Bill Text: IL HB0691 | 2011-2012 | 97th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Public Utilities Act. Makes a technical change in a Section concerning authorization of water and sewer surcharges by the Illinois Commerce Commission.

Sponsorship: Partisan Bill (Democrat 2)

Status: (Passed) 2011-12-08 - Public Act . . . . . . . . . 97-0630 [HB0691 Detail]

Download: Illinois-2011-HB0691-Introduced.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Public Utilities Act is amended by changing
Section 9-220 as follows:
(220 ILCS 5/9-220) (from Ch. 111 2/3, par. 9-220)
Sec. 9-220. Rate changes based on changes in fuel costs.
(a) Notwithstanding the provisions of Section 9-201, the
Commission may authorize the increase or decrease of rates and
charges based upon changes in the cost of fuel used in the
generation or production of electric power, changes in the cost
of purchased power, or changes in the cost of purchased gas
through the application of fuel adjustment clauses or purchased
gas adjustment clauses. The Commission may also authorize the
increase or decrease of rates and charges based upon
expenditures or revenues resulting from the purchase or sale of
emission allowances created under the federal Clean Air Act
Amendments of 1990, through such fuel adjustment clauses, as a
cost of fuel. For the purposes of this paragraph, cost of fuel
used in the generation or production of electric power shall
include the amount of any fees paid by the utility for the
implementation and operation of a process for the
desulfurization of the flue gas when burning high sulfur coal

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at any location within the State of Illinois irrespective of
the attainment status designation of such location; but shall
not include transportation costs of coal (i) except to the
extent that for contracts entered into on and after the
effective date of this amendatory Act of 1997, the cost of the
coal, including transportation costs, constitutes the lowest
cost for adequate and reliable fuel supply reasonably available
to the public utility in comparison to the cost, including
transportation costs, of other adequate and reliable sources of
fuel supply reasonably available to the public utility, or (ii)
except as otherwise provided in the next 3 sentences of this
paragraph. Such costs of fuel shall, when requested by a
utility or at the conclusion of the utility's next general
electric rate proceeding, whichever shall first occur, include
transportation costs of coal purchased under existing coal
purchase contracts. For purposes of this paragraph "existing
coal purchase contracts" means contracts for the purchase of
coal in effect on the effective date of this amendatory Act of
1991, as such contracts may thereafter be amended, but only to
the extent that any such amendment does not increase the
aggregate quantity of coal to be purchased under such contract.
Nothing herein shall authorize an electric utility to recover
through its fuel adjustment clause any amounts of
transportation costs of coal that were included in the revenue
requirement used to set base rates in its most recent general
rate proceeding. Cost shall be based upon uniformly applied

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accounting principles. Annually, the Commission shall initiate
public hearings to determine whether the clauses reflect actual
costs of fuel, gas, power, or coal transportation purchased to
determine whether such purchases were prudent, and to reconcile
any amounts collected with the actual costs of fuel, power,
gas, or coal transportation prudently purchased. In each such
proceeding, the burden of proof shall be upon the utility to
establish the prudence of its cost of fuel, power, gas, or coal
transportation purchases and costs. The Commission shall issue
its final order in each such annual proceeding for an electric
utility by December 31 of the year immediately following the
year to which the proceeding pertains, provided, that the
Commission shall issue its final order with respect to such
annual proceeding for the years 1996 and earlier by December
31, 1998.
(b) A public utility providing electric service, other than
a public utility described in subsections (e) or (f) of this
Section, may at any time during the mandatory transition period
file with the Commission proposed tariff sheets that eliminate
the public utility's fuel adjustment clause and adjust the
public utility's base rate tariffs by the amount necessary for
the base fuel component of the base rates to recover the public
utility's average fuel and power supply costs per kilowatt-hour
for the 2 most recent years for which the Commission has issued
final orders in annual proceedings pursuant to subsection (a),
where the average fuel and power supply costs per kilowatt-hour

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shall be calculated as the sum of the public utility's prudent
and allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years.
Notwithstanding any contrary or inconsistent provisions in
Section 9-201 of this Act, in subsection (a) of this Section or
in any rules or regulations promulgated by the Commission
pursuant to subsection (g) of this Section, the Commission
shall review and shall by order approve, or approve as
modified, the proposed tariff sheets within 60 days after the
date of the public utility's filing. The Commission may modify
the public utility's proposed tariff sheets only to the extent
the Commission finds necessary to achieve conformance to the
requirements of this subsection (b). During the 5 years
following the date of the Commission's order, but in any event
no earlier than January 1, 2007, a public utility whose fuel
adjustment clause has been eliminated pursuant to this
subsection shall not file proposed tariff sheets seeking, or
otherwise petition the Commission for, reinstatement of a fuel
adjustment clause.
(c) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service, other than a public utility
described in subsection (e) or (f) of this Section, may at any

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time during the mandatory transition period file with the
Commission proposed tariff sheets that establish the rate per
kilowatt-hour to be applied pursuant to the public utility's
fuel adjustment clause at the average value for such rate
during the preceding 24 months, provided that such average rate
results in a credit to customers' bills, without making any
revisions to the public utility's base rate tariffs. The
proposed tariff sheets shall establish the fuel adjustment rate
for a specific time period of at least 3 years but not more
than 5 years, provided that the terms and conditions for any
reinstatement earlier than 5 years shall be set forth in the
proposed tariff sheets and subject to modification or approval
by the Commission. The Commission shall review and shall by
order approve the proposed tariff sheets if it finds that the
requirements of this subsection are met. The Commission shall
not conduct the annual hearings specified in the last 3
sentences of subsection (a) of this Section for the utility for
the period that the factor established pursuant to this
subsection is in effect.
(d) A public utility providing electric service, or a
public utility providing gas service may file with the
Commission proposed tariff sheets that eliminate the public
utility's fuel or purchased gas adjustment clause and adjust
the public utility's base rate tariffs to provide for recovery
of power supply costs or gas supply costs that would have been
recovered through such clause; provided, that the provisions of

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this subsection (d) shall not be available to a public utility
described in subsections (e) or (f) of this Section to
eliminate its fuel adjustment clause. Notwithstanding any
contrary or inconsistent provisions in Section 9-201 of this
Act, in subsection (a) of this Section, or in any rules or
regulations promulgated by the Commission pursuant to
subsection (g) of this Section, the Commission shall review and
shall by order approve, or approve as modified in the
Commission's order, the proposed tariff sheets within 240 days
after the date of the public utility's filing. The Commission's
order shall approve rates and charges that the Commission,
based on information in the public utility's filing or on the
record if a hearing is held by the Commission, finds will
recover the reasonable, prudent and necessary jurisdictional
power supply costs or gas supply costs incurred or to be
incurred by the public utility during a 12 month period found
by the Commission to be appropriate for these purposes,
provided, that such period shall be either (i) a 12 month
historical period occurring during the 15 months ending on the
date of the public utility's filing, or (ii) a 12 month future
period ending no later than 15 months following the date of the
public utility's filing. The public utility shall include with
its tariff filing information showing both (1) its actual
jurisdictional power supply costs or gas supply costs for a 12
month historical period conforming to (i) above and (2) its
projected jurisdictional power supply costs or gas supply costs

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for a future 12 month period conforming to (ii) above. If the
Commission's order requires modifications in the tariff sheets
filed by the public utility, the public utility shall have 7
days following the date of the order to notify the Commission
whether the public utility will implement the modified tariffs
or elect to continue its fuel or purchased gas adjustment
clause in force as though no order had been entered. The
Commission's order shall provide for any reconciliation of
power supply costs or gas supply costs, as the case may be, and
associated revenues through the date that the public utility's
fuel or purchased gas adjustment clause is eliminated. During
the 5 years following the date of the Commission's order, a
public utility whose fuel or purchased gas adjustment clause
has been eliminated pursuant to this subsection shall not file
proposed tariff sheets seeking, or otherwise petition the
Commission for, reinstatement or adoption of a fuel or
purchased gas adjustment clause. Nothing in this subsection (d)
shall be construed as limiting the Commission's authority to
eliminate a public utility's fuel adjustment clause or
purchased gas adjustment clause in accordance with any other
applicable provisions of this Act.
(e) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules promulgated by the Commission
pursuant to subsection (g) of this Section, a public utility
providing electric service to more than 1,000,000 customers in

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this State may, within the first 6 months after the effective
date of this amendatory Act of 1997, file with the Commission
proposed tariff sheets that eliminate, effective January 1,
1997, the public utility's fuel adjustment clause without
adjusting its base rates, and such tariff sheets shall be
effective upon filing. To the extent the application of the
fuel adjustment clause had resulted in net charges to customers
after January 1, 1997, the utility shall also file a tariff
sheet that provides for a refund stated on a per kilowatt-hour
basis of such charges over a period not to exceed 6 months;
provided however, that such refund shall not include the
proportional amounts of taxes paid under the Use Tax Act,
Service Use Tax Act, Service Occupation Tax Act, and Retailers'
Occupation Tax Act on fuel used in generation. The Commission
shall issue an order within 45 days after the date of the
public utility's filing approving or approving as modified such
tariff sheet. If the fuel adjustment clause is eliminated
pursuant to this subsection, the Commission shall not conduct
the annual hearings specified in the last 3 sentences of
subsection (a) of this Section for the utility for any period
after December 31, 1996 and prior to any reinstatement of such
clause. A public utility whose fuel adjustment clause has been
eliminated pursuant to this subsection shall not file a
proposed tariff sheet seeking, or otherwise petition the
Commission for, reinstatement of the fuel adjustment clause
prior to January 1, 2007.

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(f) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service to more than 500,000
customers but fewer than 1,000,000 customers in this State may,
within the first 6 months after the effective date of this
amendatory Act of 1997, file with the Commission proposed
tariff sheets that eliminate, effective January 1, 1997, the
public utility's fuel adjustment clause and adjust its base
rates by the amount necessary for the base fuel component of
the base rates to recover 91% of the public utility's average
fuel and power supply costs for the 2 most recent years for
which the Commission, as of January 1, 1997, has issued final
orders in annual proceedings pursuant to subsection (a), where
the average fuel and power supply costs per kilowatt-hour shall
be calculated as the sum of the public utility's prudent and
allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years,
provided, that such tariff sheets shall be effective upon
filing. To the extent the application of the fuel adjustment
clause had resulted in net charges to customers after January
1, 1997, the utility shall also file a tariff sheet that
provides for a refund stated on a per kilowatt-hour basis of
such charges over a period not to exceed 6 months. Provided

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however, that such refund shall not include the proportional
amounts of taxes paid under the Use Tax Act, Service Use Tax
Act, Service Occupation Tax Act, and Retailers' Occupation Tax
Act on fuel used in generation. The Commission shall issue an
order within 45 days after the date of the public utility's
filing approving or approving as modified such tariff sheet. If
the fuel adjustment clause is eliminated pursuant to this
subsection, the Commission shall not conduct the annual
hearings specified in the last 3 sentences of subsection (a) of
this Section for the utility for any period after December 31,
1996 and prior to any reinstatement of such clause. A public
utility whose fuel adjustment clause has been eliminated
pursuant to this subsection shall not file a proposed tariff
sheet seeking, or otherwise petition the Commission for,
reinstatement of the fuel adjustment clause prior to January 1,
2007.
(g) The Commission shall have authority to promulgate rules
and regulations to carry out the provisions of this Section.
(h) Any Illinois gas utility may enter into a contract on
or before September 30, 2011 for up to 10 years of supply with
any company for the purchase of substitute natural gas (SNG)
produced from coal through the gasification process if the
company has commenced construction of a clean coal SNG facility
by July 1, 2012 and commencement of construction shall mean
that material physical site work has occurred, such as site
clearing and excavation, water runoff prevention, water

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retention reservoir preparation, or foundation development.
The contract shall contain the following provisions: (i) at
least 90% of feedstock to be used in the gasification process
shall be coal with a high volatile bituminous rank and greater
than 1.7 pounds of sulfur per million Btu content; (ii) at the
time the contract term commences, the price per million Btu may
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 supply contract for the purchase of SNG does not
exceed 15% of the annual system supply requirements of the
utility as of 2008; and (iv) the contract costs pursuant to
subsection (h-10) of this Section shall not include any
lobbying expenses, charitable contributions, advertising,
organizational memberships, carbon dioxide pipeline or
sequestration expenses, or marketing expenses.
Any gas utility that is providing service to more than
150,000 customers on August 2, 2011 (the effective date of
Public Act 97-239) this amendatory Act of the 97th General
Assembly shall either elect to enter into a contract on or
before September 30, 2011 for 10 years of SNG supply with the

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owner of a clean coal SNG facility or to file biennial rate
proceedings before the Commission in the years 2012, 2014, and
2016, with such filings made after August 2, 2011 the effective
date of this amendatory Act of the 97th General Assembly and no
later than September 30 of the years 2012, 2014, and 2016
consistent with all requirements of 83 Ill. Adm. Code 255 and
285 as though the gas utility were filing for an increase in
its rates, without regard to whether such filing would produce
an increase, a decrease, or no change in the gas utility's
rates, and the Commission shall review the gas utility's filing
and shall issue its order in accordance with the provisions of
Section 9-201 of this Act.
Within 7 days after August 2, 2011 the effective date of
this amendatory Act of the 97th General Assembly, the owner of
the clean coal SNG facility shall submit to the Illinois Power
Agency and each gas utility that is providing service to more
than 150,000 customers on August 2, 2011 the effective date of
this amendatory Act of the 97th General Assembly a copy of a
draft contract. Within 30 days after the receipt of the draft
contract, each such gas utility shall provide the Illinois
Power Agency and the owner of the clean coal SNG facility with
its comments and recommended revisions to the draft contract.
Within 7 days after the receipt of the gas utility's comments
and recommended revisions, the owner of the facility shall
submit its responsive comments and a further revised draft of
the contract to the Illinois Power Agency. The Illinois Power

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Agency shall review the draft contract and comments.
During its review of the draft contract, the Illinois Power
Agency shall:
(1) review and confirm in writing that the terms stated
in this subsection (h) are incorporated in the SNG
contract;
(2) review the SNG pricing formula included in the
contract and approve that formula if the Illinois Power
Agency determines that the formula, at the time the
contract term commences: (A) starts with a price of $6.50
per MMBtu adjusted by the adjusted final capitalized plant
cost; (B) takes into account budgeted miscellaneous net
revenue after cost allowance, including sale of SNG
produced by the clean coal SNG facility above the nameplate
capacity of the facility and other by-products produced by
the facility, as approved by the Illinois Power Agency; (C)
does not include carbon dioxide transportation or
sequestration expenses; and (D) includes all provisions
required under this subsection (h); if the Illinois Power
Agency does not approve of the SNG pricing formula, then
the Illinois Power Agency shall modify the formula to
ensure that it meets the requirements of this subsection
(h);
(3) review and approve the amount of budgeted
miscellaneous net revenue after cost allowance, including
sale of SNG produced by the clean coal SNG facility above

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the nameplate capacity of the facility and other
by-products produced by the facility, to be included in the
pricing formula; the Illinois Power Agency shall approve
the amount of budgeted miscellaneous net revenue to be
included in the pricing formula if it determines the
budgeted amount to be reasonable and accurate;
(4) review and confirm in writing that using the EIA
Annual Energy Outlook-2011 Henry Hub Spot Price, the
contract terms set out in subsection (h), the
reconciliation account terms as set out in subsection
(h-15), and an estimated inflation rate of 2.5% for each
corresponding year, that there will be no cumulative
estimated increase for residential customers; and
(5) allocate the nameplate capacity of the clean coal
SNG by total therms sold to ultimate customers by each gas
utility in 2008; provided, however, no utility shall be
required to purchase more than 42% of the projected annual
output of the facility; additionally, the Illinois Power
Agency shall further adjust the allocation only as required
to take into account (A) adverse consolidation,
derivative, or lease impacts to the balance sheet or income
statement of any gas utility or (B) the physical capacity
of the gas utility to accept SNG.
If the parties to the contract do not agree on the terms
therein, then the Illinois Power Agency shall retain an
independent mediator to mediate the dispute between the

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parties. If the parties are in agreement on the terms of the
contract, then the Illinois Power Agency shall approve the
contract. If after mediation the parties have failed to come to
agreement, then the Illinois Power Agency shall revise the
draft contract as necessary to confirm that the contract
contains only terms that are reasonable and equitable. The
Illinois Power Agency may, in its discretion, retain an
independent, qualified, and experienced expert to assist in its
obligations under this subsection (h). The Illinois Power
Agency shall adopt and make public policies detailing the
processes for retaining a mediator and an expert under this
subsection (h). Any mediator or expert retained under this
subsection (h) shall be retained no later than 60 days after
August 2, 2011 the effective date of this amendatory Act of the
97th General Assembly.
The Illinois Power Agency shall complete all of its
responsibilities under this subsection (h) within 60 days after
August 2, 2011 the effective date of this amendatory Act of the
97th General Assembly. The clean coal SNG facility shall pay a
reasonable fee as required by the Illinois Power Agency for its
services under this subsection (h) and shall pay the mediator's
and expert's reasonable fees, if any. A gas utility and its
customers shall have no obligation to reimburse the clean coal
SNG facility or the Illinois Power Agency of any such costs.
Within 30 days after commercial production of SNG has
begun, the Commission shall initiate a review to determine

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whether the final capitalized plant cost of the clean coal SNG
facility reflects actual incurred costs and whether the
incurred costs were reasonable. In determining the actual
incurred costs included in the final capitalized plant cost and
the reasonableness of those costs, the Commission may in its
discretion retain independent, qualified, and experienced
experts to assist in its determination. The expert shall not
own or control any direct or indirect interest in the clean
coal SNG facility and shall have no contractual relationship
with the clean coal SNG facility. If an expert is retained by
the Commission, then the clean coal SNG facility shall pay the
expert's reasonable fees. The fees shall not be passed on to a
utility or its customers. The Commission shall adopt and make
public a policy detailing the process for retaining experts
under this subsection (h).
Within 30 days after completion of its review, the
Commission shall initiate a formal proceeding on the final
capitalized plant cost of the clean coal SNG facility at which
comments and testimony may be submitted by any interested
parties and the public. If the Commission finds that the final
capitalized plant cost includes costs that were not actually
incurred or costs that were unreasonably incurred, then the
Commission shall disallow the amount of non-incurred or
unreasonable costs from the SNG price under contracts entered
into under this subsection (h). If the Commission disallows any
costs, then the Commission shall adjust the SNG price using the

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price formula in the contract approved by the Illinois Power
Agency under this subsection (h) to reflect the disallowed
costs and shall enter an order specifying the revised price. In
addition, the Commission's order shall direct the clean coal
SNG facility to issue refunds of such sums as shall represent
the difference between actual gross revenues and the gross
revenue that would have been obtained based upon the same
volume, from the price revised by the Commission. Any refund
shall include interest calculated at a rate determined by the
Commission and shall be returned according to procedures
prescribed by the Commission.
Nothing in this subsection (h) shall preclude any party
affected by a decision of the Commission under this subsection
(h) from seeking judicial review of the Commission's decision.
(h-1) Any Illinois gas utility may enter into a sourcing
agreement for up to 30 years of supply with the clean coal SNG
brownfield facility if the clean coal SNG brownfield facility
has commenced construction. Any gas utility that is providing
service to more than 150,000 customers on July 13, 2011 (the
effective date of Public Act 97-096) this amendatory Act of the
97th General Assembly shall either elect to file biennial rate
proceedings before the Commission in the years 2012, 2014, and
2016 or enter into a sourcing agreement or sourcing agreements
with a clean coal SNG brownfield facility with an initial term
of 30 years for either (i) a percentage of 43,500,000,000 cubic
feet per year, such that the utilities entering into sourcing

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agreements with the clean coal SNG brownfield facility purchase
100%, allocated by total therms sold to ultimate customers by
each gas utility in 2008 or (ii) such lesser amount as may be
available from the clean coal SNG brownfield facility; provided
that no utility shall be required to purchase more than 42% of
the projected annual output of the clean coal SNG brownfield
facility, with the remainder of such utility's obligation to be
divided proportionately between the other utilities, and
provided that the Illinois Power Agency shall further adjust
the allocation only as required to take into account adverse
consolidation, derivative, or lease impacts to the balance
sheet or income statement of any gas utility.
A gas utility electing to file biennial rate proceedings
before the Commission must file a notice of its election with
the Commission within 60 days after July 13, 2011 the effective
date of this amendatory Act of the 97th General Assembly or its
right to make the election is irrevocably waived. A gas utility
electing to file biennial rate proceedings shall make such
filings no later than August 1 of the years 2012, 2014, and
2016, consistent with all requirements of 83 Ill. Adm. Code 255
and 285 as though the gas utility were filing for an increase
in its rates, without regard to whether such filing would
produce an increase, a decrease, or no change in the gas
utility's rates, and notwithstanding any other provisions of
this Act, the Commission shall fully review the gas utility's
filing and shall issue its order in accordance with the

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provisions of Section 9-201 of this Act, regardless of whether
the Commission has approved a formula rate for the gas utility.
Within 15 days after July 13, 2011 the effective date of
this amendatory Act of the 97th General Assembly, the owner of
the clean coal SNG brownfield facility shall submit to the
Illinois Power Agency and each gas utility that is providing
service to more than 150,000 customers on July 13, 2011 the
effective date of this amendatory Act of the 97th General
Assembly a copy of a draft sourcing agreement. Within 45 days
after receipt of the draft sourcing agreement, each such gas
utility shall provide the Illinois Power Agency and the owner
of a clean coal SNG brownfield facility with its comments and
recommended revisions to the draft sourcing agreement. Within
15 days after the receipt of the gas utility's comments and
recommended revisions, the owner of the clean coal SNG
brownfield facility shall submit its responsive comments and a
further revised draft of the sourcing agreement to the Illinois
Power Agency. The Illinois Power Agency shall review the draft
sourcing agreement and comments.
If the parties to the sourcing agreement do not agree on
the terms therein, then the Illinois Power Agency shall retain
an independent mediator to mediate the dispute between the
parties. If the parties are in agreement on the terms of the
sourcing agreement, the Illinois Power Agency shall approve the
final draft sourcing agreement. If after mediation the parties
have failed to come to agreement, then the Illinois Power

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Agency shall revise the draft sourcing agreement as necessary
to confirm that the final draft sourcing agreement contains
only terms that are reasonable and equitable. The Illinois
Power Agency shall adopt and make public a policy detailing the
process for retaining a mediator under this subsection (h-1).
Any mediator retained to assist with mediating disputes between
the parties regarding the sourcing agreement shall be retained
no later than 60 days after July 13, 2011 the effective date of
this amendatory Act of the 97th General Assembly.
Upon approval of a final draft agreement, the Illinois
Power Agency shall submit the final draft agreement to the
Capital Development Board and the Commission no later than 90
days after July 13, 2011 the effective date of this amendatory
Act of the 97th General Assembly. The gas utility and the clean
coal SNG brownfield facility shall pay a reasonable fee as
required by the Illinois Power Agency for its services under
this subsection (h-1) and shall pay the mediator's reasonable
fees, if any. The Illinois Power Agency shall adopt and make
public a policy detailing the process for retaining a mediator
under this Section.
The sourcing agreement between a gas utility and the clean
coal SNG brownfield facility shall contain the following
provisions:
(1) Any and all coal used in the gasification process
must be coal that has high volatile bituminous rank and
greater than 1.7 pounds of sulfur per million Btu content.

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(2) Coal and petroleum coke are feedstocks for the
gasification process, with coal comprising at least 50% of
the total feedstock over the term of the sourcing agreement
unless the facility reasonably determines that it is
necessary to use additional petroleum coke to deliver net
consumer savings, in which case the facility shall use coal
for at least 35% of the total feedstock over the term of
any sourcing agreement and with the feedstocks to be
procured in accordance with requirements of Section 1-78 of
the Illinois Power Agency Act.
(3) The sourcing agreement has an initial term that
once entered into terminates no more than 30 years after
the commencement of the commercial production of SNG at the
clean coal SNG brownfield facility.
(4) The clean coal SNG brownfield facility guarantees a
minimum of $100,000,000 in consumer savings to customers of
the utilities that have entered into sourcing agreements
with the clean coal SNG brownfield facility, calculated in
real 2010 dollars at the conclusion of the term of the
sourcing agreement by comparing the delivered SNG price to
the Chicago City-gate price on a weighted daily basis for
each day over the entire term of the sourcing agreement, to
be provided in accordance with subsection (h-2) of this
Section.
(5) Prior to the clean coal SNG brownfield facility
issuing a notice to proceed to construction, the clean coal

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SNG brownfield facility shall establish a consumer
protection reserve account for the benefit of the customers
of the utilities that have entered into sourcing agreements
with the clean coal SNG brownfield facility pursuant to
this subsection (h-1), with cash principal in the amount of
$150,000,000. This cash principal shall only be
recoverable through the consumer protection reserve
account and not as a cost to be recovered in the delivered
SNG price pursuant to subsection (h-3) of this Section. The
consumer protection reserve account shall be maintained
and administered by an independent trustee that is mutually
agreed upon by the clean coal SNG brownfield facility, the
utilities, and the Commission in an interest-bearing
account in accordance with subsection (h-2) of this
Section.
"Consumer protection reserve account principal maximum
amount" shall mean the maximum amount of principal to be
maintained in the consumer protection reserve account.
During the first 2 years of operation of the facility,
there shall be no consumer protection reserve account
maximum amount. After the first 2 years of operation of the
facility, the consumer protection reserve account maximum
amount shall be $150,000,000. After 5 years of operation,
and every 5 years thereafter, the trustee shall calculate
the 5-year average balance of the consumer protection
reserve account. If the trustee determines that during the

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prior 5 years the consumer protection reserve account has
had an average account balance of less than $75,000,000,
then the consumer protection reserve account principal
maximum amount shall be increased by $5,000,000. If the
trustee determines that during the prior 5 years the
consumer protection reserve account has had an average
account balance of more than $75,000,000, then the consumer
protection reserve account principal maximum amount shall
be decreased by $5,000,000.
(6) The clean coal SNG brownfield facility shall
identify and sell economically viable by-products produced
by the facility.
(7) Fifty percent of all additional net revenue,
defined as miscellaneous net revenue from products
produced by the facility and delivered during the month
after cost allowance for costs associated with additional
net revenue that are not otherwise recoverable pursuant to
subsection (h-3) of this Section, including net revenue
from sales of substitute natural gas derived from the
facility above the nameplate capacity of the facility and
other by-products produced by the facility, shall be
credited to the consumer protection reserve account
pursuant to subsection (h-2) of this Section.
(8) The delivered SNG price per million btu to be paid
monthly by the utility to the clean coal SNG brownfield
facility, which shall be based only upon the following: (A)

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

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(11) A utility may exit the sourcing agreement without
penalty if the clean coal SNG brownfield facility does not
commence construction by July 1, 2015.
(12) A utility is responsible to pay only the
Commission determined unit price cost of SNG that is
purchased by the utility. Nothing in the sourcing agreement
will obligate a utility to invest capital in a clean coal
SNG brownfield facility.
(13) The quality of SNG must, at a minimum, be
equivalent to the quality required for interstate pipeline
gas before a utility is required to accept and pay for SNG
gas.
(14) Nothing in the sourcing agreement will require a
utility to construct any facilities to accept delivery of
SNG. Provided, however, if a utility is required by law or
otherwise elects to connect the clean coal SNG brownfield
facility to an interstate pipeline, then the utility shall
be entitled to recover pursuant to its tariffs all just and
reasonable costs that are prudently incurred. Any costs
incurred by the utility to receive, deliver, manage, or
otherwise accommodate purchases under the SNG sourcing
agreement will be fully recoverable through a utility's
purchased gas adjustment clause rider mechanism in
conjunction with a SNG brownfield facility rider
mechanism. The SNG brownfield facility rider mechanism (A)
shall be applicable to all customers who receive

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transportation service from the utility, (B) shall be
designed to have an equal percent impact on the
transportation services rates of each class of the
utility's customers, and (C) shall accurately reflect the
net consumer savings, if any, and above-market costs, if
any, associated with the utility receiving, delivering,
managing, or otherwise accommodating purchases under the
SNG sourcing agreement.
(15) Remedies for the clean coal SNG brownfield
facility's failure to deliver a designated amount for a
designated period.
(16) The clean coal SNG brownfield facility shall make
a good faith effort to ensure that an amount equal to not
less than 15% of the value of its prime construction
contract for the facility shall be established as a goal to
be awarded to minority owned businesses, female owned
businesses, and businesses owned by a person with a
disability; provided that at least 75% of the amount of
such total goal shall be for minority owned businesses.
"Minority owned business", "female owned business", and
"business owned by a person with a disability" shall have
the meanings ascribed to them in Section 2 of the Business
Enterprise for Minorities, Females and Persons with
Disabilities Act.
(17) Prior to the clean coal SNG brownfield facility
issuing a notice to proceed to construction, the clean coal

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SNG brownfield facility shall file with the Commission a
certificate from an independent engineer that the clean
coal SNG brownfield facility has (A) obtained all
applicable State and federal environmental permits
required for construction; (B) obtained approval from the
Commission of a carbon capture and sequestration plan; and
(C) obtained all necessary permits required for
construction for the transportation and sequestration of
carbon dioxide as set forth in the Commission-approved
carbon capture and sequestration plan.
(h-2) Consumer protection reserve account. The clean coal
SNG brownfield facility shall guarantee a minimum of
$100,000,000 in consumer savings to customers of the utilities
that have entered into sourcing agreements with the clean coal
SNG brownfield facility, calculated in real 2010 dollars at the
conclusion of the term of the sourcing agreement by comparing
the delivered SNG price to the Chicago City-gate price on a
weighted daily basis for each day over the entire term of the
sourcing agreement. Prior to the clean coal SNG brownfield
facility issuing a notice to proceed to construction, the clean
coal SNG brownfield facility shall establish a consumer
protection reserve account for the benefit of the retail
customers of the utilities that have entered into sourcing
agreements with the clean coal SNG brownfield facility pursuant
to subsection (h-1), with cash principal in the amount of
$150,000,000. Such cash principal shall only be recovered

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through the consumer protection reserve account and not as a
cost to be recovered in the delivered SNG price pursuant to
subsection (h-3) of this Section. The consumer protection
reserve account shall be maintained and administered by an
independent trustee that is mutually agreed upon by the clean
coal SNG brownfield facility, the utilities, and the Commission
in an interest-bearing account in accordance with the
following:
(1) The clean coal SNG brownfield facility monthly
shall calculate (A) the difference between the monthly
delivered SNG price and the Chicago City-gate price, by
comparing the delivered SNG price, which shall include the
cost of transportation to the delivery point, if any, to
the Chicago City-gate price on a weighted daily basis for
each day of the prior month based upon a mutually agreed
upon published index and (B) the overage amount, if any, by
calculating the annualized incremental additional cost, if
any, of the delivered SNG in excess of 2.015% of the
average annual inflation-adjusted amounts paid by all gas
distribution customers in connection with natural gas
service during the 5 years ending May 31, 2010.
(2) During the first 2 years of operation of the
facility:
(A) to the extent there is an overage amount, the
consumer protection reserve account shall be used to
provide a credit to reduce the SNG price by an amount

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equal to the overage amount; and
(B) to the extent the monthly delivered SNG price
is less than or equal to the Chicago City-gate price,
the utility shall credit the difference between the
monthly delivered SNG price and the monthly Chicago
City-gate price, if any, to the consumer protection
reserve account. Such credit issued pursuant to this
paragraph (B) shall be deemed prudent and reasonable
and not subject to a Commission prudence review;
(3) After 2 years of operation of the facility, and
monthly, on an on-going basis, thereafter:
(A) to the extent that the monthly delivered SNG
price is less than or equal to the Chicago City-gate
price, calculated using the weighted average of the
daily Chicago City-gate price on a daily basis over the
entire month, the utility shall credit the difference,
if any, to the consumer protection reserve account.
Such credit issued pursuant to this subparagraph (A)
shall be deemed prudent and reasonable and not subject
to a Commission prudence review;
(B) any amounts in the consumer protection reserve
account in excess of the consumer protection reserve
account principal maximum amount shall be distributed
as follows: (i) if retail customers have not realized
net consumer savings, calculated by comparing the
delivered SNG price to the weighted average of the

HB0691 Engrossed - 30 - LRB097 03519 ASK 43556 b
daily Chicago City-gate price on a daily basis over the
entire term of the sourcing agreement to date, then 50%
of any amounts in the consumer protection reserve
account in excess of the consumer protection reserve
account principal maximum shall be distributed to the
clean coal SNG brownfield facility, with the remaining
50% of any such additional amounts being credited to
retail customers, and (ii) if retail customers have
realized net consumer savings, then 100% of any amounts
in the consumer protection reserve account in excess of
the consumer protection reserve account principal
maximum shall be distributed to the clean coal SNG
brownfield facility; provided, however, that under no
circumstances shall the total cumulative amount
distributed to the clean coal SNG brownfield facility
under this subparagraph (B) exceed $150,000,000;
(C) to the extent there is an overage amount, after
distributing the amounts pursuant to subparagraph (B)
of this paragraph (3), if any, the consumer protection
reserve account shall be used to provide a credit to
reduce the SNG price by an amount equal to the overage
amount;
(D) if retail customers have realized net consumer
savings, calculated by comparing the delivered SNG
price to the weighted average of the daily Chicago
City-gate price on a daily basis over the entire term

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of the sourcing agreement to date, then after
distributing the amounts pursuant to subparagraphs (B)
and (C) of this paragraph (3), 50% of any additional
amounts in the consumer protection reserve account in
excess of the consumer protection reserve account
principal maximum shall be distributed to the clean
coal SNG brownfield facility, with the remaining 50% of
any such additional amounts being credited to retail
customers; provided, however, that if retail customers
have not realized such net consumer savings, no such
distribution shall be made to the clean coal SNG
brownfield facility, and 100% of such additional
amounts shall be credited to the retail customers to
the extent the consumer protection reserve account
exceeds the consumer protection reserve account
principal maximum amount.
(4) Fifty percent of all additional net revenue,
defined as miscellaneous net revenue after cost allowance
for costs associated with additional net revenue that are
not otherwise recoverable pursuant to subsection (h-3) of
this Section, including net revenue from sales of
substitute natural gas derived from the facility above the
nameplate capacity of the facility and other by-products
produced by the facility, shall be credited to the consumer
protection reserve account.
(5) At the conclusion of the term of the sourcing

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agreement, to the extent retail customers have not saved
the minimum of $100,000,000 in consumer savings as
guaranteed in this subsection (h-2), amounts in the
consumer protection reserve account shall be credited to
retail customers to the extent the retail customers have
saved the minimum of $100,000,000; 50% of any additional
amounts in the consumer protection reserve account shall be
distributed to the company, and the remaining 50% shall be
distributed to retail customers.
(6) If, at the conclusion of the term of the sourcing
agreement, the customers have not saved the minimum
$100,000,000 in savings as guaranteed in this subsection
(h-2) and the consumer protection reserve account has been
depleted, then the clean coal SNG brownfield facility shall
be liable for any remaining amount owed to the retail
customers to the extent that the customers are provided
with the $100,000,000 in savings as guaranteed in this
subsection (h-2). The retail customers shall have first
priority in recovering that debt above any creditors,
except the original senior secured lender to the extent
that the original senior secured lender has any senior
secured debt outstanding, including any clean coal SNG
brownfield facility parent companies or affiliates.
(7) The clean coal SNG brownfield facility, the
utilities, and the trustee shall work together to take
commercially reasonable steps to minimize the tax impact of

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these transactions, while preserving the consumer
benefits.
(8) The clean coal SNG brownfield facility shall each
month, starting in the facility's first year of commercial
operation, file with the Commission, in such form as the
Commission shall require, a report as to the consumer
protection reserve account. The monthly report must
contain the following information:
(A) the extent the monthly delivered SNG price is
greater than, less than, or equal to the Chicago
City-gate price;
(B) the amount credited or debited to the consumer
protection reserve account during the month;
(C) the amounts credited to consumers and
distributed to the clean coal SNG brownfield facility
during the month;
(D) the total amount of the consumer protection
reserve account at the beginning and end of the month;
(E) the total amount of consumer savings to date;
(F) a confidential summary of the inputs used to
calculate the additional net revenue; and
(G) any other additional information the
Commission shall require.
When any report is erroneous or defective or appears to
the Commission to be erroneous or defective, the Commission
may notify the clean coal SNG brownfield facility to amend

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the report within 30 days, and, before or after the
termination of the 30-day period, the Commission may
examine the trustee of the consumer protection reserve
account or the officers, agents, employees, books,
records, or accounts of the clean coal SNG brownfield
facility and correct such items in the report as upon such
examination the Commission may find defective or
erroneous. All reports shall be under oath.
All reports made to the Commission by the clean coal
SNG brownfield facility and the contents of the reports
shall be open to public inspection and shall be deemed a
public record under the Freedom of Information Act. Such
reports shall be preserved in the office of the Commission.
The Commission shall publish an annual summary of the
reports prior to February 1 of the following year. The
annual summary shall be made available to the public on the
Commission's website and shall be submitted to the General
Assembly.
Any facility that fails to file a report required under
this paragraph (8) to the Commission within the time
specified or to make specific answer to any question
propounded by the Commission within 30 days from the time
it is lawfully required to do so, or within such further
time not to exceed 90 days as may in its discretion be
allowed by the Commission, shall pay a penalty of $500 to
the Commission for each day it is in default.

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Any person who willfully makes any false report to the
Commission or to any member, officer, or employee thereof,
any person who willfully in a report withholds or fails to
provide material information to which the Commission is
entitled under this paragraph (8) and which information is
either required to be filed by statute, rule, regulation,
order, or decision of the Commission or has been requested
by the Commission, and any person who willfully aids or
abets such person shall be guilty of a Class A misdemeanor.
(h-3) Recoverable costs and revenue by the clean coal SNG
brownfield facility.
(1) A capital recovery charge approved by the
Commission shall be recoverable by the clean coal SNG
brownfield facility under a sourcing agreement. The
capital recovery charge shall be comprised of capital costs
and a reasonable rate of return. "Capital costs" means
costs to be incurred in connection with the construction
and development of a facility, as defined in Section 1-10
of the Illinois Power Agency Act, and such other costs as
the Capital Development Board deems appropriate to be
recovered in the capital recovery charge.
(A) Capital costs. The Capital Development Board
shall calculate a range of capital costs that it
believes would be reasonable for the clean coal SNG
brownfield facility to recover under the sourcing
agreement. In making this determination, the Capital

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Development Board shall review the facility cost
report, if any, of the clean coal SNG brownfield
facility, adjusting the results 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, the final draft of the sourcing agreement,
and the rate of return approved by the Commission. In
addition, the Capital Development Board may consult as
much as it deems necessary with the clean coal SNG
brownfield facility and conduct whatever research and
investigation it deems necessary.
The Capital Development Board shall retain an
engineering expert to assist in determining both the
range of capital costs and the range of operations and
maintenance costs that it believes would be reasonable
for the clean coal SNG brownfield facility to recover
under the sourcing agreement. Provided, however, that
such expert shall: (i) not have been involved in the
clean coal SNG brownfield facility's facility cost
report, if any, (ii) not own or control any direct or
indirect interest in the initial clean coal facility,
and (iii) have no contractual relationship with the
clean coal SNG brownfield facility. In order to qualify
as an independent expert, a person or company must
have:

HB0691 Engrossed - 37 - LRB097 03519 ASK 43556 b
(i) direct previous experience conducting
front-end engineering and design studies for
large-scale energy facilities and administering
large-scale energy operations and maintenance
contracts, which may be particularized to the
specific type of financing associated with the
clean coal SNG brownfield facility;
(ii) an advanced degree in economics,
mathematics, engineering, or a related area of
study;
(iii) ten years of experience in the energy
sector, including construction and risk management
experience;
(iv) expertise in assisting companies with
obtaining financing for large-scale energy
projects, which may be particularized to the
specific type of financing associated with the
clean coal SNG brownfield facility;
(v) expertise in operations and maintenance
which may be particularized to the specific type of
operations and maintenance associated with the
clean coal SNG brownfield facility;
(vi) expertise in credit and contract
protocols;
(vii) adequate resources to perform and
fulfill the required functions and

HB0691 Engrossed - 38 - LRB097 03519 ASK 43556 b
responsibilities; and
(viii) the absence of a conflict of interest
and inappropriate bias for or against an affected
gas utility or the clean coal SNG brownfield
facility.
The clean coal SNG brownfield facility and the
Illinois Power Agency shall cooperate with the Capital
Development Board in any investigation it deems
necessary. The Capital Development Board shall make
its final determination of the range of capital costs
confidentially and shall submit that range to the
Commission in a confidential filing within 120 days
after July 13, 2011 (the effective date of Public Act
97-096) this amendatory Act of the 97th General
Assembly. The clean coal SNG brownfield facility shall
submit to the Commission its estimate of the capital
costs to be recovered under the sourcing agreement.
Only after the clean coal SNG brownfield facility has
submitted this estimate shall the Commission publicly
announce the range of capital costs submitted by the
Capital Development Board.
In the event that the estimate submitted by the
clean coal SNG brownfield facility is within or below
the range submitted by the Capital Development Board,
the clean coal SNG brownfield facility's estimate
shall be approved by the Commission as the amount of

HB0691 Engrossed - 39 - LRB097 03519 ASK 43556 b
capital costs to be recovered under the sourcing
agreement. In the event that the estimate submitted by
the clean coal SNG brownfield facility is above the
range submitted by the Capital Development Board, the
amount of capital costs at the lowest end of the range
submitted by the Capital Development Board shall be
approved by the Commission as the amount of capital
costs to be recovered under the sourcing agreement.
Within 15 days after the Capital Development Board has
submitted its range and the clean coal SNG brownfield
facility has submitted its estimate, the Commission
shall approve the capital costs for the clean coal SNG
brownfield facility.
The Capital Development Board shall monitor the
construction of the clean coal SNG brownfield facility
for the full duration of construction to assess
potential cost overruns. The Capital Development
Board, in its discretion, may retain an expert to
facilitate such monitoring. The clean coal SNG
brownfield facility shall pay a reasonable fee as
required by the Capital Development Board for the
Capital Development Board's services under this
subsection (h-3) to be deposited into the Capital
Development Board Revolving Fund, and such fee shall
not be passed through to a utility or its customers. If
an expert is retained by the Capital Development Board

HB0691 Engrossed - 40 - LRB097 03519 ASK 43556 b
for monitoring of construction, then the clean coal SNG
brownfield facility must pay for the expert's
reasonable fees and such costs shall not be passed
through to a utility or its customers.
(B) Rate of Return. No later than 30 days after the
date on which the Illinois Power Agency submits a final
draft sourcing agreement, the Commission shall hold a
public hearing to determine the rate of return to be
recovered under the sourcing agreement. Rate of return
shall be comprised of the clean coal SNG brownfield
facility's actual cost of debt, including
mortgage-style amortization, and a reasonable return
on equity. The Commission shall post notice of the
hearing on its website no later than 10 days prior to
the date of the hearing. The Commission shall provide
the public and all interested parties, including the
gas utilities, the Attorney General, and the Illinois
Power Agency, an opportunity to be heard.
In determining the return on equity, the
Commission shall select a commercially reasonable
return on equity taking into account the return on
equity being received by developers of similar
facilities in or outside of Illinois, the need to
balance an incentive for clean-coal technology with
the need to protect ratepayers from high gas prices,
the risks being borne by the clean coal SNG brownfield

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facility in the final draft sourcing agreement, and any
other information that the Commission may deem
relevant. The Commission may establish a return on
equity that varies with the amount of savings, if any,
to customers during the term of the sourcing agreement,
comparing the delivered SNG price to a daily weighted
average price of natural gas, based upon an index. The
Illinois Power Agency shall recommend a return on
equity to the Commission using the same criteria.
Within 60 days after receiving the final draft sourcing
agreement from the Illinois Power Agency, the
Commission shall approve the rate of return for the
clean coal brownfield facility. Within 30 days after
obtaining debt financing for the clean coal SNG
brownfield facility, the clean coal SNG brownfield
facility shall file a notice with the Commission
identifying the actual cost of debt.
(2) Operations and maintenance costs approved by the
Commission shall be recoverable by the clean coal SNG
brownfield facility under the sourcing agreement. The
operations and maintenance costs mean costs that have been
incurred for the administration, supervision, operation,
maintenance, preservation, and protection of the clean
coal SNG brownfield facility's physical plant.
The Capital Development Board shall calculate a range
of operations and maintenance costs that it believes would

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be reasonable for the clean coal SNG brownfield facility to
recover under the sourcing agreement, incorporating an
inflation index or combination of inflation indices to most
accurately reflect the actual costs of operating the clean
coal SNG brownfield facility. In making this
determination, the Capital Development Board shall review
the facility cost report, if any, of the clean coal SNG
brownfield facility, adjusting the results for inflation
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, the final draft of the sourcing
agreement, and the rate of return approved by the
Commission. In addition, the Capital Development Board may
consult as much as it deems necessary with the clean coal
SNG brownfield facility and conduct whatever research and
investigation it deems necessary. As set forth in
subparagraph (A) of paragraph (1) of this subsection (h-3),
the Capital Development Board shall retain an independent
engineering expert to assist in determining both the range
of operations and maintenance costs that it believes would
be reasonable for the clean coal SNG brownfield facility to
recover under the sourcing agreement. The clean coal SNG
brownfield facility and the Illinois Power Agency shall
cooperate with the Capital Development Board in any
investigation it deems necessary. The Capital Development

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Board shall make its final determination of the range of
operations and maintenance costs confidentially and shall
submit that range to the Commission in a confidential
filing within 120 days after July 13, 2011 the effective
date of this amendatory Act of the 97th General Assembly.
The clean coal SNG brownfield facility shall submit to
the Commission its estimate of the operations and
maintenance costs to be recovered under the sourcing
agreement. Only after the clean coal SNG brownfield
facility has submitted this estimate shall the Commission
publicly announce the range of operations and maintenance
costs submitted by the Capital Development Board. In the
event that the estimate submitted by the clean coal SNG
brownfield facility is within or below the range submitted
by the Capital Development Board, the clean coal SNG
brownfield facility's estimate shall be approved by the
Commission as the amount of operations and maintenance
costs to be recovered under the sourcing agreement. In the
event that the estimate submitted by the clean coal SNG
brownfield facility is above the range submitted by the
Capital Development Board, the amount of operations and
maintenance costs at the lowest end of the range submitted
by the Capital Development Board shall be approved by the
Commission as the amount of operations and maintenance
costs to be recovered under the sourcing agreement. Within
15 days after the Capital Development Board has submitted

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its range and the clean coal SNG brownfield facility has
submitted its estimate, the Commission shall approve the
operations and maintenance costs for the clean coal SNG
brownfield facility.
The clean coal SNG brownfield facility shall pay for
the independent engineering expert's reasonable fees and
such costs shall not be passed through to a utility or its
customers. The clean coal SNG brownfield facility shall pay
a reasonable fee as required by the Capital Development
Board for the Capital Development Board's services under
this subsection (h-3) to be deposited into the Capital
Development Board Revolving Fund, and such fee shall not be
passed through to a utility or its customers.
(3) Sequestration costs approved by the Commission
shall be recoverable by the clean coal SNG brownfield
facility. "Sequestration costs" means costs to be incurred
by the clean coal SNG brownfield facility in accordance
with its Commission-approved carbon capture and
sequestration plan to:
(A) capture carbon dioxide;
(B) build, operate, and maintain a sequestration
site in which carbon dioxide may be injected;
(C) build, operate, and maintain a carbon dioxide
pipeline; and
(D) transport the carbon dioxide to the
sequestration site or a pipeline.

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The Commission shall assess the prudency of the
sequestration costs for the clean coal SNG brownfield
facility before construction commences at the
sequestration site or pipeline. Any revenues the clean coal
SNG brownfield facility receives as a result of the
capture, transportation, or sequestration of carbon
dioxide shall be first credited against all sequestration
costs, with the positive balance, if any, treated as
additional net revenue.
The Commission may, in its discretion, retain an expert
to assist in its review of sequestration costs. The clean
coal SNG brownfield facility shall pay for the expert's
reasonable fees if an expert is retained by the Commission,
and such costs shall not be passed through to a utility or
its customers. Once made, the Commission's determination
of the amount of recoverable sequestration costs shall not
be increased unless the clean coal SNG brownfield facility
can show by clear and convincing evidence that (i) the
costs were not reasonably foreseeable; (ii) the costs were
due to circumstances beyond the clean coal SNG brownfield
facility's control; and (iii) the clean coal SNG brownfield
facility took all reasonable steps to mitigate the costs.
If the Commission determines that sequestration costs may
be increased, the Commission shall provide for notice and a
public hearing for approval of the increased sequestration
costs.

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(4) Actual delivered and processed fuel costs shall be
set by the Illinois Power Agency through a SNG feedstock
procurement, pursuant to Sections 1-20, 1-77, and 1-78 of
the Illinois Power Agency Act, to be performed at least
every 5 years and purchased by the clean coal SNG
brownfield facility pursuant to feedstock procurement
contracts developed by the Illinois Power Agency, with coal
comprising at least 50% of the total feedstock over the
term of the sourcing agreement and petroleum coke
comprising the remainder of the SNG feedstock. If the
Commission fails to approve a feedstock procurement plan or
fails to approve the results of a feedstock procurement
event, then the fuel shall be purchased by the company
month-by-month on the spot market and those actual
delivered and processed fuel costs shall be recoverable
under the sourcing agreement. If a supplier defaults under
the terms of a procurement contract, then the Illinois
Power Agency shall immediately initiate a feedstock
procurement process to obtain a replacement supply, and,
prior to the conclusion of that process, fuel shall be
purchased by the company month-by-month on the spot market
and those actual delivered and processed fuel costs shall
be recoverable under the sourcing agreement.
(5) Taxes and fees imposed by the federal government,
the State, or any unit of local government applicable to
the clean coal SNG brownfield facility, excluding income

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tax, shall be recoverable by the clean coal SNG brownfield
facility under the sourcing agreement to the extent such
taxes and fees were not applicable to the facility on July
13, 2011 the date of this amendatory Act of the 97th
General Assembly.
(6) The actual transportation costs, in accordance
with the applicable utility's tariffs, and third-party
marketer costs incurred by the company, if any, associated
with transporting the SNG from the clean coal SNG
brownfield facility to the Chicago City-gate to sell such
SNG into the natural gas markets shall be recoverable under
the sourcing agreement.
(7) Unless otherwise provided, within 30 days after a
decision of the Commission on recoverable costs under this
Section, any interested party to the Commission's decision
may apply for a rehearing with respect to the decision. The
Commission shall receive and consider the application for
rehearing and shall grant or deny the application in whole
or in part within 20 days after the date of the receipt of
the application by the Commission. If no rehearing is
applied for within the required 30 days or an application
for rehearing is denied, then the Commission decision shall
be final. If an application for rehearing is granted, then
the Commission shall hold a rehearing within 30 days after
granting the application. The decision of the Commission
upon rehearing shall be final.

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Any person affected by a decision of the Commission
under this subsection (h-3) may have the decision reviewed
only under and in accordance with the Administrative Review
Law. Unless otherwise provided, the provisions of the
Administrative Review Law, all amendments and
modifications to that Law, and the rules adopted pursuant
to that Law shall apply to and govern all proceedings for
the judicial review of final administrative decisions of
the Commission under this subsection (h-3). The term
"administrative decision" is defined as in Section 3-101 of
the Code of Civil Procedure.
(8) The Capital Development Board shall adopt and make
public a policy detailing the process for retaining experts
under this Section. Any experts retained to assist with
calculating the range of capital costs or operations and
maintenance costs shall be retained no later than 45 days
after July 13, 2011 the effective date of this amendatory
Act of the 97th General Assembly.
(h-4) No later than 90 days after the Illinois Power Agency
submits the final draft sourcing agreement pursuant to
subsection (h-1), the Commission shall approve a sourcing
agreement containing (i) the capital costs, rate of return, and
operations and maintenance costs established pursuant to
subsection (h-3) and (ii) all other terms and conditions,
rights, provisions, exceptions, and limitations contained in
the final draft sourcing agreement; provided, however, the

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Commission shall correct typographical and scrivener's errors
and modify the contract only as necessary to provide that the
gas utility does not have the right to terminate the sourcing
agreement due to any future events that may occur other than
the clean coal SNG brownfield facility's failure to timely meet
milestones, uncured default, extended force majeure, or
abandonment. Once the sourcing agreement is approved, then the
gas utility subject to that sourcing agreement shall have 45
days after the date of the Commission's approval to enter into
the sourcing agreement.
(h-5) Sequestration enforcement.
(A) All contracts entered into under subsection (h) of
this Section Act and all sourcing agreements under
subsection (h-1) of this Section Act, regardless of
duration, shall require the owner of any facility supplying
SNG under the contract or sourcing agreement to provide
certified 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.
(B) If, in any year, the owner of the clean coal SNG
facility fails to demonstrate that the SNG facility

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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 clean coal SNG facility
must pay a penalty of $20 per ton of excess carbon dioxide
emissions not to exceed $40,000,000, in any given year
which shall be deposited into the Energy Efficiency Trust
Fund and distributed pursuant to subsection (b) of Section
6-6 of the Renewable Energy, Energy Efficiency, and Coal
Resources Development Law of 1997. On or before the 5-year
anniversary of the execution of the contract and every 5
years thereafter, an expert hired by the owner of the
facility with the approval of the Attorney General shall
conduct an analysis to determine the cost of sequestration
of at least 90% of the total carbon dioxide emissions the
plant would otherwise emit. If the analysis shows that the
actual annual cost is greater than the penalty, then the
penalty shall be increased to equal the actual cost.
Provided, however, to the extent that the owner of the
facility described in subsection (h) of this Section Act
can demonstrate that the failure was as a result of acts of
God (including fire, flood, earthquake, tornado,
lightning, hurricane, or other natural disaster); any
amendment, modification, or abrogation of any applicable
law or regulation that would prevent performance; war;

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invasion; act of foreign enemies; hostilities (regardless
of whether war is declared); civil war; rebellion;
revolution; insurrection; military or usurped power or
confiscation; terrorist activities; civil disturbance;
riots; nationalization; sabotage; blockage; or embargo,
the owner of the facility described in subsection (h) of
this Section Act shall not be subject to a penalty if and
only if (i) it promptly provides notice of its failure to
the Commission; (ii) as soon as practicable and consistent
with any order or direction from the Commission, it submits
to the Commission proposed modifications to its carbon
capture and sequestration plan; and (iii) it carries out
its proposed modifications in the manner and time directed
by the Commission.
If the Commission finds that the facility has not
satisfied each of these requirements, then the facility
shall be subject to the penalty. If the owner of the clean
coal SNG facility captured and sequestered more than 90% of
the total carbon dioxide emissions that the facility would
otherwise emit, then the owner of the facility may credit
such additional amounts to reduce the amount of any future
penalty to be paid. The penalty resulting from the failure
to capture and sequester at least the minimum amount of
carbon dioxide shall not be passed on to a utility or its
customers.
If the clean coal SNG facility fails to meet the

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requirements specified in this subsection (h-5), then the
Attorney General, on behalf of the People of the State of
Illinois, shall bring an action to enforce the obligations
related to the facility set forth in this subsection (h-5),
including any penalty payments owed, but not including the
physical obligation to capture and sequester at least 90%
of the total carbon dioxide emissions that the facility
would otherwise emit. Such action may be filed in any
circuit court in Illinois. By entering into a contract
pursuant to subsection (h) of this Section, the clean coal
SNG facility agrees to waive any objections to venue or to
the jurisdiction of the court with regard to the Attorney
General's action under this subsection (h-5).
Compliance with the sequestration requirements and any
penalty requirements specified in this subsection (h-5)
for the clean coal SNG facility shall be assessed annually
by the Commission, which may in its discretion retain an
expert to facilitate its assessment. If any expert is
retained by the Commission, then the clean coal SNG
facility shall pay for the expert's reasonable fees, and
such costs shall not be passed through to the utility or
its customers.
In addition, carbon dioxide emission credits received
by the clean coal SNG facility in connection with
sequestration of carbon dioxide from the facility must be
sold in a timely fashion with any revenue, less applicable

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fees and expenses and any expenses required to be paid by
facility for carbon dioxide transportation or
sequestration, deposited into the reconciliation account
within 30 days after receipt of such funds by the owner of
the clean coal SNG facility.
The clean coal SNG facility is prohibited from
transporting or sequestering carbon dioxide unless the
owner of the carbon dioxide pipeline that transfers the
carbon dioxide from the facility and the owner of the
sequestration site where the carbon dioxide captured by the
facility is stored has acquired all applicable permits
under applicable State and federal laws, statutes, rules,
or regulations prior to the transfer or sequestration of
carbon dioxide. The responsibility for compliance with the
sequestration requirements specified in this subsection
(h-5) for the clean coal SNG facility shall reside solely
with the clean coal SNG facility, regardless of whether the
facility has contracted with another party to capture,
transport, or sequester carbon dioxide. described in
subsection (h) of this Act described in subsection (h) of
this Act
(C) If, in any year, the owner of a clean coal SNG
brownfield facility fails to demonstrate that the clean
coal SNG brownfield facility captured and sequestered at
least 85% of the total carbon dioxide emissions that the
facility would otherwise emit, then the owner of the clean

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coal SNG brownfield facility must pay a penalty of $20 per
ton of excess carbon emissions up to $20,000,000, which
shall be deposited into the Energy Efficiency Trust Fund
and distributed pursuant to subsection (b) of Section 6-6
of the Renewable Energy, Energy Efficiency, and Coal
Resources Development Law of 1997. Provided, however, to
the extent that the owner of the clean coal SNG brownfield
facility can demonstrate that the failure was as a result
of acts of God (including fire, flood, earthquake, tornado,
lightning, hurricane, or other natural disaster); any
amendment, modification, or abrogation of any applicable
law or regulation that would prevent performance; war;
invasion; act of foreign enemies; hostilities (regardless
of whether war is declared); civil war; rebellion;
revolution; insurrection; military or usurped power or
confiscation; terrorist activities; civil disturbances;
riots; nationalization; sabotage; blockage; or embargo,
the owner of the clean coal SNG brownfield facility shall
not be subject to a penalty if and only if (i) it promptly
provides notice of its failure to the Commission; (ii) as
soon as practicable and consistent with any order or
direction from the Commission, it submits to the Commission
proposed modifications to its carbon capture and
sequestration plan; and (iii) it carries out its proposed
modifications in the manner and time directed by the
Commission. If the Commission finds that the facility has

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not satisfied each of these requirements, then the facility
shall be subject to the penalty. If the owner of a clean
coal SNG brownfield facility demonstrates that the clean
coal SNG brownfield facility captured and sequestered more
than 85% of the total carbon emissions that the facility
would otherwise emit, the owner of the clean coal SNG
brownfield facility may credit such additional amounts to
reduce the amount of any future penalty to be paid. The
penalty resulting from the failure to capture and sequester
at least the minimum amount of carbon dioxide shall not be
passed on to a utility or its customers.
In addition to any penalty for the clean coal SNG
brownfield facility's failure to capture and sequester at
least its minimum sequestration requirement, the Attorney
General, on behalf of the People of the State of Illinois,
shall bring an action for specific performance of this
subsection (h-5). Such action may be filed in any circuit
court in Illinois. By entering into a sourcing agreement
pursuant to subsection (h-1) of this Section, the clean
coal SNG brownfield facility agrees to waive any objections
to venue or to the jurisdiction of the court with regard to
the Attorney General's action for specific performance
under this subsection (h-5). for the facility described in
subsection (h) of this Act described in subsection (h) of
this Act
Compliance with the sequestration requirements and

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penalty requirements specified in this subsection (h-5)
for the clean coal SNG brownfield facility shall be
assessed annually by the Commission, which may in its
discretion retain an expert to facilitate its assessment.
If an expert is retained by the Commission, then the clean
coal SNG brownfield facility shall pay for the expert's
reasonable fees, and such costs shall not be passed through
to a utility or its customers. or a clean coal SNG
brownfield facility or requisite penalties are paid
Responsibility for compliance with the sequestration
requirements specified in this subsection (h-5) for the
clean coal SNG brownfield facility shall reside solely with
the clean coal SNG brownfield facility regardless of
whether the facility has contracted with another party to
capture, transport, or sequester carbon dioxide.
(h-7) Sequestration permitting, oversight, and
investigations.
(1) No clean coal facility or clean coal SNG brownfield
facility may transport or sequester carbon dioxide unless
the Commission approves the method of carbon dioxide
transportation or sequestration. Such approval shall be
required regardless of whether the facility has contracted
with another to transport or sequester the carbon dioxide.
Nothing in this subsection (h-7) shall release the owner or
operator of a carbon dioxide sequestration site or carbon
dioxide pipeline from any other permitting requirements

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under applicable State and federal laws, statutes, rules,
or regulations.
(2) The Commission shall review carbon dioxide
transportation and sequestration methods proposed by a
clean coal facility or a clean coal SNG brownfield facility
and shall approve those methods it deems reasonable and
cost-effective. For purposes of this review,
"cost-effective" means a commercially reasonable price for
similar carbon dioxide transportation or sequestration
techniques. In determining whether sequestration is
reasonable and cost-effective, the Commission may consult
with the Illinois State Geological Survey and retain third
parties to assist in its determination, provided that such
third parties shall not own or control any direct or
indirect interest in the facility that is proposing the
carbon dioxide transportation or the carbon dioxide
sequestration method and shall have no contractual
relationship with that facility. If a third party is
retained by the Commission, then the facility proposing the
carbon dioxide transportation or sequestration method
shall pay for the expert's reasonable fees, and these costs
shall not be passed through to a utility or its customers.
No later than 6 months prior to the date upon which the
owner intends to commence construction of a clean coal
facility or the clean coal SNG brownfield facility, the
owner of the facility shall file with the Commission a

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carbon dioxide transportation or sequestration plan. The
Commission shall hold a public hearing within 30 days after
receipt of the facility's carbon dioxide transportation or
sequestration plan. The Commission shall post notice of the
review on its website upon submission of a carbon dioxide
transportation or sequestration method and shall accept
written public comments. The Commission shall take the
comments into account when making its decision.
The Commission may not approve a carbon dioxide
sequestration method if the owner or operator of the
sequestration site has not received (i) an Underground
Injection Control permit from the Illinois Environmental
Protection Agency pursuant to the Environmental Protection
Act; (ii) an Underground Injection Control permit from the
Illinois Department of Natural Resources pursuant to the
Illinois Oil and Gas Act; or (iii) a permit similar to
items (i) or (ii) from the state in which the sequestration
site is located if the sequestration will take place
outside of Illinois. The Commission shall approve or deny
the carbon dioxide transportation or sequestration method
within 90 days after the receipt of all required
information.
(3) At least annually, the Illinois Environmental
Protection Agency shall inspect all carbon dioxide
sequestration sites in Illinois. The Illinois
Environmental Protection Agency may, as often as deemed

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necessary, monitor and conduct investigations of those
sites. The owner or operator of the sequestration site must
cooperate with the Illinois Environmental Protection
Agency investigations of carbon dioxide sequestration
sites.
If the Illinois Environmental Protection Agency
determines at any time a site creates conditions that
warrant the issuance of a seal order under Section 34 of
the Environmental Protection Act, then the Illinois
Environmental Protection Agency shall seal the site
pursuant to the Environmental Protection Act. If the
Illinois Environmental Protection Agency determines at any
time a carbon dioxide sequestration site creates
conditions that warrant the institution of a civil action
for an injunction under Section 43 of the Environmental
Protection Act, then the Illinois Environmental Protection
Agency shall request the State's Attorney or the Attorney
General institute such action. The Illinois Environmental
Protection Agency shall provide notice of any such actions
as soon as possible on its website. The SNG facility shall
incur all reasonable costs associated with any such
inspection or monitoring of the sequestration sites, and
these costs shall not be recoverable from utilities or
their customers.
(4) At least annually, the Commission shall inspect all
carbon dioxide pipelines in Illinois that transport carbon

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dioxide to ensure the safety and feasibility of those
pipelines. The Commission may, as often as deemed
necessary, monitor and conduct investigations of those
pipelines. The owner or operator of the pipeline must
cooperate with the Commission investigations of the carbon
dioxide pipelines.
In circumstances whereby a carbon dioxide pipeline
creates a substantial danger to the environment or to the
public health of persons or to the welfare of persons where
such danger is to the livelihood of such persons, the
State's Attorney or Attorney General, upon the request of
the Commission or on his or her own motion, may institute a
civil action for an immediate injunction to halt any
discharge or other activity causing or contributing to the
danger or to require such other action as may be necessary.
The court may issue an ex parte order and shall schedule a
hearing on the matter not later than 3 working days after
the date of injunction. The Commission shall provide notice
of any such actions as soon as possible on its website. The
SNG facility shall incur all reasonable costs associated
with any such inspection or monitoring of the sequestration
sites, and these costs shall not be recoverable from a
utility or its customers.
(h-9) The clean coal SNG brownfield facility shall have the
right to recover prudently incurred increased costs or reduced
revenue resulting from any new or amendatory legislation or

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other action. The State of Illinois pledges that the State will
not enact any law or take any action to:
(1) break, or repeal the authority for, sourcing
agreements approved by the Commission and entered into
between public utilities and the clean coal SNG brownfield
facility;
(2) deny public utilities full cost recovery for their
costs incurred under those sourcing agreements; or
(3) deny the clean coal SNG brownfield facility full
cost and revenue recovery as provided under those sourcing
agreements that are recoverable pursuant to subsection
(h-3) of this Section.
These pledges are for the benefit of the parties to those
sourcing agreements and the issuers and holders of bonds or
other obligations issued or incurred to finance or refinance
the clean coal SNG brownfield facility. The clean coal SNG
brownfield facility is authorized to include and refer to these
pledges in any financing agreement into which it may enter in
regard to those sourcing agreements.
The State of Illinois retains and reserves all other rights
to enact new or amendatory legislation or take any other
action, without impairment of the right of the clean coal SNG
brownfield facility to recover prudently incurred increased
costs or reduced revenue resulting from the new or amendatory
legislation or other action, including, but not limited to,
such legislation or other action that would (i) directly or

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indirectly raise the costs the clean coal SNG brownfield
facility must incur; (ii) directly or indirectly place
additional restrictions, regulations, or requirements on the
clean coal SNG brownfield facility; (iii) prohibit
sequestration in general or prohibit a specific sequestration
method or project; or (iv) increase minimum sequestration
requirements for the clean coal SNG brownfield facility to the
extent technically feasible. The clean coal SNG brownfield
facility shall have the right to recover prudently incurred
increased costs or reduced revenue resulting from the new or
amendatory legislation or other action as described in this
subsection (h-9).
(h-10) Contract costs for SNG incurred by an Illinois gas
utility are reasonable and prudent and recoverable through the
purchased gas adjustment clause and are not subject to review
or disallowance by the Commission. Contract costs are costs
incurred by the utility under the terms of a contract that
incorporates the terms stated in subsection (h) of this Section
as confirmed in writing by the Illinois Power Agency as set
forth in subsection (h) of this Section, which confirmation
shall be deemed conclusive, or as a consequence of or condition
to its performance under the contract, including (i) amounts
paid for SNG under the SNG contract and (ii) costs of
transportation and storage services of SNG purchased from
interstate pipelines under federally approved tariffs. The
Illinois gas utility shall initiate a clean coal SNG facility

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rider mechanism that (A) shall be applicable to all customers
who receive transportation service from the utility, (B) shall
be designed to have an equal percentage impact on the
transportation services rates of each class of the utility's
total customers, and (C) shall accurately reflect the net
customer savings, if any, and above market costs, if any, under
the SNG contract. Any contract, the terms of which have been
confirmed in writing by the Illinois Power Agency as set forth
in subsection (h) of this Section and the performance of the
parties under such contract cannot be grounds for challenging
prudence or cost recovery by the utility through the purchased
gas adjustment clause, and in such cases, the Commission is
directed not to consider, and has no authority to consider, any
attempted challenges.
The contracts entered into by Illinois gas utilities
pursuant to subsection (h) of this Section shall provide that
the utility retains the right to terminate the contract without
further obligation or liability to any party if the contract
has been impaired as a result of any legislative,
administrative, judicial, or other governmental action that is
taken that eliminates all or part of the prudence protection of
this subsection (h-10) or denies the recoverability of all or
part of the contract costs through the purchased gas adjustment
clause. Should any Illinois gas utility exercise its right
under this subsection (h-10) to terminate the contract, all
contract costs incurred prior to termination are and will be

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deemed reasonable, prudent, and recoverable as and when
incurred and not subject to review or disallowance by the
Commission. Any order, issued by the State requiring or
authorizing the discontinuation of the merchant function,
defined as the purchase and sale of natural gas by an Illinois
gas utility for the ultimate consumer in its service territory
shall include provisions necessary to prevent the impairment of
the value of any contract hereunder over its full term.
(h-11) All costs incurred by an Illinois gas utility in
procuring SNG from a clean coal SNG brownfield facility
pursuant to subsection (h-1) or a third-party marketer pursuant
to subsection (h-1) are reasonable and prudent and recoverable
through the purchased gas adjustment clause in conjunction with
a SNG brownfield facility rider mechanism and are not subject
to review or disallowance by the Commission; provided that if a
utility is required by law or otherwise elects to connect the
clean coal SNG brownfield facility to an interstate pipeline,
then the utility shall be entitled to recover pursuant to its
tariffs all just and reasonable costs that are prudently
incurred. Sourcing agreement costs are costs incurred by the
utility under the terms of a sourcing agreement that
incorporates the terms stated in subsection (h-1) of this
Section as approved by the Commission as set forth in
subsection (h-4) of this Section, which approval shall be
deemed conclusive, or as a consequence of or condition to its
performance under the contract, including (i) amounts paid for

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SNG under the SNG contract and (ii) costs of transportation and
storage services of SNG purchased from interstate pipelines
under federally approved tariffs. Any sourcing agreement, the
terms of which have been approved by the Commission as set
forth in subsection (h-4) of this Section, and the performance
of the parties under the sourcing agreement cannot be grounds
for challenging prudence or cost recovery by the utility, and
in these cases, the Commission is directed not to consider, and
has no authority to consider, any attempted challenges.
(h-15) Reconciliation account. The clean coal SNG facility
shall establish a reconciliation account for the benefit of the
retail customers of the utilities that have entered into
contracts with the clean coal SNG facility pursuant to
subsection (h). The reconciliation account shall be maintained
and administered by an independent trustee that is mutually
agreed upon by the owners of the clean coal SNG facility, the
utilities, and the Commission in an interest-bearing account in
accordance with the following:
(1) The clean coal SNG facility shall conduct an
analysis annually within 60 days after receiving the
necessary cost information, which shall be provided by the
gas utility within 6 months after the end of the preceding
calendar year, to determine (i) the average annual contract
SNG cost, which shall be calculated as the total amount
paid for SNG purchased from the clean coal SNG facility
over the preceding 12 months, plus the cost to the utility

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of the required transportation and storage services of SNG,
divided by the total number of MMBtus of SNG actually
purchased from the clean coal SNG facility in the preceding
12 months under the utility contract; (ii) the average
annual natural gas purchase cost, which shall be calculated
as the total annual supply costs paid for baseload natural
gas (excluding any SNG) purchased by such utility over the
preceding 12 months plus the costs of transportation and
storage services of such natural gas (excluding such costs
for SNG), divided by the total number of MMbtus of baseload
natural gas (excluding SNG) actually purchased by the
utility during the year; (iii) the cost differential, which
shall be the difference between the average annual contract
SNG cost and the average annual natural gas purchase cost;
and (iv) the revenue share target which shall be the cost
differential multiplied by the total amount of SNG
purchased over the preceding 12 months under such utility
contract.
(A) To the extent the annual average contract SNG
cost is less than the annual average natural gas
purchase cost, the utility shall credit an amount equal
to the revenue share target to the reconciliation
account. Such credit payment shall be made monthly
starting within 30 days after the completed analysis in
this subsection (h-15) and based on collections from
all customers via a line item charge in all customer

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bills designed to have an equal percentage impact on
the transportation services of each class of
customers. Credit payments made pursuant to this
subparagraph (A) shall be deemed prudent and
reasonable and not subject to Commission prudence
review.
(B) To the extent the annual average contract SNG
cost is greater than the annual average natural gas
purchase cost, the reconciliation account shall be
used to provide a credit equal to the revenue share
target to the utilities to be used to reduce the
utility's natural gas costs through the purchased gas
adjustment clause. Such payment shall be made within 30
days after the completed analysis pursuant to this
subsection (h-15), but only to the extent that the
reconciliation account has a positive balance.
(2) At the conclusion of the term of the SNG contracts
pursuant to subsection (h) and the completion of the final
annual analysis pursuant to this subsection (h-15), to the
extent the facility owes any amount to retail customers,
amounts in the account shall be credited to retail
customers to the extent the owed amount is repaid; 50% of
any additional amount in the reconciliation account shall
be distributed to the utilities to be used to reduce the
utilities' natural gas costs through the purchase gas
adjustment clause with the remaining amount distributed to

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the clean coal SNG facility. Such payment shall be made
within 30 days after the last completed analysis pursuant
to this subsection (h-15). If the facility has repaid all
owed amounts, if any, to retail customers and has
distributed 50% of any additional amount in the account to
the utilities, then the owners of the clean coal SNG
facility shall have no further obligation to the utility or
the retail customers.
If, at the conclusion of the term of the contracts
pursuant to subsection (h) and the completion of the final
annual analysis pursuant to this subsection (h-15), the
facility owes any amount to retail customers and the
account has been depleted, then the clean coal SNG facility
shall be liable for any remaining amount owed to the retail
customers. The clean coal SNG facility shall market the
daily production of SNG and distribute on a monthly basis
5% of the amounts collected with respect to such future
sales to the utilities in proportion to each utility's SNG
contract to be used to reduce the utility's natural gas
costs through the purchase gas adjustment clause; such
payments to the utility shall continue until either 15
years after the conclusion of the contract or such time as
the sum of such payments equals the remaining amount owed
to the retail customers at the end of the contract,
whichever is earlier. If the debt to the retail customers
is not repaid within 15 years after the conclusion of the

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contract, then the owner of the clean coal SNG facility
must sell the facility, and all proceeds from that sale
must be used to repay any amount owed to the retail
customers under this subsection (h-15).
The retail customers shall have first priority in
recovering that debt above any creditors, except the
secured lenders to the extent that the secured lenders have
any secured debt outstanding, including any parent
companies or affiliates of the clean coal SNG facility.
(3) 50% of all additional net revenue, defined as
miscellaneous net revenue after cost allowance and above
the budgeted estimate established for revenue pursuant to
subsection (h), including sale of substitute natural gas
derived from the clean coal SNG facility above the
nameplate capacity of the facility and other by-products
produced by the facility, shall be credited to the
reconciliation account on an annual basis with such payment
made within 30 days after the end of each calendar year
during the term of the contract.
(4) The clean coal SNG facility shall each year,
starting in the facility's first year of commercial
operation, file with the Commission, in such form as the
Commission shall require, a report as to the reconciliation
account. The annual report must contain the following
information:
(A) the revenue share target amount;

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(B) the amount credited or debited to the
reconciliation account during the year;
(C) the amount credited to the utilities to be used
to reduce the utilities natural gas costs though the
purchase gas adjustment clause;
(D) the total amount of reconciliation account at
the beginning and end of the year;
(E) the total amount of consumer savings to date;
and
(F) any additional information the Commission may
require.
When any report is erroneous or defective or appears to the
Commission to be erroneous or defective, the Commission may
notify the clean coal SNG facility to amend the report within
30 days; before or after the termination of the 30-day period,
the Commission may examine the trustee of the reconciliation
account or the officers, agents, employees, books, records, or
accounts of the clean coal SNG facility and correct such items
in the report as upon such examination the Commission may find
defective or erroneous. All reports shall be under oath.
All reports made to the Commission by the clean coal SNG
facility and the contents of the reports shall be open to
public inspection and shall be deemed a public record under the
Freedom of Information Act. Such reports shall be preserved in
the office of the Commission. The Commission shall publish an
annual summary of the reports prior to February 1 of the

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following year. The annual summary shall be made available to
the public on the Commission's website and shall be submitted
to the General Assembly.
Any facility that fails to file the report required under
this paragraph (4) to the Commission within the time specified
or to make specific answer to any question propounded by the
Commission within 30 days after the time it is lawfully
required to do so, or within such further time not to exceed 90
days as may be allowed by the Commission in its discretion,
shall pay a penalty of $500 to the Commission for each day it
is in default.
Any person who willfully makes any false report to the
Commission or to any member, officer, or employee thereof, any
person who willfully in a report withholds or fails to provide
material information to which the Commission is entitled under
this paragraph (4) and which information is either required to
be filed by statute, rule, regulation, order, or decision of
the Commission or has been requested by the Commission, and any
person who willfully aids or abets such person shall be guilty
of a Class A misdemeanor.
(h-20) The General Assembly authorizes the Illinois
Finance Authority to issue bonds to the maximum extent
permitted to finance coal gasification facilities described in
this Section, which constitute both "industrial projects"
under Article 801 of the Illinois Finance Authority Act and
"clean coal and energy projects" under Sections 825-65 through

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825-75 of the Illinois Finance Authority Act.
Administrative costs incurred by the Illinois Finance
Authority in performance of this subsection (h-20) shall be
subject to reimbursement by the clean coal SNG facility on
terms as the Illinois Finance Authority and the clean coal SNG
facility may agree. The utility and its customers shall have no
obligation to reimburse the clean coal SNG facility or the
Illinois Finance Authority for any such costs.
(h-25) The State of Illinois pledges that the State may not
enact any law or take any action to (1) break or repeal the
authority for SNG purchase contracts entered into between
public gas utilities and the clean coal SNG facility pursuant
to subsection (h) of this Section or (2) deny public gas
utilities their full cost recovery for contract costs, as
defined in subsection (h-10), that are incurred under such SNG
purchase contracts. These pledges are for the benefit of the
parties to such SNG purchase contracts and the issuers and
holders of bonds or other obligations issued or incurred to
finance or refinance the clean coal SNG facility. The
beneficiaries are authorized to include and refer to these
pledges in any finance agreement into which they may enter in
regard to such contracts.
(h-30) The State of Illinois retains and reserves all other
rights to enact new or amendatory legislation or take any other
action, including, but not limited to, such legislation or
other action that would (1) directly or indirectly raise the

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costs that the clean coal SNG facility must incur; (2) directly
or indirectly place additional restrictions, regulations, or
requirements on the clean coal SNG facility; (3) prohibit
sequestration in general or prohibit a specific sequestration
method or project; or (4) increase minimum sequestration
requirements.
(i) If a gas utility or an affiliate of a gas utility has
an ownership interest in any entity that produces or sells
synthetic natural gas, Article VII of this Act shall apply.
(Source: P.A. 96-1364, eff. 7-28-10; 97-96, eff. 7-13-11;
97-239, eff. 8-2-11; revised 9-12-11.)
Section 99. Effective date. This Act takes effect upon
becoming law.