HB 1865 — REGULATION-TECH

HB1865 EngrossedEnrolled LRB097 09633 ASK 49770 b AN ACT concerning regulation.

(4) To protect against this threat to economic well-being, health, and safety it is necessary to improve HB1865 EngrossedEnrolled - 2 - LRB097 09633 ASK 49770 b the process of procuring electricity to serve Illinois residents, to promote investment in energy efficiency and demand-response measures, and to support development of clean coal technologies and renewable resources.

(A) Develop electricity procurement plans to ensure HB1865 EngrossedEnrolled - 3 - LRB097 09633 ASK 49770 b adequate, reliable, affordable, efficient, and environmentally sustainable electric service at the lowest total cost over time, taking into account any benefits of price stability, for electric utilities that on December 31, 2005 provided electric service to at least 100,000 customers in Illinois and for small multi-jurisdictional electric utilities that (i) on December 31, 2005 served less than 100,000 customers in Illinois and (ii) request a procurement plan for their Illinois jurisdictional load.

6-1-09.) (20 ILCS 3855/1-20) HB1865 EngrossedEnrolled - 4 - LRB097 09633 ASK 49770 b Sec.

municipal electric HB1865 EngrossedEnrolled - 5 - LRB097 09633 ASK 49770 b systems, governmental aggregators, or rural electric cooperatives in Illinois.

(6) To acquire real or personal property, whether tangible or intangible, including without limitation property rights, interests in property, franchises, obligations, contracts, and debt and equity securities, HB1865 EngrossedEnrolled - 6 - LRB097 09633 ASK 49770 b and to do so by the exercise of the power of eminent domain in accordance with Section 1-21;

HB1865 EngrossedEnrolled - 7 - LRB097 09633 ASK 49770 b (10) To lend money, invest and reinvest its funds in accordance with the Public Funds Investment Act, and take and hold real and personal property as security for the payment of funds loaned or invested.

(14) To negotiate and enter into agreements with trustees or receivers appointed by United States bankruptcy courts or federal district courts or in other proceedings involving adjustment of debts and authorize proceedings involving adjustment of debts and authorize legal counsel for the Agency to appear in any such HB1865 EngrossedEnrolled - 8 - LRB097 09633 ASK 49770 b proceedings.

(22) To engage in any activity or operation that is HB1865 EngrossedEnrolled - 9 - LRB097 09633 ASK 49770 b incidental to and in furtherance of efficient operation to accomplish the Agency's purposes.

(a) The Planning and Procurement Bureau shall each HB1865 EngrossedEnrolled - 10 - LRB097 09633 ASK 49770 b year, beginning in 2008, develop procurement plans and conduct competitive procurement processes in accordance with the requirements of Section 16-111.5 of the Public Utilities Act for the eligible retail customers of electric utilities that on December 31, 2005 provided electric service to at least 100,000 customers in Illinois.

In order to qualify an HB1865 EngrossedEnrolled - 11 - LRB097 09633 ASK 49770 b expert or expert consulting firm must have:

HB1865 EngrossedEnrolled - 12 - LRB097 09633 ASK 49770 b (A) direct previous experience administering a large-scale competitive procurement process;

The Agency shall also provide each qualified expert's or expert consulting firm's HB1865 EngrossedEnrolled - 13 - LRB097 09633 ASK 49770 b response to the request for qualifications.

HB1865 EngrossedEnrolled - 14 - LRB097 09633 ASK 49770 b (4) The Agency shall issue requests for proposals to the qualified experts or expert consulting firms to develop a procurement plan for the affected utilities and to serve as procurement administrator.

(b) The experts or expert consulting firms retained by the Agency shall, as appropriate, prepare procurement plans, and conduct a competitive procurement process as prescribed in Section 16-111.5 of the Public Utilities Act, to ensure adequate, reliable, affordable, efficient, and environmentally sustainable electric service at the lowest total cost over time, taking into account any benefits of HB1865 EngrossedEnrolled - 15 - LRB097 09633 ASK 49770 b price stability, for eligible retail customers of electric utilities that on December 31, 2005 provided electric service to at least 100,000 customers in the State of Illinois, and for eligible Illinois retail customers of small multi-jurisdictional electric utilities that (i) on December 31, 2005 served less than 100,000 customers in Illinois and (ii) request a procurement plan for their Illinois jurisdictional load.

To the extent that it is available, at least 75% of the renewable energy resources used to meet these standards shall come from wind generation and, beginning on June 1, 2011, at least the following HB1865 EngrossedEnrolled - 16 - LRB097 09633 ASK 49770 b percentages of the renewable energy resources used to meet these standards shall come from photovoltaics on the following schedule:

For purposes of this subsection (c), the total amount paid for electric service includes without limitation HB1865 EngrossedEnrolled - 17 - LRB097 09633 ASK 49770 b amounts paid for supply, transmission, distribution, surcharges, and add-on taxes.

(D) in 2011, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2010 or 2% HB1865 EngrossedEnrolled - 18 - LRB097 09633 ASK 49770 b of the amount paid per kilowatthour by those customers during the year ending May 31, 2007;

(3) Through June 1, 2011, renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in paragraph (1) of this subsection (c) only if they are generated from facilities located in the State, provided that HB1865 EngrossedEnrolled - 19 - LRB097 09633 ASK 49770 b cost-effective renewable energy resources are available from those facilities.

(5) Beginning with the year commencing June 1, 2010, an electric utility subject to this subsection (c) shall apply the lesser of the maximum alternative compliance payment rate or the most recent estimated alternative compliance payment rate for its service territory for the corresponding compliance period, established pursuant to subsection (d) of Section HB1865 EngrossedEnrolled - 20 - LRB097 09633 ASK 49770 b 16-115D of the Public Utilities Act to its retail customers that take service pursuant to the electric utility's hourly pricing tariff or tariffs.

Each utility shall enter into one or more sourcing agreements with the initial clean coal facility, as provided in paragraph (3) of this subsection (d), covering electricity generated by the initial clean coal facility representing at least 5% of each utility's HB1865 EngrossedEnrolled - 21 - LRB097 09633 ASK 49770 b total supply to serve the load of eligible retail customers in 2015 and each year thereafter, as described in paragraph (3) of this subsection (d), subject to the limits specified in paragraph (2) of this subsection (d).

(B) Utilities shall maintain adequate records documenting the purchases under the sourcing agreement to comply with this subsection (d) and shall file an accounting with the load forecast that must be filed HB1865 EngrossedEnrolled - 22 - LRB097 09633 ASK 49770 b with the Agency by July 15 of each year, in accordance with subsection (d) of Section 16-111.5 of the Public Utilities Act.

Notwithstanding the requirements of this subsection (d), the total amount paid under sourcing agreements with clean coal facilities pursuant to the procurement plan for any given year shall be reduced by an amount necessary to limit the annual estimated average net increase due to the HB1865 EngrossedEnrolled - 23 - LRB097 09633 ASK 49770 b costs of these resources included in the amounts paid by eligible retail customers in connection with electric service to:

and (E) thereafter, the total amount paid under sourcing agreements with clean coal facilities pursuant to the procurement plan for any single year shall be reduced by an amount necessary to limit the estimated average net increase due to the HB1865 EngrossedEnrolled - 24 - LRB097 09633 ASK 49770 b cost of these resources included in the amounts paid by eligible retail customers in connection with electric service to no more than the greater of (i) 2.015% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009 or (ii) the incremental amount per kilowatthour paid for these resources in 2013.

In order to promote development of clean coal facilities in Illinois, each electric utility subject to this Section shall execute a sourcing agreement to source electricity from a proposed clean coal facility in Illinois (the "initial clean coal facility") that will have a nameplate capacity of at least 500 MW when commercial operation commences, that has a final Clean Air Act permit on the effective date of this amendatory Act of the 95th General Assembly, and that will HB1865 EngrossedEnrolled - 25 - LRB097 09633 ASK 49770 b meet the definition of clean coal facility in Section 1-10 of this Act when commercial operation commences.

and HB1865 EngrossedEnrolled - 26 - LRB097 09633 ASK 49770 b (ii) provide that all miscellaneous net revenue, including but not limited to net revenue from the sale of emission allowances, if any, substitute natural gas, if any, grants or other support provided by the State of Illinois or the United States Government, firm transmission rights, if any, by-products produced by the facility, energy or capacity derived from the facility and not covered by a sourcing agreement pursuant to paragraph (3) of this subsection (d) or item (5) of subsection (d) of Section 16-115 of the Public Utilities Act, whether generated from the synthesis gas derived from coal, from SNG, or from natural gas, shall be credited against the revenue requirement for this initial clean coal facility;

(iii) require the utility party to such sourcing agreement to buy from the initial clean coal facility in each hour an amount of energy HB1865 EngrossedEnrolled - 27 - LRB097 09633 ASK 49770 b equal to all clean coal energy made available from the initial clean coal facility during such hour times a fraction, the numerator of which is such utility's retail market sales of electricity (expressed in kilowatthours sold) in the State during the prior calendar month and the denominator of which is the total retail market sales of electricity (expressed in kilowatthours sold) in the State by utilities during such prior month and the sales of electricity (expressed in kilowatthours sold) in the State by alternative retail electric suppliers during such prior month that are subject to the requirements of this subsection (d) and paragraph (5) of subsection (d) of Section 16-115 of the Public Utilities Act, provided that the amount purchased by the utility in any year will be limited by paragraph (2) of this subsection (d);

(i) require the utility party to such sourcing agreement to contract with the initial clean coal facility in each hour with respect to an amount of HB1865 EngrossedEnrolled - 28 - LRB097 09633 ASK 49770 b energy equal to all clean coal energy made available from the initial clean coal facility during such hour times a fraction, the numerator of which is such utility's retail market sales of electricity (expressed in kilowatthours sold) in the utility's service territory in the State during the prior calendar month and the denominator of which is the total retail market sales of electricity (expressed in kilowatthours sold) in the State by utilities during such prior month and the sales of electricity (expressed in kilowatthours sold) in the State by alternative retail electric suppliers during such prior month that are subject to the requirements of this subsection (d) and paragraph (5) of subsection (d) of Section 16-115 of the Public Utilities Act, provided that the amount paid by the utility in any year will be limited by paragraph (2) of this subsection (d);

(ii) provide that the utility's payment obligation in respect of the quantity of electricity determined pursuant to the preceding clause (i) shall be limited to an amount equal to (1) the difference between the contract price determined pursuant to subparagraph (A) of paragraph (3) of this subsection (d) and the HB1865 EngrossedEnrolled - 29 - LRB097 09633 ASK 49770 b day-ahead price for electricity delivered to the regional transmission organization market of the utility that is party to such sourcing agreement (or any successor delivery point at which such utility's supply obligations are financially settled on an hourly basis) (the "reference price") on the day preceding the day on which the electricity is delivered to the initial clean coal facility busbar, multiplied by (2) the quantity of electricity determined pursuant to the preceding clause (i);

HB1865 EngrossedEnrolled - 30 - LRB097 09633 ASK 49770 b (iii) provide that all costs associated with the initial clean coal facility will be periodically reported to the Federal Energy Regulatory Commission and to purchasers in accordance with applicable laws governing cost-based wholesale power contracts;

If, in any year after the first year of commercial operation, the owner of the facility fails to demonstrate that the initial clean coal facility captured and sequestered at least 50% of the total carbon HB1865 EngrossedEnrolled - 31 - LRB097 09633 ASK 49770 b 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, the owner of the facility must offset excess emissions.

Compliance with the sequestration HB1865 EngrossedEnrolled - 32 - LRB097 09633 ASK 49770 b requirements and offset purchase requirements specified in paragraph (3) of this subsection (d) shall be reviewed annually by an independent expert retained by the owner of the initial clean coal facility, with the advance written approval of the Attorney General.

(1) to determine the justness, reasonableness, and prudence of the inputs to the formula referenced in subparagraphs (A)(i) through (A)(iii) of paragraph (3) of this subsection (d), prior to an adjustment in those inputs including, without limitation, the capital structure and return on equity, fuel costs, and other operations and maintenance costs and (2) to approve the costs to be passed through to customers under the sourcing agreement by which HB1865 EngrossedEnrolled - 33 - LRB097 09633 ASK 49770 b the utility satisfies its statutory obligations.

(xi) append documentation showing that the HB1865 EngrossedEnrolled - 34 - LRB097 09633 ASK 49770 b formula rate and contract, insofar as they relate to the power purchase provisions, have been approved by the Federal Energy Regulatory Commission pursuant to Section 205 of the Federal Power Act;

The owner of the initial clean coal facility shall submit to the Commission, the Agency, and the General Assembly a front-end engineering and design study, a facility cost report, method of financing (including but not limited to structure and associated costs), and an operating and maintenance cost quote for the HB1865 EngrossedEnrolled - 35 - LRB097 09633 ASK 49770 b facility (collectively "facility cost report"), which shall be prepared in accordance with the requirements of this paragraph (4) of subsection (d) of this Section, and shall provide the Commission and the Agency access to the work papers, relied upon documents, and any other backup documentation related to the facility cost report.

To assist in the preparation of its report, the Commission, in consultation with the Agency, may HB1865 EngrossedEnrolled - 36 - LRB097 09633 ASK 49770 b hire one or more experts or consultants, the costs of which shall be paid for by the owner of the initial clean coal facility.

During such time period, the Commission shall implement any directive of the General Assembly, resolve any disputes between the parties HB1865 EngrossedEnrolled - 37 - LRB097 09633 ASK 49770 b to the sourcing agreement concerning the terms of such agreement, approve the form of such agreement, and issue an order finding that the sourcing agreement is prudent and reasonable.

(ii) an estimate of the capital cost of the balance of the plant, including any capital costs associated with sequestration of carbon dioxide emissions and all interconnects and interfaces required to operate the facility, such as transmission of electricity, construction or backfeed power supply, pipelines to transport HB1865 EngrossedEnrolled - 38 - LRB097 09633 ASK 49770 b substitute natural gas or carbon dioxide, potable water supply, natural gas supply, water supply, water discharge, landfill, access roads, and coal delivery.

(a) The delivered fuel cost estimate will be provided by a recognized third party expert or HB1865 EngrossedEnrolled - 39 - LRB097 09633 ASK 49770 b experts in the fuel and transportation industries.

(E) Amounts paid to third parties unrelated to the owner or owners of the initial clean coal facility to HB1865 EngrossedEnrolled - 40 - LRB097 09633 ASK 49770 b prepare the core plant construction cost quote, including the front end engineering and design study, and the operating and maintenance cost quote will be reimbursed through Coal Development Bonds.