion cubic feet per year; and (iv) the contract is entered
into within 120 days after the effective date of this
amendatory Act of the 95th General Assembly and terminates no
more than 20 years after the commencement of the commercial
production of SNG at the facility. Contracts greater than 10
years shall provide that if, at any time during supply years 11
through 20 of the contract, the Commission determines that the
cost for the synthetic natural gas purchased under the contract
during supply years 11 through 20 is not reasonable and
prudent, then the company shall reimburse the utility for the
difference between the cost deemed reasonable and prudent by
the Commission and the cost imposed under the contract.
    (h-5) The Attorney General, on behalf of the people of the
State of Illinois, may specifically enforce the requirements of
this subsection (h-5). All such contracts, regardless of
duration, shall require the owner of any facility supplying SNG
under the contract to provide documentation to the Commission
each year, starting in the facility's first year of commercial
operation, accurately reporting the quantity of carbon dioxide
emissions from the facility that have been captured and
sequestered and reporting any quantities of carbon dioxide
released from the site or sites at which carbon dioxide
emissions were sequestered in prior years, based on continuous
monitoring of those sites. If, in any year, the owner of the
facility fails to demonstrate that the SNG facility captured
and sequestered at least 90% of the total carbon dioxide
emissions that the facility would otherwise emit or that
sequestration of emissions from prior years has failed,
resulting in the release of carbon dioxide into the atmosphere,
then the owner of the facility must offset excess emissions.
Any such carbon dioxide offsets must be permanent, additional,
verifiable, real, located within the State of Illinois, and
legally and practicably enforceable; provided that the owner of
the facility shall not be obligated to acquire carbon dioxide
emission offsets to the extent that the cost of acquiring . The
costs of such offsets would shall not exceed $40 million in any
given year. No costs of any purchases of carbon offsets may be
recovered from a utility or its customers. All carbon offsets
purchased for this purpose must be permanently retired. In
addition, carbon dioxide emission credits equivalent to 50% of
the amount of credits associated with the required
sequestration of carbon dioxide from the facility must be
permanently retired. Compliance with the sequestration
requirements and the offset purchase requirements specified in
this subsection (h-5) (h) shall be assessed annually by an
independent expert retained by the owner of the SNG facility,
with the advance written approval of the Attorney General. A An
SNG facility operating pursuant to this subsection (h-5) (h)
shall not forfeit its designation as a clean coal SNG facility
if the facility fails to fully comply with the applicable
carbon sequestration requirements in any given year, provided
the requisite offsets are purchased. However, the Attorney
General, on behalf of the People of the State of Illinois, may
specifically enforce the facility's sequestration
requirements.
    (h-10) Contract costs for SNG incurred by an Illinois gas
utility are reasonable and prudent and recoverable through the
purchased gas adjustment clause and are not subject to review
or disallowance by the Commission. Contract costs are costs
incurred by the utility under the terms of a contract that
incorporates the terms stated in subsection (h) of this Section
as confirmed in writing by the Illinois Power Agency as set
forth in subsection (h-20) of this Section, which confirmation
shall be deemed conclusive, or as a consequence of or condition
to its performance under the contract, including (i) amounts
paid for SNG under the SNG contract and (ii) costs of
transportation and storage services of SNG purchased from
interstate pipelines under federally approved tariffs. Any
contract, the terms of which have been confirmed in writing by
the Illinois Power Agency as set forth in subsection (h-20) of
this Section and the performance of the parties under such
contract cannot be grounds for challenging prudence or cost
recovery by the utility through the purchased gas adjustment
clause, and in such cases, the Commission is directed not to
consider, and has no authority to consider, any attempted
challenges.
    The contracts entered into by Illinois gas utilities shall
provide that the utility retains the right to terminate the
contract without further obligation or liability to any party
if the contract has been impaired as a result of any
legislative, administrative, judicial, or other governmental
action that is taken that eliminates all or part of the
prudence protection of this subsection (h-10) or denies the
recoverability of all or part of the contract costs through the
purchased gas adjustment clause. Should any Illinois gas
utility exercise its right under this subsection (h-10) to
terminate the contract, all contract costs incurred prior to
termination are and will be deemed reasonable, prudent, and
recoverable as and when incurred and not subject to review or
disallowance by the Commission. Any order, issued by the State
requiring or authorizing the discontinuation of the merchant
function, defined as the purchase and sale of natural gas by an
Illinois gas utility for the ultimate consumer in its service
territory shall include provisions necessary to prevent the
impairment of the value of any contract hereunder over its full
term.
    (h-15) With respect to each contract entered into by the
company with an Illinois utility in accordance with the terms
stated in subsection (h) of this Section, within 60 days
following the completion of purchases of SNG, the Illinois
Power Agency shall conduct an analysis to determine (i) the
average contract SNG cost, which shall be calculated as the
total amount paid to a company for SNG over the contract term,
plus the cost to the utility of the required transportation and
storage services of SNG, divided by the total number of MMBtus
of SNG actually purchased under the utility contract; (ii) the
average natural gas purchase cost, which shall be calculated as
the total annual supply costs paid for natural gas (excluding
SNG) purchased by such utility over the contract term, plus the
costs of transportation and storage services of such natural
gas (excluding such costs for SNG), divided by the total number
of MMBtus of natural gas (excluding SNG) actually purchased by
the utility during the contract term; (iii) the cost
differential, which shall be the difference between the average
contract SNG cost and the average natural gas purchase cost;
and (iv) the revenue share target, which shall be the cost
differential multiplied by the total amount of SNG purchased
under such utility contract. If the average contract SNG cost
is equal to or less than the average natural gas purchase cost,
then the company shall have no further obligation to the
utility. If the average contract SNG cost for such SNG contract
is greater than the average natural gas purchase cost for such
utility, then the company shall market the daily production of
SNG and distribute on a monthly basis 5% of amounts collected
with respect to such future sales to the utilities in
proportion to each utility's SNG purchases from the company
during the term of the SNG contract to be used to reduce the
utility's natural gas costs through the purchased gas
adjustment clause; such payments to the utility shall continue
until such time as the sum of such payments equals the revenue
share target of that utility. The company or utilities shall
have no obligation to repay the revenue share target except as
provided for in this subsection (h-15).
    (h-20) The General Assembly authorizes the Illinois
Finance Authority to issue bonds to the maximum extent
permitted to finance coal gasification facilities described in
this Section, which constitute both "industrial projects"
under Article 801 of the Illinois Finance Authority Act and
"clean coal and energy projects" under Sections 825-65 through
825-75 of the Illinois Finance Authority Act. The General
Assembly further authorizes the Illinois Power Agency to become
party to agreements and take such actions as necessary to
enable the Illinois Power Agency or its designate to (i) review
and confirm in writing that the terms stated in subsection (h)
of this Section are incorporated in the SNG contract, and (ii)
conduct an analysis pursuant to subsection (h-15) of this
Section. Administrative costs incurred by the Illinois Finance
Authority and Illinois Power Agency in performance of this
subsection (h-20) shall be subject to reimbursement by the
company on terms as the Illinois Finance Authority, the
Illinois Power Agency, and the company may agree. The utility
and its customers shall have no obligation to reimburse the
company, the Illinois Finance Authority, or the Illinois Power
Agency for any such costs.
    (i) If a gas utility or an affiliate of a gas utility has
an ownership interest in any entity that produces or sells
synthetic natural gas, Article VII of this Act shall apply.
(Source: P.A. 94-63, eff. 6-21-05; 95-1027, eff. 6-1-09.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.