AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois,

represented in the General Assembly:

ARTICLE 1

Section 1-1. Short title. This Article may be cited as the

Clean Coal Portfolio Standard Law.

Section 1-5. The Illinois Power Agency Act is amended by

changing Sections 1-5, 1-10, 1-75, and 1-80 as follows:

(20 ILCS 3855/1-5)

Sec. 1-5. Legislative declarations and findings. The

General Assembly finds and declares:

(1) The health, welfare, and prosperity of all Illinois

citizens require the provision of adequate, reliable,

affordable, efficient, and environmentally sustainable

electric service at the lowest total cost over time, taking

into account any benefits of price stability.

(2) The transition to retail competition is not

complete. Some customers, especially residential and small

commercial customers, have failed to benefit from lower

electricity costs from retail and wholesale competition.

(3) Escalating prices for electricity in Illinois pose

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a serious threat to the economic well-being, health, and

safety of the residents of and the commerce and industry of

the State.

(4) To protect against this threat to economic

well-being, health, and safety it is necessary to improve

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.

(5) Procuring a diverse electricity supply portfolio

will ensure the lowest total cost over time for adequate,

reliable, efficient, and environmentally sustainable

electric service.

(6) Including cost-effective renewable resources in

that portfolio will reduce long-term direct and indirect

costs to consumers by decreasing environmental impacts and

by avoiding or delaying the need for new generation,

transmission, and distribution infrastructure.

(7) Energy efficiency, demand-response measures, and

renewable energy are resources currently underused in

Illinois.

(8) The State should encourage the use of advanced

clean coal technologies that capture and sequester carbon

dioxide emissions to advance environmental protection

goals and to demonstrate the viability of coal and

coal-derived fuels in a carbon-constrained economy.

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The General Assembly therefore finds that it is necessary

to create the Illinois Power Agency and that the goals and

objectives of that Agency are to accomplish each of the

following:

(A) Develop electricity procurement plans to ensure

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. The procurement plan shall be

updated on an annual basis and shall include renewable

energy resources sufficient to achieve the standards

specified in this Act.

(B) Conduct competitive procurement processes to

procure the supply resources identified in the procurement

plan.

(C) Develop electric generation and co-generation

facilities that use indigenous coal or renewable

resources, or both, financed with bonds issued by the

Illinois Finance Authority.

(D) Supply electricity from the Agency's facilities at

cost to one or more of the following: municipal electric

systems, governmental aggregators, or rural electric

cooperatives in Illinois.

(Source: P.A. 95-481, eff. 8-28-07.)

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(20 ILCS 3855/1-10)

Sec. 1-10. Definitions.

"Agency" means the Illinois Power Agency.

"Agency loan agreement" means any agreement pursuant to

which the Illinois Finance Authority agrees to loan the

proceeds of revenue bonds issued with respect to a project to

the Agency upon terms providing for loan repayment installments

at least sufficient to pay when due all principal of, interest

and premium, if any, on those revenue bonds, and providing for

maintenance, insurance, and other matters in respect of the

project.

"Authority" means the Illinois Finance Authority.

"Clean coal facility" means an electric generating

facility that uses primarily coal as a feedstock and that

captures and sequesters carbon emissions at the following

levels: at least 50% of the total carbon emissions that the

facility would otherwise emit if, at the time construction

commences, the facility is scheduled to commence operation

before 2016, at least 70% of the total carbon emissions that

the facility would otherwise emit if, at the time construction

commences, the facility is scheduled to commence operation

during 2016 or 2017, and at least 90% of the total carbon

emissions that the facility would otherwise emit if, at the

time construction commences, the facility is scheduled to

commence operation after 2017. The power block of the clean

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coal facility shall not exceed allowable emission rates for

sulfur dioxide, nitrogen oxides, carbon monoxide, particulates

and mercury for a natural gas-fired combined-cycle facility the

same size as and in the same location as the clean coal

facility at the time the clean coal facility obtains an

approved air permit. All coal used by a clean coal facility

shall have high volatile bituminous rank and greater than 1.7

pounds of sulfur per million btu content, unless the clean coal

facility does not use gasification technology and was operating

as a conventional coal-fired electric generating facility on

the effective date of this amendatory Act of the 95th General

Assembly.

"Clean coal SNG facility" means a facility that uses a

gasification process to produce substitute natural gas, that

sequesters at least 90% of the total carbon emissions that the

facility would otherwise emit and that uses coal as a

feedstock, with all such coal having a high bituminous rank and

greater than 1.7 pounds of sulfur per million btu content.

"Commission" means the Illinois Commerce Commission.

"Costs incurred in connection with the development and

construction of a facility" means:

(1) the cost of acquisition of all real property and

improvements in connection therewith and equipment and

other property, rights, and easements acquired that are

deemed necessary for the operation and maintenance of the

facility;

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(2) financing costs with respect to bonds, notes, and

other evidences of indebtedness of the Agency;

(3) all origination, commitment, utilization,

facility, placement, underwriting, syndication, credit

enhancement, and rating agency fees;

(4) engineering, design, procurement, consulting,

legal, accounting, title insurance, survey, appraisal,

escrow, trustee, collateral agency, interest rate hedging,

interest rate swap, capitalized interest and other

financing costs, and other expenses for professional

services; and

(5) the costs of plans, specifications, site study and

investigation, installation, surveys, other Agency costs

and estimates of costs, and other expenses necessary or

incidental to determining the feasibility of any project,

together with such other expenses as may be necessary or

incidental to the financing, insuring, acquisition, and

construction of a specific project and placing that project

in operation.

"Department" means the Department of Commerce and Economic

Opportunity.

"Director" means the Director of the Illinois Power Agency.

"Demand-response" means measures that decrease peak

electricity demand or shift demand from peak to off-peak

periods.

"Energy efficiency" means measures that reduce the amount

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of electricity required to achieve a given end use.

"Electric utility" has the same definition as found in

Section 16-102 of the Public Utilities Act.

"Facility" means an electric generating unit or a

co-generating unit that produces electricity along with

related equipment necessary to connect the facility to an

electric transmission or distribution system.

"Governmental aggregator" means one or more units of local

government that individually or collectively procure

electricity to serve residential retail electrical loads

located within its or their jurisdiction.

"Local government" means a unit of local government as

defined in Article VII of Section 1 of the Illinois

Constitution.

"Municipality" means a city, village, or incorporated

town.

"Person" means any natural person, firm, partnership,

corporation, either domestic or foreign, company, association,

limited liability company, joint stock company, or association

and includes any trustee, receiver, assignee, or personal

representative thereof.

"Project" means the planning, bidding, and construction of

a facility.

"Public utility" has the same definition as found in

Section 3-105 of the Public Utilities Act.

"Real property" means any interest in land together with

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all structures, fixtures, and improvements thereon, including

lands under water and riparian rights, any easements,

covenants, licenses, leases, rights-of-way, uses, and other

interests, together with any liens, judgments, mortgages, or

other claims or security interests related to real property.

"Renewable energy credit" means a tradable credit that

represents the environmental attributes of a certain amount of

energy produced from a renewable energy resource.

"Renewable energy resources" includes energy and its

associated renewable energy credit or renewable energy credits

from wind, solar thermal energy, photovoltaic cells and panels,

biodiesel, crops and untreated and unadulterated organic waste

biomass, trees and tree trimmings, hydropower that does not

involve new construction or significant expansion of

hydropower dams, and other alternative sources of

environmentally preferable energy. For purposes of this Act,

landfill gas produced in the State is considered a renewable

energy resource. "Renewable energy resources" does not include

the incineration, burning, or heating of tires, garbage,

general household, institutional, and commercial waste,

industrial lunchroom or office waste, landscape waste other

than trees and tree trimmings, railroad crossties, utility

poles, and construction or demolition debris, other than

untreated and unadulterated waste wood.

"Revenue bond" means any bond, note, or other evidence of

indebtedness issued by the Authority, the principal and

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interest of which is payable solely from revenues or income

derived from any project or activity of the Agency.

"Sequester" means permanent storage of carbon dioxide by

injecting it into a saline aquifer, a depleted gas reservoir,

or an oil reservoir, directly or through an enhanced oil

recovery process that may involve intermediate storage in a

salt dome.

"Servicing agreement" means (i) in the case of an electric

utility, an agreement between the owner of a clean coal

facility and such electric utility, which agreement shall have

terms and conditions meeting the requirements of paragraph (3)

of subsection (d) of Section 1-75, and (ii) in the case of an

alternative retail electric supplier, an agreement between the

owner of a clean coal facility and such alternative retail

electric supplier, which agreement shall have terms and

conditions meeting the requirements of Section 16-115(d)(5) of

the Public Utilities Act.

"Substitute natural gas" or "SNG" means a gas manufactured

by gasification of hydrocarbon feedstock, which is

substantially interchangeable in use and distribution with

conventional natural gas.

"Total resource cost test" or "TRC test" means a standard

that is met if, for an investment in energy efficiency or

demand-response measures, the benefit-cost ratio is greater

than one. The benefit-cost ratio is the ratio of the net

present value of the total benefits of the program to the net

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present value of the total costs as calculated over the

lifetime of the measures. A total resource cost test compares

the sum of avoided electric utility costs, representing the

benefits that accrue to the system and the participant in the

delivery of those efficiency measures, to the sum of all

incremental costs of end-use measures that are implemented due

to the program (including both utility and participant

contributions), plus costs to administer, deliver, and

evaluate each demand-side program, to quantify the net savings

obtained by substituting the demand-side program for supply

resources. In calculating avoided costs of power and energy

that an electric utility would otherwise have had to acquire,

reasonable estimates shall be included of financial costs

likely to be imposed by future regulations and legislation on

emissions of greenhouse gases.

(Source: P.A. 95-481, eff. 8-28-07.)

(20 ILCS 3855/1-75)

Sec. 1-75. Planning and Procurement Bureau. The Planning

and Procurement Bureau has the following duties and

responsibilities:

(a) The Planning and Procurement Bureau shall each

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

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utilities that on December 31, 2005 provided electric

service to at least 100,000 customers in Illinois. For the

purposes of this Section, the term "eligible retail

customers" has the same definition as found in Section

16-111.5(a) of the Public Utilities Act.

(1) The Agency shall each year, beginning in 2008,

as needed, issue a request for qualifications for

experts or expert consulting firms to develop the

procurement plans in accordance with Section 16-111.5

of the Public Utilities Act. In order to qualify an

expert or expert consulting firm must have:

(A) direct previous experience assembling

large-scale power supply plans or portfolios for

end-use customers;

(B) an advanced degree in economics,

mathematics, engineering, risk management, or a

related area of study;

(C) 10 years of experience in the electricity

sector, including managing supply risk;

(D) expertise in wholesale electricity market

rules, including those established by the Federal

Energy Regulatory Commission and regional

transmission organizations;

(E) expertise in credit protocols and

familiarity with contract protocols;

(F) adequate resources to perform and fulfill

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the required functions and responsibilities; and

(G) the absence of a conflict of interest and

inappropriate bias for or against potential

bidders or the affected electric utilities.

(2) The Agency shall each year, as needed, issue a

request for qualifications for a procurement

administrator to conduct the competitive procurement

processes in accordance with Section 16-111.5 of the

Public Utilities Act. In order to qualify an expert or

expert consulting firm must have:

(A) direct previous experience administering a

large-scale competitive procurement process;

(B) an advanced degree in economics,

mathematics, engineering, or a related area of

study;

(C) 10 years of experience in the electricity

sector, including risk management experience;

(D) expertise in wholesale electricity market

rules, including those established by the Federal

Energy Regulatory Commission and regional

transmission organizations;

(E) expertise in credit and contract

protocols;

(F) adequate resources to perform and fulfill

the required functions and responsibilities; and

(G) the absence of a conflict of interest and

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inappropriate bias for or against potential

bidders or the affected electric utilities.

(3) The Agency shall provide affected utilities

and other interested parties with the lists of

qualified experts or expert consulting firms

identified through the request for qualifications

processes that are under consideration to develop the

procurement plans and to serve as the procurement

administrator. The Agency shall also provide each

qualified expert's or expert consulting firm's

response to the request for qualifications. All

information provided under this subparagraph shall

also be provided to the Commission. The Agency may

provide by rule for fees associated with supplying the

information to utilities and other interested parties.

These parties shall, within 5 business days, notify the

Agency in writing if they object to any experts or

expert consulting firms on the lists. Objections shall

be based on:

(A) failure to satisfy qualification criteria;

(B) identification of a conflict of interest;

or

(C) evidence of inappropriate bias for or

against potential bidders or the affected

utilities.

The Agency shall remove experts or expert

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consulting firms from the lists within 10 days if there

is a reasonable basis for an objection and provide the

updated lists to the affected utilities and other

interested parties. If the Agency fails to remove an

expert or expert consulting firm from a list, an

objecting party may seek review by the Commission

within 5 days thereafter by filing a petition, and the

Commission shall render a ruling on the petition within

10 days. There is no right of appeal of the

Commission's ruling.

(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.

(5) The Agency shall select an expert or expert

consulting firm to develop procurement plans based on

the proposals submitted and shall award one-year

contracts to those selected with an option for the

Agency for a one-year renewal.

(6) The Agency shall select an expert or expert

consulting firm, with approval of the Commission, to

serve as procurement administrator based on the

proposals submitted. If the Commission rejects, within

5 days, the Agency's selection, the Agency shall submit

another recommendation within 3 days based on the

proposals submitted. The Agency shall award a one-year

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contract to the expert or expert consulting firm so

selected with Commission approval with an option for

the Agency for a one-year renewal.

(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

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.

(c) Renewable portfolio standard.

(1) The procurement plans shall include

cost-effective renewable energy resources. A minimum

percentage of each utility's total supply to serve the

load of eligible retail customers, as defined in

Section 16-111.5(a) of the Public Utilities Act,

procured for each of the following years shall be

generated from cost-effective renewable energy

resources: at least 2% by June 1, 2008; at least 4% by

June 1, 2009; at least 5% by June 1, 2010; at least 6%

by June 1, 2011; at least 7% by June 1, 2012; at least

8% by June 1, 2013; at least 9% by June 1, 2014; at

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least 10% by June 1, 2015; and increasing by at least

1.5% each year thereafter to at least 25% by June 1,

2025. 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. For

purposes of this subsection (c) Section,

"cost-effective" means that the costs of procuring

renewable energy resources do not cause the limit

stated in paragraph (2) of this subsection (c) to be

exceeded and do not exceed benchmarks based on market

prices for renewable energy resources in the region,

which shall be developed by the procurement

administrator, in consultation with the Commission

staff, Agency staff, and the procurement monitor and

shall be subject to Commission review and approval.

(2) For purposes of this subsection (c), the

required procurement of cost-effective renewable

energy resources for a particular year shall be

measured as a percentage of the actual amount of

electricity (megawatt-hours) supplied by the electric

utility to eligible retail customers in the planning

year ending immediately prior to the procurement. For

purposes of this subsection (c), the amount paid per

kilowatthour means the total amount paid for electric

service expressed on a per kilowatthour basis. For

purposes of this subsection (c), the total amount paid

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for electric service includes without limitation

amounts paid for supply, transmission, distribution,

surcharges, and add-on taxes.

Notwithstanding the requirements of this

subsection (c), the total of renewable energy

resources procured pursuant to the procurement plan

for any single year shall be reduced by an amount

necessary to limit the annual estimated average net

increase due to the costs of these resources included

in the amounts paid by eligible retail customers in

connection with electric service to:

(A) in 2008, no more than 0.5% of the amount

paid per kilowatthour by those customers during

the year ending May 31, 2007;

(B) in 2009, the greater of an additional 0.5%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2008 or 1%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2007;

(C) in 2010, the greater of an additional 0.5%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2009 or

1.5% of the amount paid per kilowatthour by those

customers during the year ending May 31, 2007;

(D) in 2011, the greater of an additional 0.5%

of the amount paid per kilowatthour by those

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customers during the year ending May 31, 2010 or 2%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2007; and

(E) thereafter, the amount of renewable energy

resources procured 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 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 2.015% of the amount

paid per kilowatthour by those customers during

the year ending May 31, 2007 or the incremental

amount per kilowatthour paid for these resources

in 2011.

No later than June 30, 2011, the Commission shall

review the limitation on the amount of renewable energy

resources procured pursuant to this subsection (c) and

report to the General Assembly its findings as to

whether that limitation unduly constrains the

procurement of cost-effective renewable energy

resources.

(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

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from facilities located in the State, provided that

cost-effective renewable energy resources are

available from those facilities. If those

cost-effective resources are not available in

Illinois, they shall be procured in states that adjoin

Illinois and may be counted towards compliance. If

those cost-effective resources are not available in

Illinois or in states that adjoin Illinois, they shall

be purchased elsewhere and shall be counted towards

compliance. After June 1, 2011, cost-effective

renewable energy resources located in Illinois and in

states that adjoin Illinois may be counted towards

compliance with the standards set forth in paragraph

(1) of this subsection (c). If those cost-effective

resources are not available in Illinois or in states

that adjoin Illinois, they shall be purchased

elsewhere and shall be counted towards compliance.

(4) The electric utility shall retire all

renewable energy credits used to comply with the

standard.

(d) Clean coal portfolio standard.

(1) The procurement plans shall include electricity

generated using clean coal. 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

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coal facility representing at least 5% of each utility's

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). It is the goal of

the State that by January 1, 2025, 25% of the electricity

used in the State shall be generated by cost-effective

clean coal facilities. For purposes of this subsection (d),

"cost-effective" means that the expenditures pursuant to

such sourcing agreements do not cause the limit stated in

paragraph (2) of this subsection (d) to be exceeded and do

not exceed cost-based benchmarks, which shall be developed

to assess all expenditures pursuant to such sourcing

agreements covering electricity generated by clean coal

facilities, other than the initial clean coal facility, by

the procurement administrator, in consultation with the

Commission staff, Agency staff, and the procurement

monitor and shall be subject to Commission review and

approval.

(A) A utility party to a sourcing agreement shall

immediately retire any emission credits that it

receives in connection with the electricity covered by

such agreement.

(B) Utilities shall maintain adequate records

documenting the purchases under the sourcing agreement

to comply with this subsection (d) and shall file an

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accounting with the load forecast that must be filed

with the Agency by July 15 of each year, in accordance

with subsection (d) of Section 16-111.5 of the Public

Utilities Act.

(C) A utility shall be deemed to have complied with

the clean coal portfolio standard specified in this

subsection (d) if the utility enters into a sourcing

agreement as required by this subsection (d).

(2) For purposes of this subsection (d), the required

execution of sourcing agreements with the initial clean

coal facility for a particular year shall be measured as a

percentage of the actual amount of electricity

(megawatt-hours) supplied by the electric utility to

eligible retail customers in the planning year ending

immediately prior to the agreement's execution. For

purposes of this subsection (d), the amount paid per

kilowatthour means the total amount paid for electric

service expressed on a per kilowatthour basis. For purposes

of this subsection (d), the total amount paid for electric

service includes without limitation amounts paid for

supply, transmission, distribution, surcharges and add-on

taxes.

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

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limit the annual estimated average net increase due to the

costs of these resources included in the amounts paid by

eligible retail customers in connection with electric

service to:

(A) in 2010, no more than 0.5% of the amount

paid per kilowatthour by those customers during

the year ending May 31, 2009;

(B) 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 1%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2009;

(C) in 2012, the greater of an additional 0.5%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2011 or

1.5% of the amount paid per kilowatthour by those

customers during the year ending May 31, 2009;

(D) in 2013, the greater of an additional 0.5%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2012 or 2%

of the amount paid per kilowatthour by those

customers during the year ending May 31, 2009; 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

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limit the estimated average net increase due to the

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.

These requirements may be altered only as provided

by statute. No later than June 30, 2015, the

Commission shall review the limitation on the

total amount paid under sourcing agreements, if

any, with clean coal facilities pursuant to this

subsection (d) and report to the General Assembly

its findings as to whether that limitation unduly

constrains the amount of electricity generated by

cost-effective clean coal facilities that is

covered by sourcing agreements.

(3) Initial clean coal facility. 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

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amendatory Act of the 95th General Assembly, and that will

meet the definition of clean coal facility in Section 1-10

of this Act when commercial operation commences. The

sourcing agreements with this initial clean coal facility

shall be subject to both approval of the initial clean coal

facility by the General Assembly and satisfaction of the

requirements of paragraph (4) of this subsection (d) and

shall be executed within 90 days after any such approval by

the General Assembly. The Agency and the Commission shall

have authority to inspect all books and records associated

with the initial clean coal facility during the term of

such a sourcing agreement. A utility's sourcing agreement

for electricity produced by the initial clean coal facility

shall include:

(A) a formula contractual price (the "contract

price") approved pursuant to paragraph (4) of this

subsection (d), which shall:

(i) be determined using a cost of service

methodology employing either a level or deferred

capital recovery component, based on a capital

structure consisting of 45% equity and 55% debt,

and a return on equity as may be approved by the

Federal Energy Regulatory Commission, which in any

case may not exceed the lower of 11.5% or the rate

of return approved by the General Assembly

pursuant to paragraph (4) of this subsection (d);

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and

(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;

(B) power purchase provisions, which shall:

(i) provide that the utility party to such

sourcing agreement shall pay the contract price

for electricity delivered under such sourcing

agreement;

(ii) require delivery of electricity to the

regional transmission organization market of the

utility that is party to such sourcing agreement;

(iii) require the utility party to such

sourcing agreement to buy from the initial clean

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coal facility in each hour an amount of 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 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); and

(iv) be considered pre-existing contracts in

such utility's procurement plans for eligible

retail customers;

(C) contract for differences provisions, which

shall:

(i) require the utility party to such sourcing

agreement to contract with the initial clean coal

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facility in each hour with respect to an amount of

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

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paragraph (3) of this subsection (d) and the

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); and

(iii) not require the utility to take physical

delivery of the electricity produced by the

facility;

(D) general provisions, which shall:

(i) specify a term of no more than 30 years,

commencing on the commercial operation date of the

facility;

(ii) provide that utilities shall maintain

adequate records documenting purchases under the

sourcing agreements entered into to comply with

this subsection (d) and shall file an accounting

with the load forecast that must be filed with the

Agency by July 15 of each year, in accordance with

subsection (d) of Section 16-111.5 of the Public

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Utilities Act.

(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;

(iv) permit the Illinois Power Agency to

assume ownership of the initial clean coal

facility, without monetary consideration and

otherwise on reasonable terms acceptable to the

Agency, if the Agency so requests no less than 3

years prior to the end of the stated contract term;

(v) require the owner of the initial clean coal

facility to provide documentation to the

Commission each year, starting in the facility's

first year of commercial operation, accurately

reporting the quantity of carbon emissions from

the facility that have been captured and

sequestered and report any quantities of carbon

released from the site or sites at which carbon

emissions were sequestered in prior years, based

on continuous monitoring of such sites. 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

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sequestered at least 50% of the total carbon

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. Any

such carbon offsets must be permanent, additional,

verifiable, real, located within the State of

Illinois, and legally and practicably enforceable.

The cost of such offsets for the facility that are

not recoverable shall not exceed $15 million in any

given year. No costs of any such purchases of

carbon offsets may be recovered from a utility or

its customers. All carbon offsets purchased for

this purpose and any carbon emission credits

associated with sequestration of carbon from the

facility must be permanently retired. The initial

clean coal facility shall not forfeit its

designation as a clean coal 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

requirement and the other terms of this contract

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provision. Compliance with the sequestration

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. The Commission may, in the

course of the review specified in item (vii),

reduce the allowable return on equity for the

facility if the facility wilfully fails to comply

with the carbon capture and sequestration

requirements set forth in this item (v);

(vi) include limits on, and accordingly

provide for modification of, the amount the

utility is required to source under the sourcing

agreement consistent with paragraph (2) of this

subsection (d);

(vii) require Commission review: (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

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to customers under the sourcing agreement by which

the utility satisfies its statutory obligations.

Commission review shall occur no less than every 3

years, regardless of whether any adjustments have

been proposed, and shall be completed within 9

months;

(viii) limit the utility's obligation to such

amount as the utility is allowed to recover through

tariffs filed with the Commission, provided that

neither the clean coal facility nor the utility

waives any right to assert federal pre-emption or

any other argument in response to a purported

disallowance of recovery costs;

(ix) limit the utility's or alternative retail

electric supplier's obligation to incur any

liability until such time as the facility is in

commercial operation and generating power and

energy and such power and energy is being delivered

to the facility busbar;

(x) provide that the owner or owners of the

initial clean coal facility, which is the

counterparty to such sourcing agreement, shall

have the right from time to time to elect whether

the obligations of the utility party thereto shall

be governed by the power purchase provisions or the

contract for differences provisions;

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(xi) append documentation showing that the

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;

(xii) provide that any changes to the terms of

the contract, insofar as such changes relate to the

power purchase provisions, are subject to review

under the public interest standard applied by the

Federal Energy Regulatory Commission pursuant to

Sections 205 and 206 of the Federal Power Act; and

(xiii) conform with customary lender

requirements in power purchase agreements used as

the basis for financing non-utility generators.

(4) Effective date of sourcing agreements with the

initial clean coal facility. Any proposed sourcing

agreement with the initial clean coal facility shall not

become effective unless the following reports are prepared

and submitted and authorizations and approvals obtained:

(i) Facility cost report. 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),

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and an operating and maintenance cost quote for the

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.

(ii) Commission report. Within 6 months

following receipt of the facility cost report, the

Commission, in consultation with the Agency, shall

submit a report to the General Assembly setting

forth its analysis of the facility cost report.

Such report shall include, but not be limited to, a

comparison of the costs associated with

electricity generated by the initial clean coal

facility to the costs associated with electricity

generated by other types of generation facilities,

an analysis of the rate impacts on residential and

small business customers over the life of the

sourcing agreements, and an analysis of the

likelihood that the initial clean coal facility

will commence commercial operation by and be

delivering power to the facility's busbar by 2016.

To assist in the preparation of its report, the

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Commission, in consultation with the Agency, may

hire one or more experts or consultants, the costs

of which shall be paid for by the owner of the

initial clean coal facility. The Commission and

Agency may begin the process of selecting such

experts or consultants prior to receipt of the

facility cost report.

(iii) General Assembly approval. The proposed

sourcing agreements shall not take effect unless,

based on the facility cost report and the

Commission's report, the General Assembly enacts

authorizing legislation approving (A) the

projected price, stated in cents per kilowatthour,

to be charged for electricity generated by the

initial clean coal facility, (B) the projected

impact on residential and small business

customers' bills over the life of the sourcing

agreements, and (C) the maximum allowable return

on equity for the project; and

(iv) Commission review. If the General

Assembly enacts authorizing legislation pursuant

to subparagraph (iii) approving a sourcing

agreement, the Commission shall, within 90 days of

such enactment, complete a review of such sourcing

agreement. During such time period, the Commission

shall implement any directive of the General

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Assembly, resolve any disputes between the parties

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.

The facility cost report shall be prepared as follows:

(A) The facility cost report shall be prepared by

duly licensed engineering and construction firms

detailing the estimated capital costs payable to one or

more contractors or suppliers for the engineering,

procurement and construction of the components

comprising the initial clean coal facility and the

estimated costs of operation and maintenance of the

facility. The facility cost report shall include:

(i) an estimate of the capital cost of the core

plant based on one or more front end engineering

and design studies for the gasification island and

related facilities. The core plant shall include

all civil, structural, mechanical, electrical,

control, and safety systems.

(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

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backfeed power supply, pipelines to transport

substitute natural gas or carbon dioxide, potable

water supply, natural gas supply, water supply,

water discharge, landfill, access roads, and coal

delivery.

The quoted construction costs shall be expressed

in nominal dollars as of the date that the quote is

prepared and shall include (1) capitalized financing

costs during construction, (2) taxes, insurance, and

other owner's costs, and (3) an assumed escalation in

materials and labor beyond the date as of which the

construction cost quote is expressed.

(B) The front end engineering and design study for

the gasification island and the cost study for the

balance of plant shall include sufficient design work

to permit quantification of major categories of

materials, commodities and labor hours, and receipt of

quotes from vendors of major equipment required to

construct and operate the clean coal facility.

(C) The facility cost report shall also include an

operating and maintenance cost quote that will provide

the estimated cost of delivered fuel, personnel,

maintenance contracts, chemicals, catalysts,

consumables, spares, and other fixed and variable

operations and maintenance costs.

(a) The delivered fuel cost estimate will be

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provided by a recognized third party expert or

experts in the fuel and transportation industries.

(b) The balance of the operating and

maintenance cost quote, excluding delivered fuel

costs will be developed based on the inputs

provided by duly licensed engineering and

construction firms performing the construction

cost quote, potential vendors under long-term

service agreements and plant operating agreements,

or recognized third party plant operator or

operators.

The operating and maintenance cost quote

(including the cost of the front end engineering

and design study) shall be expressed in nominal

dollars as of the date that the quote is prepared

and shall include (1) taxes, insurance, and other

owner's costs, and (2) an assumed escalation in

materials and labor beyond the date as of which the

operating and maintenance cost quote is expressed.

(D) The facility cost report shall also include (i)

an analysis of the initial clean coal facility's

ability to deliver power and energy into the applicable

regional transmission organization markets and (ii) an

analysis of the expected capacity factor for the

initial clean coal facility.

(E) Amounts paid to third parties unrelated to the

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owner or owners of the initial clean coal facility to

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.

(5) Re-powering and retrofitting coal-fired power

plants previously owned by Illinois utilities to qualify as

clean coal facilities. During the 2009 procurement

planning process and thereafter, the Agency and the

Commission shall consider sourcing agreements covering

electricity generated by power plants that were previously

owned by Illinois utilities and that have been or will be

converted into clean coal facilities, as defined by Section

1-10 of this Act. Pursuant to such procurement planning

process, the owners of such facilities may propose to the

Agency sourcing agreements with utilities and alternative

retail electric suppliers required to comply with

subsection (d) of this Section and item (5) of subsection

(d) of Section 16-115 of the Public Utilities Act, covering

electricity generated by such facilities. In the case of

sourcing agreements that are power purchase agreements,

the contract price for electricity sales shall be

established on a cost of service basis. In the case of

sourcing agreements that are contracts for differences,

the contract price from which the reference price is

subtracted shall be established on a cost of service basis.

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The Agency and the Commission may approve any such utility

sourcing agreements that do not exceed cost-based

benchmarks developed by the procurement administrator, in

consultation with the Commission staff, Agency staff and

the procurement monitor, subject to Commission review and

approval. The Commission shall have authority to inspect

all books and records associated with these clean coal

facilities during the term of any such contract.

(6) Costs incurred under this subsection (d) or

pursuant to a contract entered into under this subsection

(d) shall be deemed prudently incurred and reasonable in

amount and the electric utility shall be entitled to full

cost recovery pursuant to the tariffs filed with the

Commission.

(e) (d) The draft procurement plans are subject to

public comment, as required by Section 16-111.5 of the

Public Utilities Act.

(f) (e) The Agency shall submit the final procurement

plan to the Commission. The Agency shall revise a

procurement plan if the Commission determines that it does

not meet the standards set forth in Section 16-111.5 of the

Public Utilities Act.

(g) (f) The Agency shall assess fees to each affected

utility to recover the costs incurred in preparation of the

annual procurement plan for the utility.

(h) (g) The Agency shall assess fees to each bidder to

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recover the costs incurred in connection with a competitive

procurement process.

(Source: P.A. 95-481, eff. 8-28-07.)

(20 ILCS 3855/1-80)

Sec. 1-80. Resource Development Bureau. The Resource

Development Bureau has the following duties and

responsibilities:

(a) At the Agency's discretion, conduct feasibility

studies on the construction of any facility. Funding for a

study shall come from either:

(i) fees assessed by the Agency on municipal

electric systems, governmental aggregators, unit or

units of local government, or rural electric

cooperatives requesting the feasibility study; or

(ii) an appropriation from the General Assembly.

(b) If the Agency undertakes the construction of a

facility, moneys generated from the sale of revenue bonds

by the Authority for the facility shall be used to

reimburse the source of the money used for the facility's

feasibility study.

(c) The Agency may develop, finance, construct, or

operate electric generation and co-generation facilities

that use indigenous coal or renewable resources, or both,

financed with bonds issued by the Authority on behalf of

the Agency. Any such facility that uses coal must be a

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clean coal facility and must be constructed in a location

Preference shall be given to technologies that enable

carbon capture and sites in locations where the geology is

suitable for carbon sequestration. The Agency may also

develop, finance, construct, or operate a carbon

sequestration facility.

(1) The Agency may enter into contractual

arrangements with private and public entities,

including but not limited to municipal electric

systems, governmental aggregators, and rural electric

cooperatives, to plan, site, construct, improve,

rehabilitate, and operate those electric generation

and co-generation facilities. No contract shall be

entered into by the Agency that would jeopardize the

tax-exempt status of any bond issued in connection with

a project for which the Agency entered into the

contract.

(2) The Agency shall hold at least one public

hearing before entering into any such contractual

arrangements. At least 30-days' notice of the hearing

shall be given by publication once in each week during

that period in 6 newspapers within the State, at least

one of which has a circulation area that includes the

location of the proposed facility.

(3) The first facility that the Agency develops,

finances, or constructs shall be a facility that uses

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coal produced in Illinois. The Agency may, however,

also develop, finance, or construct renewable energy

facilities after work on the first facility has

commenced.

(4) The Agency may not develop, finance, or

construct a nuclear power plant.

(5) The Agency shall assess fees to applicants

seeking to partner with the Agency on projects.

(d) Use of electricity generated by the Agency's

facilities. The Agency may supply electricity produced by

the Agency's facilities to municipal electric systems,

governmental aggregators, or rural electric cooperatives

in Illinois. The electricity shall be supplied at cost.

(1) Contracts to supply power and energy from the

Agency's facilities shall provide for the effectuation

of the policies set forth in this Act.

(2) The contracts shall also provide that,

notwithstanding any provision in the Public Utilities

Act, entities supplied with power and energy from an

Agency facility shall supply the power and energy to

retail customers at the same price paid to purchase

power and energy from the Agency.

(e) Electric utilities shall not be required to purchase

electricity directly or indirectly from facilities developed

or sponsored by the Agency.

(f) The Agency may sell excess capacity and excess energy

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into the wholesale electric market at prevailing market rates;

provided, however, the Agency may not sell excess capacity or

excess energy through the procurement process described in

Section 16-111.5 of the Public Utilities Act.

(g) The Agency shall not directly sell electric power and

energy to retail customers. Nothing in this paragraph shall be

construed to prohibit sales to municipal electric systems,

governmental aggregators, or rural electric cooperatives.

(Source: P.A. 95-481, eff. 8-28-07.)

Section 1-10. The Public Utilities Act is amended by

changing Sections 9-220, 16-101A, 16-111.5, 16-115, and 16-116

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

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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

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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

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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.

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(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

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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

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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

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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

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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,

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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 gas utility may enter into a contract for up to 20

years of supply with any company for the purchase of substitute

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natural gas (SNG) produced from coal through the gasification

process if the company has commenced construction of a coal

gasification facility by July 1, 2010. The 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 used in the gasification process has high

volatile bituminous rank and greater than 1.7 pounds of sulfur

per million Btu content; (ii) at the time the contract term

commences, the price per million Btu does not exceed $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 at the

time the contract is entered into and the quantity of SNG

supplied to a utility 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

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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. 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. The

costs of such offsets shall not exceed $40 million in any given

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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) 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. An

SNG facility operating pursuant to this subsection (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. Any gas utility may enter into a 20-year supply

contract with any company for synthetic natural gas produced

from coal through the gasification process if the company has

commenced construction of a coal gasification facility by July

1, 2008. The cost for the synthetic natural gas is reasonable

and prudent and recoverable through the purchased gas

adjustment clause for years one through 10 of the contract if:

(i) the only coal used in the gasification process has high

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volatile bituminous rank and greater than 1.7 pounds of sulfur

per million Btu content; (ii) at the time the contract term

commences, the price per million Btu does not exceed $5 in 2004

dollars, adjusted annually based on the change in the Annual

Consumer Price Index for All Urban Consumers for the Midwest

Region as published in April by the United States Department of

Labor, Bureau of Labor Statistics (or a suitable Consumer Price

Index calculation if this Consumer Price Index is not

available) for the previous calendar year; provided that the

price per million Btu shall not exceed $5.50 at any time during

the contract; (iii) the utility's aggregate long-term supply

contracts for the purchase of synthetic natural gas produced

from coal through the gasification process does not exceed 25%

of the annual system supply requirements of the utility at the

time the contract is entered into; and (iv) the contract is

entered into within one year after the effective date of this

amendatory Act of the 94th General Assembly and terminates 20

years after the commencement of the production of synthetic

natural gas. The contract shall provide that if, at any time

during years 11 through 20 of the contract, the Commission

determines that the cost for the synthetic natural gas under

the contract is not reasonable and prudent, then the company

shall reimburse the utility for the difference between the cost

deemed reasonable and prudent by the Commission and the cost

imposed under the contract.

(i) If a gas utility or an affiliate of a gas utility has

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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.)

(220 ILCS 5/16-101A)

Sec. 16-101A. Legislative findings.

(a) The citizens and businesses of the State of Illinois

have been well-served by a comprehensive electrical utility

system which has provided safe, reliable, and affordable

service. The electrical utility system in the State of Illinois

has historically been subject to State and federal regulation,

aimed at assuring the citizens and businesses of the State of

safe, reliable, and affordable service, while at the same time

assuring the utility system of a return on its investment.

(b) Competitive forces are affecting the market for

electricity as a result of recent federal regulatory and

statutory changes and the activities of other states.

Competition in the electric services market may create

opportunities for new products and services for customers and

lower costs for users of electricity. Long-standing regulatory

relationships need to be altered to accommodate the competition

that could fundamentally alter the structure of the electric

services market.

(c) With the advent of increasing competition in this

industry, the State has a continued interest in assuring that

the safety, reliability, and affordability of electrical power

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is not sacrificed to competitive pressures, and to that end,

intends to implement safeguards to assure that the industry

continues to operate the electrical system in a manner that

will serve the public's interest. Under the existing regulatory

framework, the industry has been encouraged to undertake

certain investments in its physical plant and personnel to

enhance its efficient operation, the cost of which it has been

permitted to pass on to consumers. The State has an interest in

providing the existing utilities a reasonable opportunity to

obtain a return on certain investments on which they depended

in undertaking those commitments in the first instance while,

at the same time, not permitting new entrants into the industry

to take unreasonable advantage of the investments made by the

formerly regulated industry.

(d) A competitive wholesale and retail market must benefit

all Illinois citizens. The Illinois Commerce Commission should

act to promote the development of an effectively competitive

electricity market that operates efficiently and is equitable

to all consumers. Consumer protections must be in place to

ensure that all customers continue to receive safe, reliable,

affordable, and environmentally safe electric service.

(e) All consumers must benefit in an equitable and timely

fashion from the lower costs for electricity that result from

retail and wholesale competition and receive sufficient

information to make informed choices among suppliers and

services. The use of renewable resources and energy efficiency

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resources should be encouraged in competitive markets.

(f) The efficiency of electric markets depends both upon

the competitiveness of supply and upon the

price-responsiveness of the demand for service. Therefore, to

ensure the lowest total cost of service and to enhance the

reliability of service, all classes of the electricity

customers of electric utilities should have access to and be

able to voluntarily use real-time pricing and other

price-response and demand-response mechanisms.

(g) Including cost-effective renewable resources and

demand-response resources in a diverse electricity supply

portfolio will reduce long-term direct and indirect costs to

consumers by decreasing environmental impacts and by avoiding

or delaying the need for new generation, transmission, and

distribution infrastructure. It serves the public interest to

allow electric utilities to recover costs for reasonably and

prudently incurred expenses for electricity generated by

renewable resources and demand-response resources.

(h) Including electricity generated by clean coal

facilities, as defined under Section 1-10 of the Illinois Power

Agency Act, in a diverse electricity procurement portfolio will

reduce the need to purchase, directly or indirectly, carbon

dioxide emission credits and will decrease environmental

impacts. It serves the public interest to allow electric

utilities to recover costs for reasonably and prudently

incurred expenses for sourcing electricity generated by clean

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coal facilities.

(Source: P.A. 94-977, eff. 6-30-06; 95-481, eff. 8-28-07.)

(220 ILCS 5/16-111.5)

Sec. 16-111.5. Provisions relating to procurement.

(a) An electric utility that on December 31, 2005 served at

least 100,000 customers in Illinois shall procure power and

energy for its eligible retail customers in accordance with the

applicable provisions set forth in Section 1-75 of the Illinois

Power Agency Act and this Section. "Eligible retail customers"

for the purposes of this Section means those retail customers

that purchase power and energy from the electric utility under

fixed-price bundled service tariffs, other than those retail

customers whose service is declared or deemed competitive under

Section 16-113 and those other customer groups specified in

this Section, including self-generating customers, customers

electing hourly pricing, or those customers who are otherwise

ineligible for fixed-price bundled tariff service. Those

customers that are excluded from the definition of "eligible

retail customers" shall not be included in the procurement plan

load requirements, and the utility shall procure any supply

requirements, including capacity, ancillary services, and

hourly priced energy, in the applicable markets as needed to

serve those customers, provided that the utility may include in

its procurement plan load requirements for the load that is

associated with those retail customers whose service has been

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declared or deemed competitive pursuant to Section 16-113 of

this Act to the extent that those customers are purchasing

power and energy during one of the transition periods

identified in subsection (b) of Section 16-113 of this Act.

(b) A procurement plan shall be prepared for each electric

utility consistent with the applicable requirements of the

Illinois Power Agency Act and this Section. For purposes of

this Section, Illinois electric utilities that are affiliated

by virtue of a common parent company are considered to be a

single electric utility. Each procurement plan shall analyze

the projected balance of supply and demand for eligible retail

customers over a 5-year period with the first planning year

beginning on June 1 of the year following the year in which the

plan is filed. The plan shall specifically identify the

wholesale products to be procured following plan approval, and

shall follow all the requirements set forth in the Public

Utilities Act and all applicable State and federal laws,

statutes, rules, or regulations, as well as Commission orders.

Nothing in this Section precludes consideration of contracts

longer than 5 years and related forecast data. Unless specified

otherwise in this Section, in the procurement plan or in the

implementing tariff, any procurement occurring in accordance

with this plan shall be competitively bid through a request for

proposals process. Approval and implementation of the

procurement plan shall be subject to review and approval by the

Commission according to the provisions set forth in this

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Section. A procurement plan shall include each of the following

components:

(1) Hourly load analysis. This analysis shall include:

(i) multi-year historical analysis of hourly

loads;

(ii) switching trends and competitive retail

market analysis;

(iii) known or projected changes to future loads;

and

(iv) growth forecasts by customer class.

(2) Analysis of the impact of any demand side and

renewable energy initiatives. This analysis shall include:

(i) the impact of demand response programs, both

current and projected;

(ii) supply side needs that are projected to be

offset by purchases of renewable energy resources, if

any; and

(iii) the impact of energy efficiency programs,

both current and projected.

(3) A plan for meeting the expected load requirements

that will not be met through preexisting contracts. This

plan shall include:

(i) definitions of the different retail customer

classes for which supply is being purchased;

(ii) the proposed mix of demand-response products

for which contracts will be executed during the next

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year. The cost-effective demand-response measures

shall be procured whenever the cost is lower than

procuring comparable capacity products, provided that

such products shall:

(A) be procured by a demand-response provider

from eligible retail customers;

(B) at least satisfy the demand-response

requirements of the regional transmission

organization market in which the utility's service

territory is located, including, but not limited

to, any applicable capacity or dispatch

requirements;

(C) provide for customers' participation in

the stream of benefits produced by the

demand-response products;

(D) provide for reimbursement by the

demand-response provider of the utility for any

costs incurred as a result of the failure of the

supplier of such products to perform its

obligations thereunder; and

(E) meet the same credit requirements as apply

to suppliers of capacity, in the applicable

regional transmission organization market;

(iii) (ii) monthly forecasted system supply

requirements, including expected minimum, maximum, and

average values for the planning period;

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(iv) (iii) the proposed mix and selection of

standard wholesale products for which contracts will

be executed during the next year, separately or in

combination, to meet that portion of its load

requirements not met through pre-existing contracts,

including but not limited to monthly 5 x 16 peak period

block energy, monthly off-peak wrap energy, monthly 7 x

24 energy, annual 5 x 16 energy, annual off-peak wrap

energy, annual 7 x 24 energy, monthly capacity, annual

capacity, peak load capacity obligations, capacity

purchase plan, and ancillary services;

(v) (iv) proposed term structures for each

wholesale product type included in the proposed

procurement plan portfolio of products; and

(vi) (v) an assessment of the price risk, load

uncertainty, and other factors that are associated

with the proposed procurement plan; this assessment,

to the extent possible, shall include an analysis of

the following factors: contract terms, time frames for

securing products or services, fuel costs, weather

patterns, transmission costs, market conditions, and

the governmental regulatory environment; the proposed

procurement plan shall also identify alternatives for

those portfolio measures that are identified as having

significant price risk.

(4) Proposed procedures for balancing loads. The

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procurement plan shall include, for load requirements

included in the procurement plan, the process for (i)

hourly balancing of supply and demand and (ii) the criteria

for portfolio re-balancing in the event of significant

shifts in load.

(c) The procurement process set forth in Section 1-75 of

the Illinois Power Agency Act and subsection (e) of this

Section shall be administered by a procurement administrator

and monitored by a procurement monitor.

(1) The procurement administrator shall:

(i) design the final procurement process in

accordance with Section 1-75 of the Illinois Power

Agency Act and subsection (e) of this Section following

Commission approval of the procurement plan;

(ii) develop benchmarks in accordance with

subsection (e)(3) to be used to evaluate bids; these

benchmarks shall be submitted to the Commission for

review and approval on a confidential basis prior to

the procurement event;

(iii) serve as the interface between the electric

utility and suppliers;

(iv) manage the bidder pre-qualification and

registration process;

(v) obtain the electric utilities' agreement to

the final form of all supply contracts and credit

collateral agreements;

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(vi) administer the request for proposals process;

(vii) have the discretion to negotiate to

determine whether bidders are willing to lower the

price of bids that meet the benchmarks approved by the

Commission; any post-bid negotiations with bidders

shall be limited to price only and shall be completed

within 24 hours after opening the sealed bids and shall

be conducted in a fair and unbiased manner; in

conducting the negotiations, there shall be no

disclosure of any information derived from proposals

submitted by competing bidders; if information is

disclosed to any bidder, it shall be provided to all

competing bidders;

(viii) maintain confidentiality of supplier and

bidding information in a manner consistent with all

applicable laws, rules, regulations, and tariffs;

(ix) submit a confidential report to the

Commission recommending acceptance or rejection of

bids;

(x) notify the utility of contract counterparties

and contract specifics; and

(xi) administer related contingency procurement

events.

(2) The procurement monitor, who shall be retained by

the Commission, shall:

(i) monitor interactions among the procurement

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administrator, suppliers, and utility;

(ii) monitor and report to the Commission on the

progress of the procurement process;

(iii) provide an independent confidential report

to the Commission regarding the results of the

procurement event;

(iv) assess compliance with the procurement plans

approved by the Commission for each utility that on

December 31, 2005 provided electric service to a least

100,000 customers in Illinois;

(v) preserve the confidentiality of supplier and

bidding information in a manner consistent with all

applicable laws, rules, regulations, and tariffs;

(vi) provide expert advice to the Commission and

consult with the procurement administrator regarding

issues related to procurement process design, rules,

protocols, and policy-related matters; and

(vii) consult with the procurement administrator

regarding the development and use of benchmark

criteria, standard form contracts, credit policies,

and bid documents.

(d) Except as provided in subsection (j), the planning

process shall be conducted as follows:

(1) Beginning in 2008, each Illinois utility procuring

power pursuant to this Section shall annually provide a

range of load forecasts to the Illinois Power Agency by

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July 15 of each year, or such other date as may be required

by the Commission or Agency. The load forecasts shall cover

the 5-year procurement planning period for the next

procurement plan and shall include hourly data

representing a high-load, low-load and expected-load

scenario for the load of the eligible retail customers. The

utility shall provide supporting data and assumptions for

each of the scenarios.

(2) Beginning in 2008, the Illinois Power Agency shall

prepare a procurement plan by August 15th of each year, or

such other date as may be required by the Commission. The

procurement plan shall identify the portfolio of

demand-response and power and energy products to be

procured. Cost-effective demand-response measures shall be

procured as set forth in item (iii) of subsection (b) of

this Section. Copies of the procurement plan shall be

posted and made publicly available on the Agency's and

Commission's websites, and copies shall also be provided to

each affected electric utility. An affected utility shall

have 30 days following the date of posting to provide

comment to the Agency on the procurement plan. Other

interested entities also may comment on the procurement

plan. All comments submitted to the Agency shall be

specific, supported by data or other detailed analyses,

and, if objecting to all or a portion of the procurement

plan, accompanied by specific alternative wording or

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proposals. All comments shall be posted on the Agency's and

Commission's websites. During this 30-day comment period,

the Agency shall hold at least one public hearing within

each utility's service area for the purpose of receiving

public comment on the procurement plan. Within 14 days

following the end of the 30-day review period, the Agency

shall revise the procurement plan as necessary based on the

comments received and file the procurement plan with the

Commission and post the procurement plan on the websites.

(3) Within 5 days after the filing of the procurement

plan, any person objecting to the procurement plan shall

file an objection with the Commission. Within 10 days after

the filing, the Commission shall determine whether a

hearing is necessary. The Commission shall enter its order

confirming or modifying the procurement plan within 90 days

after the filing of the procurement plan by the Illinois

Power Agency.

(4) The Commission shall approve the procurement plan,

including expressly the forecast used in the procurement

plan, if the Commission determines that it will ensure

adequate, reliable, affordable, efficient, and

environmentally sustainable electric service at the lowest

total cost over time, taking into account any benefits of

price stability.

(e) The procurement process shall include each of the

following components:

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(1) Solicitation, pre-qualification, and registration

of bidders. The procurement administrator shall

disseminate information to potential bidders to promote a

procurement event, notify potential bidders that the

procurement administrator may enter into a post-bid price

negotiation with bidders that meet the applicable

benchmarks, provide supply requirements, and otherwise

explain the competitive procurement process. In addition

to such other publication as the procurement administrator

determines is appropriate, this information shall be

posted on the Illinois Power Agency's and the Commission's

websites. The procurement administrator shall also

administer the prequalification process, including

evaluation of credit worthiness, compliance with

procurement rules, and agreement to the standard form

contract developed pursuant to paragraph (2) of this

subsection (e). The procurement administrator shall then

identify and register bidders to participate in the

procurement event.

(2) Standard contract forms and credit terms and

instruments. The procurement administrator, in

consultation with the utilities, the Commission, and other

interested parties and subject to Commission oversight,

shall develop and provide standard contract forms for the

supplier contracts that meet generally accepted industry

practices. Standard credit terms and instruments that meet

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generally accepted industry practices shall be similarly

developed. The procurement administrator shall make

available to the Commission all written comments it

receives on the contract forms, credit terms, or

instruments. If the procurement administrator cannot reach

agreement with the applicable electric utility as to the

contract terms and conditions, the procurement

administrator must notify the Commission of any disputed

terms and the Commission shall resolve the dispute. The

terms of the contracts shall not be subject to negotiation

by winning bidders, and the bidders must agree to the terms

of the contract in advance so that winning bids are

selected solely on the basis of price.

(3) Establishment of a market-based price benchmark.

As part of the development of the procurement process, the

procurement administrator, in consultation with the

Commission staff, Agency staff, and the procurement

monitor, shall establish benchmarks for evaluating the

final prices in the contracts for each of the products that

will be procured through the procurement process. The

benchmarks shall be based on price data for similar

products for the same delivery period and same delivery

hub, or other delivery hubs after adjusting for that

difference. The price benchmarks may also be adjusted to

take into account differences between the information

reflected in the underlying data sources and the specific

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products and procurement process being used to procure

power for the Illinois utilities. The benchmarks shall be

confidential but shall be provided to, and will be subject

to Commission review and approval, prior to a procurement

event.

(4) Request for proposals competitive procurement

process. The procurement administrator shall design and

issue a request for proposals to supply electricity in

accordance with each utility's procurement plan, as

approved by the Commission. The request for proposals shall

set forth a procedure for sealed, binding commitment

bidding with pay-as-bid settlement, and provision for

selection of bids on the basis of price.

(5) A plan for implementing contingencies in the event

of supplier default or failure of the procurement process

to fully meet the expected load requirement due to

insufficient supplier participation, Commission rejection

of results, or any other cause.

(i) Event of supplier default: In the event of

supplier default, the utility shall review the

contract of the defaulting supplier to determine if the

amount of supply is 200 megawatts or greater, and if

there are more than 60 days remaining of the contract

term. If both of these conditions are met, and the

default results in termination of the contract, the

utility shall immediately notify the Illinois Power

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Agency that a request for proposals must be issued to

procure replacement power, and the procurement

administrator shall run an additional procurement

event. If the contracted supply of the defaulting

supplier is less than 200 megawatts or there are less

than 60 days remaining of the contract term, the

utility shall procure power and energy from the

applicable regional transmission organization market,

including ancillary services, capacity, and day-ahead

or real time energy, or both, for the duration of the

contract term to replace the contracted supply;

provided, however, that if a needed product is not

available through the regional transmission

organization market it shall be purchased from the

wholesale market.

(ii) Failure of the procurement process to fully

meet the expected load requirement: If the procurement

process fails to fully meet the expected load

requirement due to insufficient supplier participation

or due to a Commission rejection of the procurement

results, the procurement administrator, the

procurement monitor, and the Commission staff shall

meet within 10 days to analyze potential causes of low

supplier interest or causes for the Commission

decision. If changes are identified that would likely

result in increased supplier participation, or that

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would address concerns causing the Commission to

reject the results of the prior procurement event, the

procurement administrator may implement those changes

and rerun the request for proposals process according

to a schedule determined by those parties and

consistent with Section 1-75 of the Illinois Power

Agency Act and this subsection. In any event, a new

request for proposals process shall be implemented by

the procurement administrator within 90 days after the

determination that the procurement process has failed

to fully meet the expected load requirement.

(iii) In all cases where there is insufficient

supply provided under contracts awarded through the

procurement process to fully meet the electric

utility's load requirement, the utility shall meet the

load requirement by procuring power and energy from the

applicable regional transmission organization market,

including ancillary services, capacity, and day-ahead

or real time energy or both; provided, however, that if

a needed product is not available through the regional

transmission organization market it shall be purchased

from the wholesale market.

(6) The procurement process described in this

subsection is exempt from the requirements of the Illinois

Procurement Code, pursuant to Section 20-10 of that Code.

(f) Within 2 business days after opening the sealed bids,

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the procurement administrator shall submit a confidential

report to the Commission. The report shall contain the results

of the bidding for each of the products along with the

procurement administrator's recommendation for the acceptance

and rejection of bids based on the price benchmark criteria and

other factors observed in the process. The procurement monitor

also shall submit a confidential report to the Commission

within 2 business days after opening the sealed bids. The

report shall contain the procurement monitor's assessment of

bidder behavior in the process as well as an assessment of the

procurement administrator's compliance with the procurement

process and rules. The Commission shall review the confidential

reports submitted by the procurement administrator and

procurement monitor, and shall accept or reject the

recommendations of the procurement administrator within 2

business days after receipt of the reports.

(g) Within 3 business days after the Commission decision

approving the results of a procurement event, the utility shall

enter into binding contractual arrangements with the winning

suppliers using the standard form contracts; except that the

utility shall not be required either directly or indirectly to

execute the contracts if a tariff that is consistent with

subsection (l) of this Section has not been approved and placed

into effect for that utility.

(h) The names of the successful bidders and the load

weighted average of the winning bid prices for each contract

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type and for each contract term shall be made available to the

public at the time of Commission approval of a procurement

event. The Commission, the procurement monitor, the

procurement administrator, the Illinois Power Agency, and all

participants in the procurement process shall maintain the

confidentiality of all other supplier and bidding information

in a manner consistent with all applicable laws, rules,

regulations, and tariffs. Confidential information, including

the confidential reports submitted by the procurement

administrator and procurement monitor pursuant to subsection

(f) of this Section, shall not be made publicly available and

shall not be discoverable by any party in any proceeding,

absent a compelling demonstration of need, nor shall those

reports be admissible in any proceeding other than one for law

enforcement purposes.

(i) Within 2 business days after a Commission decision

approving the results of a procurement event or such other date

as may be required by the Commission from time to time, the

utility shall file for informational purposes with the

Commission its actual or estimated retail supply charges, as

applicable, by customer supply group reflecting the costs

associated with the procurement and computed in accordance with

the tariffs filed pursuant to subsection (l) of this Section

and approved by the Commission.

(j) Within 60 days following the effective date of this

amendatory Act, each electric utility that on December 31, 2005

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provided electric service to at least 100,000 customers in

Illinois shall prepare and file with the Commission an initial

procurement plan, which shall conform in all material respects

to the requirements of the procurement plan set forth in

subsection (b); provided, however, that the Illinois Power

Agency Act shall not apply to the initial procurement plan

prepared pursuant to this subsection. The initial procurement

plan shall identify the portfolio of power and energy products

to be procured and delivered for the period June 2008 through

May 2009, and shall identify the proposed procurement

administrator, who shall have the same experience and expertise

as is required of a procurement administrator hired pursuant to

Section 1-75 of the Illinois Power Agency Act. Copies of the

procurement plan shall be posted and made publicly available on

the Commission's website. The initial procurement plan may

include contracts for renewable resources that extend beyond

May 2009.

(i) Within 14 days following filing of the initial

procurement plan, any person may file a detailed objection

with the Commission contesting the procurement plan

submitted by the electric utility. All objections to the

electric utility's plan shall be specific, supported by

data or other detailed analyses. The electric utility may

file a response to any objections to its procurement plan

within 7 days after the date objections are due to be

filed. Within 7 days after the date the utility's response

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is due, the Commission shall determine whether a hearing is

necessary. If it determines that a hearing is necessary, it

shall require the hearing to be completed and issue an

order on the procurement plan within 60 days after the

filing of the procurement plan by the electric utility.

(ii) The order shall approve or modify the procurement

plan, approve an independent procurement administrator,

and approve or modify the electric utility's tariffs that

are proposed with the initial procurement plan. The

Commission shall approve the procurement plan if the

Commission determines that it will ensure adequate,

reliable, affordable, efficient, and environmentally

sustainable electric service at the lowest total cost over

time, taking into account any benefits of price stability.

(k) In order to promote price stability for residential and

small commercial customers during the transition to

competition in Illinois, and notwithstanding any other

provision of this Act, each electric utility subject to this

Section shall enter into one or more multi-year financial swap

contracts that become effective on the effective date of this

amendatory Act. These contracts may be executed with generators

and power marketers, including affiliated interests of the

electric utility. These contracts shall be for a term of no

more than 5 years and shall, for each respective utility or for

any Illinois electric utilities that are affiliated by virtue

of a common parent company and that are thereby considered a

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single electric utility for purposes of this subsection (k),

not exceed in the aggregate 3,000 megawatts for any hour of the

year. The contracts shall be financial contracts and not energy

sales contracts. The contracts shall be executed as

transactions under a negotiated master agreement based on the

form of master agreement for financial swap contracts sponsored

by the International Swaps and Derivatives Association, Inc.

and shall be considered pre-existing contracts in the

utilities' procurement plans for residential and small

commercial customers. Costs incurred pursuant to a contract

authorized by this subsection (k) shall be deemed prudently

incurred and reasonable in amount and the electric utility

shall be entitled to full cost recovery pursuant to the tariffs

filed with the Commission.

(l) An electric utility shall recover its costs incurred

under this Section, including, but not limited to, the costs of

procuring power and energy demand-response resources under

this Section. The utility shall file with the initial

procurement plan its proposed tariffs through which its costs

of procuring power that are incurred pursuant to a

Commission-approved procurement plan and those other costs

identified in this subsection (l), will be recovered. The

tariffs shall include a formula rate or charge designed to pass

through both the costs incurred by the utility in procuring a

supply of electric power and energy for the applicable customer

classes with no mark-up or return on the price paid by the

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utility for that supply, plus any just and reasonable costs

that the utility incurs in arranging and providing for the

supply of electric power and energy. The formula rate or charge

shall also contain provisions that ensure that its application

does not result in over or under recovery due to changes in

customer usage and demand patterns, and that provide for the

correction, on at least an annual basis, of any accounting

errors that may occur. A utility shall recover through the

tariff all reasonable costs incurred to implement or comply

with any procurement plan that is developed and put into effect

pursuant to Section 1-75 of the Illinois Power Agency Act and

this Section, including any fees assessed by the Illinois Power

Agency, costs associated with load balancing, and contingency

plan costs. The electric utility shall also recover its full

costs of procuring electric supply for which it contracted

before the effective date of this Section in conjunction with

the provision of full requirements service under fixed-price

bundled service tariffs subsequent to December 31, 2006. All

such costs shall be deemed to have been prudently incurred. The

pass-through tariffs that are filed and approved pursuant to

this Section shall not be subject to review under, or in any

way limited by, Section 16-111(i) of this Act.

(m) The Commission has the authority to adopt rules to

carry out the provisions of this Section. For the public

interest, safety, and welfare, the Commission also has

authority to adopt rules to carry out the provisions of this

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Section on an emergency basis immediately following the

effective date of this amendatory Act.

(n) Notwithstanding any other provision of this Act, any

affiliated electric utilities that submit a single procurement

plan covering their combined needs may procure for those

combined needs in conjunction with that plan, and may enter

jointly into power supply contracts, purchases, and other

procurement arrangements, and allocate capacity and energy and

cost responsibility therefor among themselves in proportion to

their requirements.

(o) On or before June 1 of each year, the Commission shall

hold an informal hearing for the purpose of receiving comments

on the prior year's procurement process and any recommendations

for change.

(p) An electric utility subject to this Section may propose

to invest, lease, own, or operate an electric generation

facility as part of its procurement plan, provided the utility

demonstrates that such facility is the least-cost option to

provide electric service to eligible retail customers. If the

facility is shown to be the least-cost option and is included

in a procurement plan prepared in accordance with Section 1-75

of the Illinois Power Agency Act and this Section, then the

electric utility shall make a filing pursuant to Section 8-406

of the Act, and may request of the Commission any statutory

relief required thereunder. If the Commission grants all of the

necessary approvals for the proposed facility, such supply

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shall thereafter be considered as a pre-existing contract under

subsection (b) of this Section. The Commission shall in any

order approving a proposal under this subsection specify how

the utility will recover the prudently incurred costs of

investing in, leasing, owning, or operating such generation

facility through just and reasonable rates charged to eligible

retail customers. Cost recovery for facilities included in the

utility's procurement plan pursuant to this subsection shall

not be subject to review under or in any way limited by the

provisions of Section 16-111(i) of this Act. Nothing in this

Section is intended to prohibit a utility from filing for a

fuel adjustment clause as is otherwise permitted under Section

9-220 of this Act.

(Source: P.A. 95-481, eff. 8-28-07.)

(220 ILCS 5/16-115)

Sec. 16-115. Certification of alternative retail electric

suppliers.

(a) Any alternative retail electric supplier must obtain a

certificate of service authority from the Commission in

accordance with this Section before serving any retail customer

or other user located in this State. An alternative retail

electric supplier may request, and the Commission may grant, a

certificate of service authority for the entire State or for a

specified geographic area of the State.

(b) An alternative retail electric supplier seeking a

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certificate of service authority shall file with the Commission

a verified application containing information showing that the

applicant meets the requirements of this Section. The

alternative retail electric supplier shall publish notice of

its application in the official State newspaper within 10 days

following the date of its filing. No later than 45 days after

the application is properly filed with the Commission, and such

notice is published, the Commission shall issue its order

granting or denying the application.

(c) An application for a certificate of service authority

shall identify the area or areas in which the applicant intends

to offer service and the types of services it intends to offer.

Applicants that seek to serve residential or small commercial

retail customers within a geographic area that is smaller than

an electric utility's service area shall submit evidence

demonstrating that the designation of this smaller area does

not violate Section 16-115A. An applicant that seeks to serve

residential or small commercial retail customers may state in

its application for certification any limitations that will be

imposed on the number of customers or maximum load to be

served.

(d) The Commission shall grant the application for a

certificate of service authority if it makes the findings set

forth in this subsection based on the verified application and

such other information as the applicant may submit:

(1) That the applicant possesses sufficient technical,

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financial and managerial resources and abilities to

provide the service for which it seeks a certificate of

service authority. In determining the level of technical,

financial and managerial resources and abilities which the

applicant must demonstrate, the Commission shall consider

(i) the characteristics, including the size and financial

sophistication, of the customers that the applicant seeks

to serve, and (ii) whether the applicant seeks to provide

electric power and energy using property, plant and

equipment which it owns, controls or operates;

(2) That the applicant will comply with all applicable

federal, State, regional and industry rules, policies,

practices and procedures for the use, operation, and

maintenance of the safety, integrity and reliability, of

the interconnected electric transmission system;

(3) That the applicant will only provide service to

retail customers in an electric utility's service area that

are eligible to take delivery services under this Act;

(4) That the applicant will comply with such

informational or reporting requirements as the Commission

may by rule establish and provide the information required

by Section 16-112. Any data related to contracts for the

purchase and sale of electric power and energy shall be

made available for review by the Staff of the Commission on

a confidential and proprietary basis and only to the extent

and for the purposes which the Commission determines are

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reasonably necessary in order to carry out the purposes of

this Act;

(5) That the applicant will procure renewable energy

resources and will source electricity from clean coal

facilities, as defined in Section 1-10 of the Illinois

Power Agency Act, in amounts at least equal to the

percentages set forth in subsections (c) and (d) of Section

1-75 of the Illinois Power Agency Act. For purposes of this

Section:

(i) the required procurement of renewable energy

resources shall be measured as a percentage of the

actual amount of electricity (megawatt-hours) supplied

by the alternative retail electric supplier in the

prior calendar year, as reported for that year to the

Commission. This obligation applies to all electricity

supplied pursuant to retail contracts executed,

extended, or otherwise revised after the effective

date of this amendatory Act, provided the alternative

retail electric supplier submits all documentation

needed by the Commission to determine the actual amount

of electricity supplied under contracts that may be

excluded under this limitation;

(ii) an alternative retail electric supplier need

not actually deliver electricity to its customers to

comply with this Section, provided that if the

alternative retail electric supplier claims credit for

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such purpose, subsequent purchasers shall not receive

any emission credits or renewable energy credits in

connection with the purchase of such electricity.

Alternative retail electric suppliers shall maintain

adequate records documenting the contractual

disposition of all electricity procured to comply with

this Section and shall file an accounting in the report

which must be filed with the Commission on April 1 of

each year, starting in 2010, in accordance with

subsection (d-5) of this Section;

(iii) the required procurement of renewable energy

resources and sourcing of electricity generated by

clean coal facilities, other than the initial clean

coal facility, shall be limited to the amount of

electricity that can be procured or sourced at a price

at or below the benchmarks approved by the Commission

each year in accordance with item (1) of subsection (c)

and items (1) and (5) of subsection (d) of Section 1-75

of the Illinois Power Agency Act;

(iv) all alternative retail electric suppliers

shall execute a sourcing agreement to source

electricity from the initial clean coal facility, on

the terms set forth in paragraphs (3) and (4) of

subsection (d) of Section 1-75 of the Illinois Power

Agency Act, except that in lieu of the requirements in

subparagraphs (A)(v), (B)(i), (C)(v), and (C)(vi) of

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paragraph (3) of that subsection (d), the applicant

shall execute one or more of the following:

(1) if the sourcing agreement is a power

purchase agreement, a contract with the initial

clean coal facility to purchase in each hour an

amount of electricity equal to all clean coal

energy made available from the initial clean coal

facility during such hour, which the utilities are

not required to procure under the terms of

subsection (d) of Section 1-75 of the Illinois

Power Agency Act, multiplied by a fraction, the

numerator of which is the alternative retail

electric supplier'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 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 paragraph (5) of subsection

(d) of this Section and subsection (d) of Section

1-75 of the Illinois Power Agency Act plus the

total sales of electricity (expressed in

kilowatthours sold) by utilities outside of their

service areas during such prior month, pursuant to

subsection (c) of Section 16-116 of this Act; or

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(2) if the sourcing agreement is a contract for

differences, a contract with the initial clean

coal facility in each hour with respect to an

amount of electricity equal to all clean coal

energy made available from the initial clean coal

facility during such hour, which the utilities are

not required to procure under the terms of

subsection (d) of Section 1-75 of the Illinois

Power Agency Act, multiplied by a fraction, the

numerator of which is the alternative retail

electric supplier'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 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 paragraph (5) of subsection

(d) of this Section and subsection (d) of Section

1-75 of the Illinois Power Agency Act plus the

total sales of electricity (expressed in

kilowatthours sold) by utilities outside of their

service areas during such prior month, pursuant to

subsection (c) of Section 16-116 of this Act;

(v) if, in any year after the first year of

commercial operation, the owner of the clean coal

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facility fails to demonstrate to the Commission that

the initial clean coal facility captured and

sequestered at least 50% of the total carbon emissions

that the facility would otherwise emit or that

sequestration of emissions from prior years has

failed, resulting in the release of carbon into the

atmosphere, the owner of the facility must offset

excess emissions. Any such carbon offsets must be

permanent, additional, verifiable, real, located

within the State of Illinois, and legally and

practicably enforceable. The costs of any such offsets

that are not recoverable shall not exceed $15 million

in any given year. No costs of any such purchases of

carbon offsets may be recovered from an alternative

retail electric supplier or its customers. All carbon

offsets purchased for this purpose and any carbon

emission credits associated with sequestration of

carbon from the facility must be permanently retired.

The initial clean coal facility shall not forfeit its

designation as a clean coal 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 requirement and the other terms of this

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contract provision. Compliance with the sequestration

requirements and offset purchase requirements that

apply to the initial clean coal facility 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

(Blank);

(6) With respect to an applicant that seeks to serve

residential or small commercial retail customers, that the

area to be served by the applicant and any limitations it

proposes on the number of customers or maximum amount of

load to be served meet the provisions of Section 16-115A,

provided, that the Commission can extend the time for

considering such a certificate request by up to 90 days,

and can schedule hearings on such a request;

(7) That the applicant meets the requirements of

subsection (a) of Section 16-128; and

(8) That the applicant will comply with all other

applicable laws and regulations.

(d-5) The Commission shall, after notice and hearing,

revoke the certification of any alternative retail electric

supplier that fails to execute a sourcing agreement with the

initial clean coal facility, as required by item (5) of

subsection (d) of this Section. The sourcing agreements with

this initial clean coal facility shall be subject to both

approval of the initial clean coal facility by the General

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Assembly and satisfaction of the requirements of paragraph (4)

of subsection (d) of Section 1-75 of the Illinois Power Agency

Act, and shall be executed within 90 days after any such

approval by the General Assembly. The Commission shall also

revoke the certification of any alternative retail electric

supplier that, on April 1, 2010 or on April 1 of any year

thereafter, fails to demonstrate that the electricity provided

to the alternative retail electricity supplier's Illinois

customers during the previous year was generated by renewable

energy resources and clean coal facilities in amounts at least

equal to the percentages set forth in subsections (c) and (d)

of Section 1-75 of the Illinois Power Agency Act, as limited by

subsection (d)(5)(iii) of this Section. The Commission shall

not accept an application for certification from an alternative

retail electric supplier that has lost certification under this

subsection (d-5), or any corporate affiliate thereof, for at

least one year from the date of revocation.

(e) A retail customer that owns a cogeneration or

self-generation facility and that seeks certification only to

provide electric power and energy from such facility to retail

customers at separate locations which customers are both (i)

owned by, or a subsidiary or other corporate affiliate of, such

applicant and (ii) eligible for delivery services, shall be

granted a certificate of service authority upon filing an

application and notifying the Commission that it has entered

into an agreement with the relevant electric utilities pursuant

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to Section 16-118. Provided, however, that if the retail

customer owning such cogeneration or self-generation facility

would not be charged a transition charge due to the exemption

provided under subsection (f) of Section 16-108 prior to the

certification, and the retail customers at separate locations

are taking delivery services in conjunction with purchasing

power and energy from the facility, the retail customer on

whose premises the facility is located shall not thereafter be

required to pay transition charges on the power and energy that

such retail customer takes from the facility.

(f) The Commission shall have the authority to promulgate

rules and regulations to carry out the provisions of this

Section. On or before May 1, 1999, the Commission shall adopt a

rule or rules applicable to the certification of those

alternative retail electric suppliers that seek to serve only

nonresidential retail customers with maximum electrical

demands of one megawatt or more which shall provide for (i)

expedited and streamlined procedures for certification of such

alternative retail electric suppliers and (ii) specific

criteria which, if met by any such alternative retail electric

supplier, shall constitute the demonstration of technical,

financial and managerial resources and abilities to provide

service required by subsection (d) (1) of this Section, such as

a requirement to post a bond or letter of credit, from a

responsible surety or financial institution, of sufficient

size for the nature and scope of the services to be provided;

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demonstration of adequate insurance for the scope and nature of

the services to be provided; and experience in providing

similar services in other jurisdictions.

(Source: P.A. 95-130, eff. 1-1-08.)

(220 ILCS 5/16-116)

Sec. 16-116. Commission oversight of electric utilities

serving retail customers outside their service areas or

providing competitive, non-tariffed services.

(a) An electric utility that has a tariff on file for

delivery services may, without regard to any otherwise

applicable tariffs on file, provide electric power and energy

to one or more retail customers located outside its service

area, but only to the extent (i) such retail customer (A) is

eligible for delivery services under any delivery services

tariff filed with the Commission by the electric utility in

whose service area the retail customer is located and (B) has

either elected to take such delivery services or has paid or

contracted to pay the charges specified in Sections 16-108 and

16-114, or (ii) if such retail customer is served by a

municipal system or electric cooperative, the customer is

eligible for delivery services under the terms and conditions

for such service established by the municipal system or

electric cooperative serving that customer.

(b) An electric utility may offer any competitive service

to any customer or group of customers without filing contracts

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with or seeking approval of the Commission, notwithstanding any

rule or regulation that would require such approval. The

Commission shall not increase or decrease the prices, and may

not alter or add to the terms and conditions for the utility's

competitive services, from those agreed to by the electric

utility and the customer or customers. Non-tariffed,

competitive services shall not be subject to the provisions of

the Electric Supplier Act or to Articles V, VII, VIII or IX of

the Act, except to the extent that any provisions of such

Articles are made applicable to alternative retail electric

suppliers pursuant to Sections 16-115 and 16-115A, but shall be

subject to the provisions of subsections (b) through (g) of

Section 16-115A, and Section 16-115B to the same extent such

provisions are applicable to the services provided by

alternative retail electric suppliers.

(c) Electric utilities serving retail customers outside

their service areas shall be subject to the requirements of

paragraph (5) of subsection (d) of Section 16-115 of the Public

Utilities Act, except that the numerators referred to in that

subsection (d) shall be the utility's retail market sales of

electricity (expressed in kilowatthours sold) in the State

outside of the utility's service territory in the prior month.

(Source: P.A. 90-561, eff. 12-16-97.)

ARTICLE 5

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Section 5-5. The Public Utilities Act is amended by

changing Section 2-203 as follows:

(220 ILCS 5/2-203)

(Section scheduled to be repealed on January 1, 2009)

Sec. 2-203. Public Utility Fund base maintenance

contribution. Each For each of the years 2003 through 2008,

each electric utility as defined in Section 16-102 of this Act

providing service to more than 12,500 customers in this State

on January 1, 1995 shall contribute annually a pro rata share

of a total amount of $5,500,000 based upon the number of

kilowatt-hours delivered to retail customers within this State

by each such electric utility in the 12 months preceding the

year of contribution. On or before May 1 of each year, the

Illinois Commerce Commission shall determine and notify the

Illinois Department of Revenue of the pro rata share owed by

each electric utility based upon information supplied annually

to the Commission. On or before June 1 of each year, the

Department of Revenue shall send written notification to each

electric utility of the amount of pro rata share they owe.

These contributions shall be remitted to the Department of

Revenue no earlier that July 1 and no later than July 31 of

each year the contribution is due on a return prescribed and

furnished by the Department of Revenue showing such information

as the Department of Revenue may reasonably require. The

Department of Revenue shall place the funds remitted under this

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Section in the Public Utility Fund in the State treasury. The

funds received pursuant to this Section shall be subject to

appropriation by the General Assembly. If an electric utility

does not remit its pro rata share to the Department of Revenue,

the Department of Revenue must inform the Illinois Commerce

Commission of such failure. The Illinois Commerce Commission

may then revoke the certification of that electric utility.

This Section is repealed on January 1, 2014 2009.

(Source: P.A. 92-600, eff. 6-28-02.)

ARTICLE 10.

Section 10-5. The Public Utilities Act is amended by

changing Section 16-125 as follows:

(220 ILCS 5/16-125)

Sec. 16-125. Transmission and distribution reliability

requirements.

(a) To assure the reliable delivery of electricity to all

customers in this State and the effective implementation of the

provisions of this Article, the Commission shall, within 180

days of the effective date of this Article, adopt rules and

regulations for assessing and assuring the reliability of the

transmission and distribution systems and facilities that are

under the Commission's jurisdiction.

(b) These rules and regulations shall require each electric

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utility or alternative retail electric supplier owning,

controlling, or operating transmission and distribution

facilities and equipment subject to the Commission's

jurisdiction, referred to in this Section as "jurisdictional

entities", to adopt and implement procedures for restoring

transmission and distribution services to customers after

transmission or distribution outages on a nondiscriminatory

basis without regard to whether a customer has chosen the

electric utility, an affiliate of the electric utility, or

another entity as its provider of electric power and energy.

These rules and regulations shall also, at a minimum,

specifically require each jurisdictional entity to submit

annually to the Commission.

(1) the number and duration of planned and unplanned

outages during the prior year and their impacts on

customers;

(2) outages that were controllable and outages that

were exacerbated in scope or duration by the condition of

facilities, equipment or premises or by the actions or

inactions of operating personnel or agents;

(3) customer service interruptions that were due

solely to the actions or inactions of an alternative retail

electric supplier or a public utility in supplying power or

energy;

(4) a detailed report of the age, current condition,

reliability and performance of the jurisdictional entity's

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existing transmission and distribution facilities, which

shall include, without limitation, the following data:

(i) a summary of the jurisdictional entity's

outages and voltage variances reportable under the

Commission's rules;

(ii) the jurisdictional entity's expenditures for

transmission construction and maintenance, the ratio

of those expenditures to the jurisdictional entity's

transmission investment, and the average remaining

depreciation lives of the entity's transmission

facilities, expressed as a percentage of total

depreciation lives;

(iii) the jurisdictional entity's expenditures for

distribution construction and maintenance, the ratio

of those expenditures to the jurisdictional entity's

distribution investment, and the average remaining

depreciation lives of the entity's distribution

facilities, expressed as a percentage of total

depreciation lives;

(iv) a customer satisfaction survey covering,

among other areas identified in Commission rules,

reliability, customer service, and understandability

of the jurisdictional entity's services and prices;

and

(v) the corresponding information, in the same

format, for the previous 3 years, if available;

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(5) a plan for future investment and reliability

improvements for the jurisdictional entity's transmission

and distribution facilities that will ensure continued

reliable delivery of energy to customers and provide the

delivery reliability needed for fair and open competition;

and

(6) a report of the jurisdictional entity's

implementation of its plan filed pursuant to subparagraph

(5) for the previous reporting period.

(c) The Commission rules shall set forth the criteria that

will be used to assess each jurisdictional entity's annual

report and evaluate its reliability performance. Such criteria

must take into account, at a minimum: the items required to be

reported in subsection (b); the relevant characteristics of the

area served; the age and condition of the system's equipment

and facilities; good engineering practices; the costs of

potential actions; and the benefits of avoiding the risks of

service disruption.

(d) At least every 3 years, beginning in the year the

Commission issues the rules required by subsection (a) or the

following year if the rules are issued after June 1, the

Commission shall assess the annual report of each

jurisdictional entity and evaluate its reliability

performance. The Commission's evaluation shall include

specific identification of, and recommendations concerning,

any potential reliability problems that it has identified as a

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result of its evaluation.

(e) In the event that more than either (i) 30,000 (or some

other number, but only as provided by statute) of the total

customers or (ii) 0.8% (or some other percentage, but only as

provided by statute) of the total customers, whichever is less,

of an electric utility are subjected to a continuous power

interruption of 4 hours or more that results in the

transmission of power at less than 50% of the standard voltage,

or that results in the total loss of power transmission, the

utility shall be responsible for compensating customers

affected by that interruption for 4 hours or more for all

actual damages, which shall not include consequential damages,

suffered as a result of the power interruption. The utility

shall also reimburse the affected municipality, county, or

other unit of local government in which the power interruption

has taken place for all emergency and contingency expenses

incurred by the unit of local government as a result of the

interruption. A waiver of the requirements of this subsection

may be granted by the Commission in instances in which the

utility can show that the power interruption was a result of

any one or more of the following causes:

(1) Unpreventable damage due to weather events or

conditions.

(2) Customer tampering.

(3) Unpreventable damage due to civil or international

unrest or animals.

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(4) Damage to utility equipment or other actions by a

party other than the utility, its employees, agents, or

contractors.

Loss of revenue and expenses incurred in complying with this

subsection may not be recovered from ratepayers.

(f) In the event of a power surge or other fluctuation that

causes damage and affects more than either (i) 30,000 (or some

other number, but only as provided by statute) of the total

customers or (ii) 0.8% (or some other percentage, but only as

provided by statute) of the total customers, whichever is less,

the electric utility shall pay to affected customers the

replacement value of all goods damaged as a result of the power

surge or other fluctuation unless the utility can show that the

power surge or other fluctuation was due to one or more of the

following causes:

(1) Unpreventable damage due to weather events or

conditions.

(2) Customer tampering.

(3) Unpreventable damage due to civil or international

unrest or animals.

(4) Damage to utility equipment or other actions by a

party other than the utility, its employees, agents, or

contractors.

Loss of revenue and expenses incurred in complying with this

subsection may not be recovered from ratepayers. Customers with

respect to whom a waiver has been granted by the Commission

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pursuant to subparagraphs (1)-(4) of subsections (e) and (f)

shall not count toward the either (i) 30,000 (or some other

number, but only as provided by statute) of the total customers

or (ii) 0.8% (or some other percentage, but only as provided by

statute) of the total customers required therein.

(g) Whenever an electric utility must perform planned or

routine maintenance or repairs on its equipment that will

result in transmission of power at less than 50% of the

standard voltage, loss of power, or power fluctuation (as

defined in subsection (f)), the utility shall make reasonable

efforts to notify potentially affected customers no less than

24 hours in advance of performance of the repairs or

maintenance.

(h) Remedies provided for under this Section may be sought

exclusively through the Illinois Commerce Commission as

provided under Section 10-109 of this Act. Damages awarded

under this Section for a power interruption shall be limited to

actual damages, which shall not include consequential damages,

and litigation costs. A utility's request for a waiver of this

Section shall be timely if filed no later than 30 days after

the date on which a claim is filed with the Commission seeking

damages or expense reimbursement under this Section. No utility

shall be liable under this Section while a request for waiver

is pending. Damage awards may not be paid out of utility rate

funds.

(i) The provisions of this Section shall not in any way

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diminish or replace other civil or administrative remedies

available to a customer or a class of customers.

(j) The Commission shall by rule require an electric

utility to maintain service records detailing information on

each instance of transmission of power at less than 50% of the

standard voltage, loss of power, or power fluctuation (as

defined in subsection (f)), that affects 10 or more customers.

Occurrences that are momentary shall not be required to be

recorded or reported. The service record shall include, for

each occurrence, the following information:

(1) The date.

(2) The time of occurrence.

(3) The duration of the incident.

(4) The number of customers affected.

(5) A description of the cause.

(6) The geographic area affected.

(7) The specific equipment involved in the fluctuation

or interruption.

(8) A description of measures taken to restore service.

(9) A description of measures taken to remedy the cause

of the power interruption or fluctuation.

(10) A description of measures taken to prevent future

occurrence.

(11) The amount of remuneration, if any, paid to

affected customers.

(12) A statement of whether the fixed charge was waived

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for affected customers.

Copies of the records containing this information shall be

available for public inspection at the utility's offices, and

copies thereof may be obtained upon payment of a fee not

exceeding the reasonable cost of reproduction. A copy of each

record shall be filed with the Commission and shall be

available for public inspection. Copies of the records may be

obtained upon payment of a fee not exceeding the reasonable

cost of reproduction.

(k) The requirements of subsections (e) through (j) of this

Section shall apply only to an electric public utility having

100,000 1,000,000 or more customers.

(Source: P.A. 90-561, eff. 12-16-97.)

ARTICLE 15

Section 15-5. The Public Utilities Act is amended by

changing Section 2-202 as follows:

(220 ILCS 5/2-202) (from Ch. 111 2/3, par. 2-202)

Sec. 2-202. Policy; Public Utility Fund; tax.

(a) It is declared to be the public policy of this State

that in order to maintain and foster the effective regulation

of public utilities under this Act in the interests of the

People of the State of Illinois and the public utilities as

well, the public utilities subject to regulation under this Act

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and which enjoy the privilege of operating as public utilities

in this State, shall bear the expense of administering this Act

by means of a tax on such privilege measured by the annual

gross revenue of such public utilities in the manner provided

in this Section. For purposes of this Section, "expense of

administering this Act" includes any costs incident to studies,

whether made by the Commission or under contract entered into

by the Commission, concerning environmental pollution problems

caused or contributed to by public utilities and the means for

eliminating or abating those problems. Such proceeds shall be

deposited in the Public Utility Fund in the State treasury.

(b) All of the ordinary and contingent expenses of the

Commission incident to the administration of this Act shall be

paid out of the Public Utility Fund except the compensation of

the members of the Commission which shall be paid from the

General Revenue Fund. Notwithstanding other provisions of this

Act to the contrary, the ordinary and contingent expenses of

the Commission incident to the administration of the Illinois

Commercial Transportation Law may be paid from appropriations

from the Public Utility Fund through the end of fiscal year

1986.

(c) A tax is imposed upon each public utility subject to

the provisions of this Act equal to .08% of its gross revenue

for each calendar year commencing with the calendar year

beginning January 1, 1982, except that the Commission may, by

rule, establish a different rate no greater than 0.1%. For

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purposes of this Section, "gross revenue" shall not include

revenue from the production, transmission, distribution, sale,

delivery, or furnishing of electricity. "Gross revenue" shall

not include amounts paid by telecommunications retailers under

the Telecommunications Infrastructure Maintenance Fee Act.

(d) Annual gross revenue returns shall be filed in

accordance with paragraph (1) or (2) of this subsection (d).

(1) Except as provided in paragraph (2) of this

subsection (d), on or before January 10 of each year each

public utility subject to the provisions of this Act shall

file with the Commission an estimated annual gross revenue

return containing an estimate of the amount of its gross

revenue for the calendar year commencing January 1 of said

year and a statement of the amount of tax due for said

calendar year on the basis of that estimate. Public

utilities may also file revised returns containing updated

estimates and updated amounts of tax due during the

calendar year. These revised returns, if filed, shall form

the basis for quarterly payments due during the remainder

of the calendar year. In addition, on or before March 31 of

each year, each public utility shall file an amended return

showing the actual amount of gross revenues shown by the

company's books and records as of December 31 of the

previous year. Forms and instructions for such estimated,

revised, and amended returns shall be devised and supplied

by the Commission.

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(2) Beginning with returns due after January 1, 2002,

the requirements of paragraph (1) of this subsection (d)

shall not apply to any public utility in any calendar year

for which the total tax the public utility owes under this

Section is less than $10,000. For such public utilities

with respect to such years, the public utility shall file

with the Commission, on or before March 31 of the following

year, an annual gross revenue return for the year and a

statement of the amount of tax due for that year on the

basis of such a return. Forms and instructions for such

returns and corrected returns shall be devised and supplied

by the Commission.

(e) All returns submitted to the Commission by a public

utility as provided in this subsection (e) or subsection (d) of

this Section shall contain or be verified by a written

declaration by an appropriate officer of the public utility

that the return is made under the penalties of perjury. The

Commission may audit each such return submitted and may, under

the provisions of Section 5-101 of this Act, take such measures

as are necessary to ascertain the correctness of the returns

submitted. The Commission has the power to direct the filing of

a corrected return by any utility which has filed an incorrect

return and to direct the filing of a return by any utility

which has failed to submit a return. A taxpayer's signing a

fraudulent return under this Section is perjury, as defined in

Section 32-2 of the Criminal Code of 1961.

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(f) (1) For all public utilities subject to paragraph (1)

of subsection (d), at least one quarter of the annual amount of

tax due under subsection (c) shall be paid to the Commission on

or before the tenth day of January, April, July, and October of

the calendar year subject to tax. In the event that an

adjustment in the amount of tax due should be necessary as a

result of the filing of an amended or corrected return under

subsection (d) or subsection (e) of this Section, the amount of

any deficiency shall be paid by the public utility together

with the amended or corrected return and the amount of any

excess shall, after the filing of a claim for credit by the

public utility, be returned to the public utility in the form

of a credit memorandum in the amount of such excess or be

refunded to the public utility in accordance with the

provisions of subsection (k) of this Section. However, if such

deficiency or excess is less than $1, then the public utility

need not pay the deficiency and may not claim a credit.

(2) Any public utility subject to paragraph (2) of

subsection (d) shall pay the amount of tax due under subsection

(c) on or before March 31 next following the end of the

calendar year subject to tax. In the event that an adjustment

in the amount of tax due should be necessary as a result of the

filing of a corrected return under subsection (e), the amount

of any deficiency shall be paid by the public utility at the

time the corrected return is filed. Any excess tax payment by

the public utility shall be returned to it after the filing of

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a claim for credit, in the form of a credit memorandum in the

amount of the excess. However, if such deficiency or excess is

less than $1, the public utility need not pay the deficiency

and may not claim a credit.

(g) Each installment or required payment of the tax imposed

by subsection (c) becomes delinquent at midnight of the date

that it is due. Failure to make a payment as required by this

Section shall result in the imposition of a late payment

penalty, an underestimation penalty, or both, as provided by

this subsection. The late payment penalty shall be the greater

of:

(1) $25 for each month or portion of a month that the

installment or required payment is unpaid or

(2) an amount equal to the difference between what

should have been paid on the due date, based upon the most

recently filed estimated, annual, or amended return, and

what was actually paid, times 1%, for each month or portion

of a month that the installment or required payment goes

unpaid. This penalty may be assessed as soon as the

installment or required payment becomes delinquent.

The underestimation penalty shall apply to those public

utilities subject to paragraph (1) of subsection (d) and shall

be calculated after the filing of the amended return. It shall

be imposed if the amount actually paid on any of the dates

specified in subsection (f) is not equal to at least one-fourth

of the amount actually due for the year, and shall equal the

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greater of:

(1) $25 for each month or portion of a month that the

amount due is unpaid or

(2) an amount equal to the difference between what

should have been paid, based on the amended return, and

what was actually paid as of the date specified in

subsection (f), times a percentage equal to 1/12 of the sum

of 10% and the percentage most recently established by the

Commission for interest to be paid on customer deposits

under 83 Ill. Adm. Code 280.70(e)(1), for each month or

portion of a month that the amount due goes unpaid, except

that no underestimation penalty shall be assessed if the

amount actually paid on or before each of the dates

specified in subsection (f) was based on an estimate of

gross revenues at least equal to the actual gross revenues

for the previous year. The Commission may enforce the

collection of any delinquent installment or payment, or

portion thereof by legal action or in any other manner by

which the collection of debts due the State of Illinois may

be enforced under the laws of this State. The executive

director or his designee may excuse the payment of an

assessed penalty or a portion of an assessed penalty if he

determines that enforced collection of the penalty as

assessed would be unjust.

(h) All sums collected by the Commission under the

provisions of this Section shall be paid promptly after the

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receipt of the same, accompanied by a detailed statement

thereof, into the Public Utility Fund in the State treasury.

(i) During the month of October of each odd-numbered year

the Commission shall:

(1) determine the amount of all moneys deposited in the

Public Utility Fund during the preceding fiscal biennium

plus the balance, if any, in that fund at the beginning of

that biennium;

(2) determine the sum total of the following items: (A)

all moneys expended or obligated against appropriations

made from the Public Utility Fund during the preceding

fiscal biennium, plus (B) the sum of the credit memoranda

then outstanding against the Public Utility Fund, if any;

and

(3) determine the amount, if any, by which the sum

determined as provided in item (1) exceeds the amount

determined as provided in item (2).

If the amount determined as provided in item (3) of this

subsection exceeds 50% of the previous fiscal year's

appropriation level $5,000,000, the Commission shall then

compute the proportionate amount, if any, which (x) the tax

paid hereunder by each utility during the preceding biennium,

and (y) the amount paid into the Public Utility Fund during the

preceding biennium by the Department of Revenue pursuant to

Sections 2-9 and 2-11 of the Electricity Excise Tax Law, bears

to the difference between the amount determined as provided in

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item (3) of this subsection (i) and 50% of the previous fiscal

year's appropriation level $5,000,000. The Commission shall

cause the proportionate amount determined with respect to

payments made under the Electricity Excise Tax Law to be

transferred into the General Revenue Fund in the State

Treasury, and notify each public utility that it may file

during the 3 month period after the date of notification a

claim for credit for the proportionate amount determined with

respect to payments made hereunder by the public utility. If

the proportionate amount is less than $10, no notification will

be sent by the Commission, and no right to a claim exists as to

that amount. Upon the filing of a claim for credit within the

period provided, the Commission shall issue a credit memorandum

in such amount to such public utility. Any claim for credit

filed after the period provided for in this Section is void.

(j) Credit memoranda issued pursuant to subsection (f) and

credit memoranda issued after notification and filing pursuant

to subsection (i) may be applied for the 2 year period from the

date of issuance, against the payment of any amount due during

that period under the tax imposed by subsection (c), or,

subject to reasonable rule of the Commission including

requirement of notification, may be assigned to any other

public utility subject to regulation under this Act. Any

application of credit memoranda after the period provided for

in this Section is void.

(k) The chairman or executive director may make refund of

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fees, taxes or other charges whenever he shall determine that

the person or public utility will not be liable for payment of

such fees, taxes or charges during the next 24 months and he

determines that the issuance of a credit memorandum would be

unjust.

(Source: P.A. 92-11, eff. 6-11-01; 92-22, eff. 6-30-01; 92-526,

eff. 1-1-03.)

Section 15-10. The Illinois Vehicle Code is amended by

changing Section 18c-1503 as follows:

(625 ILCS 5/18c-1503) (from Ch. 95 1/2, par. 18c-1503)

Sec. 18c-1503. Legislative Intent. It is the intent of the

Legislature that the exercise of powers under Sections 18c-1501

and 18c-1502 of this Chapter shall not diminish revenues to the

Commission, and that any surplus or deficit of revenues in the

Transportation Regulatory Fund, together with any projected

changes in the cost of administering and enforcing this

Chapter, should be considered in establishing or adjusting fees

and taxes in succeeding years. The Commission shall administer

fees and taxes under this Chapter in such a manner as to insure

that any surplus generated or accumulated in the Transportation

Regulatory Fund does not exceed 50% of the previous fiscal

year's appropriation the surplus accumulated in the Motor

Vehicle Fund during fiscal year 1984, and shall adjust the

level of such fees and taxes to insure compliance with this

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provision.

(Source: P.A. 84-796.)

ARTICLE 99

Section 99-97. Severability. The provisions of this Act are

severable under Section 1.31 of the Statute on Statutes.

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