Bill Text: IL HB1865 | 2011-2012 | 97th General Assembly | Enrolled

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 HVAC affiliate marketing.

Sponsorship: Partisan Bill (Democrat 2)

Status: (Passed) 2011-08-12 - Public Act . . . . . . . . . 97-0325 [HB1865 Detail]

Download: Illinois-2011-HB1865-Enrolled.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 Illinois Power Agency Act is amended by
changing Sections 1-5, 1-20, and 1-75 as follows:
(20 ILCS 3855/1-5)
Sec. 1-5. Legislative declarations and findings. The
General Assembly finds and declares:
(1) The health, welfare, and prosperity of all Illinois
citizens require the provision of adequate, reliable,
affordable, efficient, and environmentally sustainable
electric service at the lowest total cost over time, taking
into account any benefits of price stability.
(2) The transition to retail competition is not
complete. Some customers, especially residential and small
commercial customers, have failed to benefit from lower
electricity costs from retail and wholesale competition.
(3) Escalating prices for electricity in Illinois pose
a serious threat to the economic well-being, health, and
safety of the residents of and the commerce and industry of
the State.
(4) To protect against this threat to economic
well-being, health, and safety it is necessary to improve

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the process of procuring electricity to serve Illinois
residents, to promote investment in energy efficiency and
demand-response measures, and to support development of
clean coal technologies and renewable resources.
(5) Procuring a diverse electricity supply portfolio
will ensure the lowest total cost over time for adequate,
reliable, efficient, and environmentally sustainable
electric service.
(6) Including cost-effective renewable resources in
that portfolio will reduce long-term direct and indirect
costs to consumers by decreasing environmental impacts and
by avoiding or delaying the need for new generation,
transmission, and distribution infrastructure.
(7) Energy efficiency, demand-response measures, and
renewable energy are resources currently underused in
Illinois.
(8) The State should encourage the use of advanced
clean coal technologies that capture and sequester carbon
dioxide emissions to advance environmental protection
goals and to demonstrate the viability of coal and
coal-derived fuels in a carbon-constrained economy.
The General Assembly therefore finds that it is necessary
to create the Illinois Power Agency and that the goals and
objectives of that Agency are to accomplish each of the
following:
(A) Develop electricity procurement plans to ensure

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adequate, reliable, affordable, efficient, and
environmentally sustainable electric service at the lowest
total cost over time, taking into account any benefits of
price stability, for electric utilities that on December
31, 2005 provided electric service to at least 100,000
customers in Illinois and for small multi-jurisdictional
electric utilities that (i) on December 31, 2005 served
less than 100,000 customers in Illinois and (ii) request a
procurement plan for their Illinois jurisdictional load.
The procurement plan shall be updated on an annual basis
and shall include renewable energy resources sufficient to
achieve the standards specified in this Act.
(B) Conduct competitive procurement processes to
procure the supply resources identified in the procurement
plan.
(C) Develop electric generation and co-generation
facilities that use indigenous coal or renewable
resources, or both, financed with bonds issued by the
Illinois Finance Authority.
(D) Supply electricity from the Agency's facilities at
cost to one or more of the following: municipal electric
systems, governmental aggregators, or rural electric
cooperatives in Illinois.
(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)
(20 ILCS 3855/1-20)

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Sec. 1-20. General powers of the Agency.
(a) The Agency is authorized to do each of the following:
(1) Develop electricity procurement plans to ensure
adequate, reliable, affordable, efficient, and
environmentally sustainable electric service at the lowest
total cost over time, taking into account any benefits of
price stability, for electric utilities that on December
31, 2005 provided electric service to at least 100,000
customers in Illinois and for small multi-jurisdictional
electric utilities that (A) on December 31, 2005 served
less than 100,000 customers in Illinois and (B) request a
procurement plan for their Illinois jurisdictional load.
The procurement plans shall be updated on an annual basis
and shall include electricity generated from renewable
resources sufficient to achieve the standards specified in
this Act.
(2) Conduct competitive procurement processes to
procure the supply resources identified in the procurement
plan, pursuant to Section 16-111.5 of the Public Utilities
Act.
(3) Develop electric generation and co-generation
facilities that use indigenous coal or renewable
resources, or both, financed with bonds issued by the
Illinois Finance Authority.
(4) Supply electricity from the Agency's facilities at
cost to one or more of the following: municipal electric

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systems, governmental aggregators, or rural electric
cooperatives in Illinois.
(b) Except as otherwise limited by this Act, the Agency has
all of the powers necessary or convenient to carry out the
purposes and provisions of this Act, including without
limitation, each of the following:
(1) To have a corporate seal, and to alter that seal at
pleasure, and to use it by causing it or a facsimile to be
affixed or impressed or reproduced in any other manner.
(2) To use the services of the Illinois Finance
Authority necessary to carry out the Agency's purposes.
(3) To negotiate and enter into loan agreements and
other agreements with the Illinois Finance Authority.
(4) To obtain and employ personnel and hire consultants
that are necessary to fulfill the Agency's purposes, and to
make expenditures for that purpose within the
appropriations for that purpose.
(5) To purchase, receive, take by grant, gift, devise,
bequest, or otherwise, lease, or otherwise acquire, own,
hold, improve, employ, use, and otherwise deal in and with,
real or personal property whether tangible or intangible,
or any interest therein, within the State.
(6) To acquire real or personal property, whether
tangible or intangible, including without limitation
property rights, interests in property, franchises,
obligations, contracts, and debt and equity securities,

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and to do so by the exercise of the power of eminent domain
in accordance with Section 1-21; except that any real
property acquired by the exercise of the power of eminent
domain must be located within the State.
(7) To sell, convey, lease, exchange, transfer,
abandon, or otherwise dispose of, or mortgage, pledge, or
create a security interest in, any of its assets,
properties, or any interest therein, wherever situated.
(8) To purchase, take, receive, subscribe for, or
otherwise acquire, hold, make a tender offer for, vote,
employ, sell, lend, lease, exchange, transfer, or
otherwise dispose of, mortgage, pledge, or grant a security
interest in, use, and otherwise deal in and with, bonds and
other obligations, shares, or other securities (or
interests therein) issued by others, whether engaged in a
similar or different business or activity.
(9) To make and execute agreements, contracts, and
other instruments necessary or convenient in the exercise
of the powers and functions of the Agency under this Act,
including contracts with any person, local government,
State agency, or other entity; and all State agencies and
all local governments are authorized to enter into and do
all things necessary to perform any such agreement,
contract, or other instrument with the Agency. No such
agreement, contract, or other instrument shall exceed 40
years.

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(10) To lend money, invest and reinvest its funds in
accordance with the Public Funds Investment Act, and take
and hold real and personal property as security for the
payment of funds loaned or invested.
(11) To borrow money at such rate or rates of interest
as the Agency may determine, issue its notes, bonds, or
other obligations to evidence that indebtedness, and
secure any of its obligations by mortgage or pledge of its
real or personal property, machinery, equipment,
structures, fixtures, inventories, revenues, grants, and
other funds as provided or any interest therein, wherever
situated.
(12) To enter into agreements with the Illinois Finance
Authority to issue bonds whether or not the income
therefrom is exempt from federal taxation.
(13) To procure insurance against any loss in
connection with its properties or operations in such amount
or amounts and from such insurers, including the federal
government, as it may deem necessary or desirable, and to
pay any premiums therefor.
(14) To negotiate and enter into agreements with
trustees or receivers appointed by United States
bankruptcy courts or federal district courts or in other
proceedings involving adjustment of debts and authorize
proceedings involving adjustment of debts and authorize
legal counsel for the Agency to appear in any such

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proceedings.
(15) To file a petition under Chapter 9 of Title 11 of
the United States Bankruptcy Code or take other similar
action for the adjustment of its debts.
(16) To enter into management agreements for the
operation of any of the property or facilities owned by the
Agency.
(17) To enter into an agreement to transfer and to
transfer any land, facilities, fixtures, or equipment of
the Agency to one or more municipal electric systems,
governmental aggregators, or rural electric agencies or
cooperatives, for such consideration and upon such terms as
the Agency may determine to be in the best interest of the
citizens of Illinois.
(18) To enter upon any lands and within any building
whenever in its judgment it may be necessary for the
purpose of making surveys and examinations to accomplish
any purpose authorized by this Act.
(19) To maintain an office or offices at such place or
places in the State as it may determine.
(20) To request information, and to make any inquiry,
investigation, survey, or study that the Agency may deem
necessary to enable it effectively to carry out the
provisions of this Act.
(21) To accept and expend appropriations.
(22) To engage in any activity or operation that is

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incidental to and in furtherance of efficient operation to
accomplish the Agency's purposes.
(23) To adopt, revise, amend, and repeal rules with
respect to its operations, properties, and facilities as
may be necessary or convenient to carry out the purposes of
this Act, subject to the provisions of the Illinois
Administrative Procedure Act and Sections 1-22 and 1-35 of
this Act.
(24) To establish and collect charges and fees as
described in this Act.
(25) To manage procurement of substitute natural gas
from a facility that meets the criteria specified in
subsection (a) of Section 1-58 of this Act, on terms and
conditions that may be approved by the Agency pursuant to
subsection (d) of Section 1-58 of this Act, to support the
operations of State agencies and local governments that
agree to such terms and conditions. This procurement
process is not subject to the Procurement Code.
(Source: P.A. 95-481, eff. 8-28-07; 96-784, eff. 8-28-09;
96-1000, eff. 7-2-10.)
(20 ILCS 3855/1-75)
Sec. 1-75. Planning and Procurement Bureau. The Planning
and Procurement Bureau has the following duties and
responsibilities:
(a) The Planning and Procurement Bureau shall each

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year, beginning in 2008, develop procurement plans and
conduct competitive procurement processes in accordance
with the requirements of Section 16-111.5 of the Public
Utilities Act for the eligible retail customers of electric
utilities that on December 31, 2005 provided electric
service to at least 100,000 customers in Illinois. The
Planning and Procurement Bureau shall also develop
procurement plans and conduct competitive procurement
processes in accordance with the requirements of Section
16-111.5 of the Public Utilities Act for the eligible
retail customers of small multi-jurisdictional electric
utilities that (i) on December 31, 2005 served less than
100,000 customers in Illinois and (ii) request a
procurement plan for their Illinois jurisdictional load.
This Section shall not apply to a small
multi-jurisdictional utility until such time as a small
multi-jurisdictional utility requests the Agency to
prepare a procurement plan for their Illinois
jurisdictional load. For the purposes of this Section, the
term "eligible retail customers" has the same definition as
found in Section 16-111.5(a) of the Public Utilities Act.
(1) The Agency shall each year, beginning in 2008,
as needed, issue a request for qualifications for
experts or expert consulting firms to develop the
procurement plans in accordance with Section 16-111.5
of the Public Utilities Act. In order to qualify an

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expert or expert consulting firm must have:
(A) direct previous experience assembling
large-scale power supply plans or portfolios for
end-use customers;
(B) an advanced degree in economics,
mathematics, engineering, risk management, or a
related area of study;
(C) 10 years of experience in the electricity
sector, including managing supply risk;
(D) expertise in wholesale electricity market
rules, including those established by the Federal
Energy Regulatory Commission and regional
transmission organizations;
(E) expertise in credit protocols and
familiarity with contract protocols;
(F) adequate resources to perform and fulfill
the required functions and responsibilities; and
(G) the absence of a conflict of interest and
inappropriate bias for or against potential
bidders or the affected electric utilities.
(2) The Agency shall each year, as needed, issue a
request for qualifications for a procurement
administrator to conduct the competitive procurement
processes in accordance with Section 16-111.5 of the
Public Utilities Act. In order to qualify an expert or
expert consulting firm must have:

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(A) direct previous experience administering a
large-scale competitive procurement process;
(B) an advanced degree in economics,
mathematics, engineering, or a related area of
study;
(C) 10 years of experience in the electricity
sector, including risk management experience;
(D) expertise in wholesale electricity market
rules, including those established by the Federal
Energy Regulatory Commission and regional
transmission organizations;
(E) expertise in credit and contract
protocols;
(F) adequate resources to perform and fulfill
the required functions and responsibilities; and
(G) the absence of a conflict of interest and
inappropriate bias for or against potential
bidders or the affected electric utilities.
(3) The Agency shall provide affected utilities
and other interested parties with the lists of
qualified experts or expert consulting firms
identified through the request for qualifications
processes that are under consideration to develop the
procurement plans and to serve as the procurement
administrator. The Agency shall also provide each
qualified expert's or expert consulting firm's

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response to the request for qualifications. All
information provided under this subparagraph shall
also be provided to the Commission. The Agency may
provide by rule for fees associated with supplying the
information to utilities and other interested parties.
These parties shall, within 5 business days, notify the
Agency in writing if they object to any experts or
expert consulting firms on the lists. Objections shall
be based on:
(A) failure to satisfy qualification criteria;
(B) identification of a conflict of interest;
or
(C) evidence of inappropriate bias for or
against potential bidders or the affected
utilities.
The Agency shall remove experts or expert
consulting firms from the lists within 10 days if there
is a reasonable basis for an objection and provide the
updated lists to the affected utilities and other
interested parties. If the Agency fails to remove an
expert or expert consulting firm from a list, an
objecting party may seek review by the Commission
within 5 days thereafter by filing a petition, and the
Commission shall render a ruling on the petition within
10 days. There is no right of appeal of the
Commission's ruling.

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(4) The Agency shall issue requests for proposals
to the qualified experts or expert consulting firms to
develop a procurement plan for the affected utilities
and to serve as procurement administrator.
(5) The Agency shall select an expert or expert
consulting firm to develop procurement plans based on
the proposals submitted and shall award one-year
contracts to those selected with an option for the
Agency for a one-year renewal.
(6) The Agency shall select an expert or expert
consulting firm, with approval of the Commission, to
serve as procurement administrator based on the
proposals submitted. If the Commission rejects, within
5 days, the Agency's selection, the Agency shall submit
another recommendation within 3 days based on the
proposals submitted. The Agency shall award a one-year
contract to the expert or expert consulting firm so
selected with Commission approval with an option for
the Agency for a one-year renewal.
(b) The experts or expert consulting firms retained by
the Agency shall, as appropriate, prepare procurement
plans, and conduct a competitive procurement process as
prescribed in Section 16-111.5 of the Public Utilities Act,
to ensure adequate, reliable, affordable, efficient, and
environmentally sustainable electric service at the lowest
total cost over time, taking into account any benefits of

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price stability, for eligible retail customers of electric
utilities that on December 31, 2005 provided electric
service to at least 100,000 customers in the State of
Illinois, and for eligible Illinois retail customers of
small multi-jurisdictional electric utilities that (i) on
December 31, 2005 served less than 100,000 customers in
Illinois and (ii) request a procurement plan for their
Illinois jurisdictional load.
(c) Renewable portfolio standard.
(1) The procurement plans shall include
cost-effective renewable energy resources. A minimum
percentage of each utility's total supply to serve the
load of eligible retail customers, as defined in
Section 16-111.5(a) of the Public Utilities Act,
procured for each of the following years shall be
generated from cost-effective renewable energy
resources: at least 2% by June 1, 2008; at least 4% by
June 1, 2009; at least 5% by June 1, 2010; at least 6%
by June 1, 2011; at least 7% by June 1, 2012; at least
8% by June 1, 2013; at least 9% by June 1, 2014; at
least 10% by June 1, 2015; and increasing by at least
1.5% each year thereafter to at least 25% by June 1,
2025. To the extent that it is available, at least 75%
of the renewable energy resources used to meet these
standards shall come from wind generation and,
beginning on June 1, 2011, at least the following

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percentages of the renewable energy resources used to
meet these standards shall come from photovoltaics on
the following schedule: 0.5% by June 1, 2012, 1.5% by
June 1, 2013; 3% by June 1, 2014; and 6% by June 1,
2015 and thereafter. For purposes of this subsection
(c), "cost-effective" means that the costs of
procuring renewable energy resources do not cause the
limit stated in paragraph (2) of this subsection (c) to
be exceeded and do not exceed benchmarks based on
market prices for renewable energy resources in the
region, which shall be developed by the procurement
administrator, in consultation with the Commission
staff, Agency staff, and the procurement monitor and
shall be subject to Commission review and approval.
(2) For purposes of this subsection (c), the
required procurement of cost-effective renewable
energy resources for a particular year shall be
measured as a percentage of the actual amount of
electricity (megawatt-hours) supplied by the electric
utility to eligible retail customers in the planning
year ending immediately prior to the procurement. For
purposes of this subsection (c), the amount paid per
kilowatthour means the total amount paid for electric
service expressed on a per kilowatthour basis. For
purposes of this subsection (c), the total amount paid
for electric service includes without limitation

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amounts paid for supply, transmission, distribution,
surcharges, and add-on taxes.
Notwithstanding the requirements of this
subsection (c), the total of renewable energy
resources procured pursuant to the procurement plan
for any single year shall be reduced by an amount
necessary to limit the annual estimated average net
increase due to the costs of these resources included
in the amounts paid by eligible retail customers in
connection with electric service to:
(A) in 2008, no more than 0.5% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2007;
(B) in 2009, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2008 or 1%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007;
(C) in 2010, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009 or
1.5% of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007;
(D) in 2011, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2010 or 2%

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of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007; and
(E) thereafter, the amount of renewable energy
resources procured pursuant to the procurement
plan for any single year shall be reduced by an
amount necessary to limit the estimated average
net increase due to the cost of these resources
included in the amounts paid by eligible retail
customers in connection with electric service to
no more than the greater of 2.015% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2007 or the incremental
amount per kilowatthour paid for these resources
in 2011.
No later than June 30, 2011, the Commission shall
review the limitation on the amount of renewable energy
resources procured pursuant to this subsection (c) and
report to the General Assembly its findings as to
whether that limitation unduly constrains the
procurement of cost-effective renewable energy
resources.
(3) Through June 1, 2011, renewable energy
resources shall be counted for the purpose of meeting
the renewable energy standards set forth in paragraph
(1) of this subsection (c) only if they are generated
from facilities located in the State, provided that

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cost-effective renewable energy resources are
available from those facilities. If those
cost-effective resources are not available in
Illinois, they shall be procured in states that adjoin
Illinois and may be counted towards compliance. If
those cost-effective resources are not available in
Illinois or in states that adjoin Illinois, they shall
be purchased elsewhere and shall be counted towards
compliance. After June 1, 2011, cost-effective
renewable energy resources located in Illinois and in
states that adjoin Illinois may be counted towards
compliance with the standards set forth in paragraph
(1) of this subsection (c). If those cost-effective
resources are not available in Illinois or in states
that adjoin Illinois, they shall be purchased
elsewhere and shall be counted towards compliance.
(4) The electric utility shall retire all
renewable energy credits used to comply with the
standard.
(5) Beginning with the year commencing June 1,
2010, an electric utility subject to this subsection
(c) shall apply the lesser of the maximum alternative
compliance payment rate or the most recent estimated
alternative compliance payment rate for its service
territory for the corresponding compliance period,
established pursuant to subsection (d) of Section

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16-115D of the Public Utilities Act to its retail
customers that take service pursuant to the electric
utility's hourly pricing tariff or tariffs. The
electric utility shall retain all amounts collected as
a result of the application of the alternative
compliance payment rate or rates to such customers,
and, beginning in 2011, the utility shall include in
the information provided under item (1) of subsection
(d) of Section 16-111.5 of the Public Utilities Act the
amounts collected under the alternative compliance
payment rate or rates for the prior year ending May 31.
Notwithstanding any limitation on the procurement of
renewable energy resources imposed by item (2) of this
subsection (c), the Agency shall increase its spending
on the purchase of renewable energy resources to be
procured by the electric utility for the next plan year
by an amount equal to the amounts collected by the
utility under the alternative compliance payment rate
or rates in the prior year ending May 31.
(d) Clean coal portfolio standard.
(1) The procurement plans shall include electricity
generated using clean coal. Each utility shall enter into
one or more sourcing agreements with the initial clean coal
facility, as provided in paragraph (3) of this subsection
(d), covering electricity generated by the initial clean
coal facility representing at least 5% of each utility's

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total supply to serve the load of eligible retail customers
in 2015 and each year thereafter, as described in paragraph
(3) of this subsection (d), subject to the limits specified
in paragraph (2) of this subsection (d). It is the goal of
the State that by January 1, 2025, 25% of the electricity
used in the State shall be generated by cost-effective
clean coal facilities. For purposes of this subsection (d),
"cost-effective" means that the expenditures pursuant to
such sourcing agreements do not cause the limit stated in
paragraph (2) of this subsection (d) to be exceeded and do
not exceed cost-based benchmarks, which shall be developed
to assess all expenditures pursuant to such sourcing
agreements covering electricity generated by clean coal
facilities, other than the initial clean coal facility, by
the procurement administrator, in consultation with the
Commission staff, Agency staff, and the procurement
monitor and shall be subject to Commission review and
approval.
(A) A utility party to a sourcing agreement shall
immediately retire any emission credits that it
receives in connection with the electricity covered by
such agreement.
(B) Utilities shall maintain adequate records
documenting the purchases under the sourcing agreement
to comply with this subsection (d) and shall file an
accounting with the load forecast that must be filed

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with the Agency by July 15 of each year, in accordance
with subsection (d) of Section 16-111.5 of the Public
Utilities Act.
(C) A utility shall be deemed to have complied with
the clean coal portfolio standard specified in this
subsection (d) if the utility enters into a sourcing
agreement as required by this subsection (d).
(2) For purposes of this subsection (d), the required
execution of sourcing agreements with the initial clean
coal facility for a particular year shall be measured as a
percentage of the actual amount of electricity
(megawatt-hours) supplied by the electric utility to
eligible retail customers in the planning year ending
immediately prior to the agreement's execution. For
purposes of this subsection (d), the amount paid per
kilowatthour means the total amount paid for electric
service expressed on a per kilowatthour basis. For purposes
of this subsection (d), the total amount paid for electric
service includes without limitation amounts paid for
supply, transmission, distribution, surcharges and add-on
taxes.
Notwithstanding the requirements of this subsection
(d), the total amount paid under sourcing agreements with
clean coal facilities pursuant to the procurement plan for
any given year shall be reduced by an amount necessary to
limit the annual estimated average net increase due to the

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costs of these resources included in the amounts paid by
eligible retail customers in connection with electric
service to:
(A) in 2010, no more than 0.5% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2009;
(B) in 2011, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2010 or 1%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009;
(C) in 2012, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2011 or
1.5% of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009;
(D) in 2013, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2012 or 2%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009; and
(E) thereafter, the total amount paid under
sourcing agreements with clean coal facilities
pursuant to the procurement plan for any single
year shall be reduced by an amount necessary to
limit the estimated average net increase due to the

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cost of these resources included in the amounts
paid by eligible retail customers in connection
with electric service to no more than the greater
of (i) 2.015% of the amount paid per kilowatthour
by those customers during the year ending May 31,
2009 or (ii) the incremental amount per
kilowatthour paid for these resources in 2013.
These requirements may be altered only as provided
by statute. No later than June 30, 2015, the
Commission shall review the limitation on the
total amount paid under sourcing agreements, if
any, with clean coal facilities pursuant to this
subsection (d) and report to the General Assembly
its findings as to whether that limitation unduly
constrains the amount of electricity generated by
cost-effective clean coal facilities that is
covered by sourcing agreements.
(3) Initial clean coal facility. In order to promote
development of clean coal facilities in Illinois, each
electric utility subject to this Section shall execute a
sourcing agreement to source electricity from a proposed
clean coal facility in Illinois (the "initial clean coal
facility") that will have a nameplate capacity of at least
500 MW when commercial operation commences, that has a
final Clean Air Act permit on the effective date of this
amendatory Act of the 95th General Assembly, and that will

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meet the definition of clean coal facility in Section 1-10
of this Act when commercial operation commences. The
sourcing agreements with this initial clean coal facility
shall be subject to both approval of the initial clean coal
facility by the General Assembly and satisfaction of the
requirements of paragraph (4) of this subsection (d) and
shall be executed within 90 days after any such approval by
the General Assembly. The Agency and the Commission shall
have authority to inspect all books and records associated
with the initial clean coal facility during the term of
such a sourcing agreement. A utility's sourcing agreement
for electricity produced by the initial clean coal facility
shall include:
(A) a formula contractual price (the "contract
price") approved pursuant to paragraph (4) of this
subsection (d), which shall:
(i) be determined using a cost of service
methodology employing either a level or deferred
capital recovery component, based on a capital
structure consisting of 45% equity and 55% debt,
and a return on equity as may be approved by the
Federal Energy Regulatory Commission, which in any
case may not exceed the lower of 11.5% or the rate
of return approved by the General Assembly
pursuant to paragraph (4) of this subsection (d);
and

HB1865 Enrolled - 26 - LRB097 09633 ASK 49770 b
(ii) provide that all miscellaneous net
revenue, including but not limited to net revenue
from the sale of emission allowances, if any,
substitute natural gas, if any, grants or other
support provided by the State of Illinois or the
United States Government, firm transmission
rights, if any, by-products produced by the
facility, energy or capacity derived from the
facility and not covered by a sourcing agreement
pursuant to paragraph (3) of this subsection (d) or
item (5) of subsection (d) of Section 16-115 of the
Public Utilities Act, whether generated from the
synthesis gas derived from coal, from SNG, or from
natural gas, shall be credited against the revenue
requirement for this initial clean coal facility;
(B) power purchase provisions, which shall:
(i) provide that the utility party to such
sourcing agreement shall pay the contract price
for electricity delivered under such sourcing
agreement;
(ii) require delivery of electricity to the
regional transmission organization market of the
utility that is party to such sourcing agreement;
(iii) require the utility party to such
sourcing agreement to buy from the initial clean
coal facility in each hour an amount of energy

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equal to all clean coal energy made available from
the initial clean coal facility during such hour
times a fraction, the numerator of which is such
utility's retail market sales of electricity
(expressed in kilowatthours sold) in the State
during the prior calendar month and the
denominator of which is the total retail market
sales of electricity (expressed in kilowatthours
sold) in the State by utilities during such prior
month and the sales of electricity (expressed in
kilowatthours sold) in the State by alternative
retail electric suppliers during such prior month
that are subject to the requirements of this
subsection (d) and paragraph (5) of subsection (d)
of Section 16-115 of the Public Utilities Act,
provided that the amount purchased by the utility
in any year will be limited by paragraph (2) of
this subsection (d); and
(iv) be considered pre-existing contracts in
such utility's procurement plans for eligible
retail customers;
(C) contract for differences provisions, which
shall:
(i) require the utility party to such sourcing
agreement to contract with the initial clean coal
facility in each hour with respect to an amount of

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energy equal to all clean coal energy made
available from the initial clean coal facility
during such hour times a fraction, the numerator of
which is such utility's retail market sales of
electricity (expressed in kilowatthours sold) in
the utility's service territory in the State
during the prior calendar month and the
denominator of which is the total retail market
sales of electricity (expressed in kilowatthours
sold) in the State by utilities during such prior
month and the sales of electricity (expressed in
kilowatthours sold) in the State by alternative
retail electric suppliers during such prior month
that are subject to the requirements of this
subsection (d) and paragraph (5) of subsection (d)
of Section 16-115 of the Public Utilities Act,
provided that the amount paid by the utility in any
year will be limited by paragraph (2) of this
subsection (d);
(ii) provide that the utility's payment
obligation in respect of the quantity of
electricity determined pursuant to the preceding
clause (i) shall be limited to an amount equal to
(1) the difference between the contract price
determined pursuant to subparagraph (A) of
paragraph (3) of this subsection (d) and the

HB1865 Enrolled - 29 - LRB097 09633 ASK 49770 b
day-ahead price for electricity delivered to the
regional transmission organization market of the
utility that is party to such sourcing agreement
(or any successor delivery point at which such
utility's supply obligations are financially
settled on an hourly basis) (the "reference
price") on the day preceding the day on which the
electricity is delivered to the initial clean coal
facility busbar, multiplied by (2) the quantity of
electricity determined pursuant to the preceding
clause (i); and
(iii) not require the utility to take physical
delivery of the electricity produced by the
facility;
(D) general provisions, which shall:
(i) specify a term of no more than 30 years,
commencing on the commercial operation date of the
facility;
(ii) provide that utilities shall maintain
adequate records documenting purchases under the
sourcing agreements entered into to comply with
this subsection (d) and shall file an accounting
with the load forecast that must be filed with the
Agency by July 15 of each year, in accordance with
subsection (d) of Section 16-111.5 of the Public
Utilities Act.

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(iii) provide that all costs associated with
the initial clean coal facility will be
periodically reported to the Federal Energy
Regulatory Commission and to purchasers in
accordance with applicable laws governing
cost-based wholesale power contracts;
(iv) permit the Illinois Power Agency to
assume ownership of the initial clean coal
facility, without monetary consideration and
otherwise on reasonable terms acceptable to the
Agency, if the Agency so requests no less than 3
years prior to the end of the stated contract term;
(v) require the owner of the initial clean coal
facility to provide documentation to the
Commission each year, starting in the facility's
first year of commercial operation, accurately
reporting the quantity of carbon emissions from
the facility that have been captured and
sequestered and report any quantities of carbon
released from the site or sites at which carbon
emissions were sequestered in prior years, based
on continuous monitoring of such sites. If, in any
year after the first year of commercial operation,
the owner of the facility fails to demonstrate that
the initial clean coal facility captured and
sequestered at least 50% of the total carbon

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emissions that the facility would otherwise emit
or that sequestration of emissions from prior
years has failed, resulting in the release of
carbon dioxide into the atmosphere, the owner of
the facility must offset excess emissions. Any
such carbon offsets must be permanent, additional,
verifiable, real, located within the State of
Illinois, and legally and practicably enforceable.
The cost of such offsets for the facility that are
not recoverable shall not exceed $15 million in any
given year. No costs of any such purchases of
carbon offsets may be recovered from a utility or
its customers. All carbon offsets purchased for
this purpose and any carbon emission credits
associated with sequestration of carbon from the
facility must be permanently retired. The initial
clean coal facility shall not forfeit its
designation as a clean coal facility if the
facility fails to fully comply with the applicable
carbon sequestration requirements in any given
year, provided the requisite offsets are
purchased. However, the Attorney General, on
behalf of the People of the State of Illinois, may
specifically enforce the facility's sequestration
requirement and the other terms of this contract
provision. Compliance with the sequestration

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requirements and offset purchase requirements
specified in paragraph (3) of this subsection (d)
shall be reviewed annually by an independent
expert retained by the owner of the initial clean
coal facility, with the advance written approval
of the Attorney General. The Commission may, in the
course of the review specified in item (vii),
reduce the allowable return on equity for the
facility if the facility wilfully fails to comply
with the carbon capture and sequestration
requirements set forth in this item (v);
(vi) include limits on, and accordingly
provide for modification of, the amount the
utility is required to source under the sourcing
agreement consistent with paragraph (2) of this
subsection (d);
(vii) require Commission review: (1) to
determine the justness, reasonableness, and
prudence of the inputs to the formula referenced in
subparagraphs (A)(i) through (A)(iii) of paragraph
(3) of this subsection (d), prior to an adjustment
in those inputs including, without limitation, the
capital structure and return on equity, fuel
costs, and other operations and maintenance costs
and (2) to approve the costs to be passed through
to customers under the sourcing agreement by which

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the utility satisfies its statutory obligations.
Commission review shall occur no less than every 3
years, regardless of whether any adjustments have
been proposed, and shall be completed within 9
months;
(viii) limit the utility's obligation to such
amount as the utility is allowed to recover through
tariffs filed with the Commission, provided that
neither the clean coal facility nor the utility
waives any right to assert federal pre-emption or
any other argument in response to a purported
disallowance of recovery costs;
(ix) limit the utility's or alternative retail
electric supplier's obligation to incur any
liability until such time as the facility is in
commercial operation and generating power and
energy and such power and energy is being delivered
to the facility busbar;
(x) provide that the owner or owners of the
initial clean coal facility, which is the
counterparty to such sourcing agreement, shall
have the right from time to time to elect whether
the obligations of the utility party thereto shall
be governed by the power purchase provisions or the
contract for differences provisions;
(xi) append documentation showing that the

HB1865 Enrolled - 34 - LRB097 09633 ASK 49770 b
formula rate and contract, insofar as they relate
to the power purchase provisions, have been
approved by the Federal Energy Regulatory
Commission pursuant to Section 205 of the Federal
Power Act;
(xii) provide that any changes to the terms of
the contract, insofar as such changes relate to the
power purchase provisions, are subject to review
under the public interest standard applied by the
Federal Energy Regulatory Commission pursuant to
Sections 205 and 206 of the Federal Power Act; and
(xiii) conform with customary lender
requirements in power purchase agreements used as
the basis for financing non-utility generators.
(4) Effective date of sourcing agreements with the
initial clean coal facility. Any proposed sourcing
agreement with the initial clean coal facility shall not
become effective unless the following reports are prepared
and submitted and authorizations and approvals obtained:
(i) Facility cost report. The owner of the
initial clean coal facility shall submit to the
Commission, the Agency, and the General Assembly a
front-end engineering and design study, a facility
cost report, method of financing (including but
not limited to structure and associated costs),
and an operating and maintenance cost quote for the

HB1865 Enrolled - 35 - LRB097 09633 ASK 49770 b
facility (collectively "facility cost report"),
which shall be prepared in accordance with the
requirements of this paragraph (4) of subsection
(d) of this Section, and shall provide the
Commission and the Agency access to the work
papers, relied upon documents, and any other
backup documentation related to the facility cost
report.
(ii) Commission report. Within 6 months
following receipt of the facility cost report, the
Commission, in consultation with the Agency, shall
submit a report to the General Assembly setting
forth its analysis of the facility cost report.
Such report shall include, but not be limited to, a
comparison of the costs associated with
electricity generated by the initial clean coal
facility to the costs associated with electricity
generated by other types of generation facilities,
an analysis of the rate impacts on residential and
small business customers over the life of the
sourcing agreements, and an analysis of the
likelihood that the initial clean coal facility
will commence commercial operation by and be
delivering power to the facility's busbar by 2016.
To assist in the preparation of its report, the
Commission, in consultation with the Agency, may

HB1865 Enrolled - 36 - LRB097 09633 ASK 49770 b
hire one or more experts or consultants, the costs
of which shall be paid for by the owner of the
initial clean coal facility. The Commission and
Agency may begin the process of selecting such
experts or consultants prior to receipt of the
facility cost report.
(iii) General Assembly approval. The proposed
sourcing agreements shall not take effect unless,
based on the facility cost report and the
Commission's report, the General Assembly enacts
authorizing legislation approving (A) the
projected price, stated in cents per kilowatthour,
to be charged for electricity generated by the
initial clean coal facility, (B) the projected
impact on residential and small business
customers' bills over the life of the sourcing
agreements, and (C) the maximum allowable return
on equity for the project; and
(iv) Commission review. If the General
Assembly enacts authorizing legislation pursuant
to subparagraph (iii) approving a sourcing
agreement, the Commission shall, within 90 days of
such enactment, complete a review of such sourcing
agreement. During such time period, the Commission
shall implement any directive of the General
Assembly, resolve any disputes between the parties

HB1865 Enrolled - 37 - LRB097 09633 ASK 49770 b
to the sourcing agreement concerning the terms of
such agreement, approve the form of such
agreement, and issue an order finding that the
sourcing agreement is prudent and reasonable.
The facility cost report shall be prepared as follows:
(A) The facility cost report shall be prepared by
duly licensed engineering and construction firms
detailing the estimated capital costs payable to one or
more contractors or suppliers for the engineering,
procurement and construction of the components
comprising the initial clean coal facility and the
estimated costs of operation and maintenance of the
facility. The facility cost report shall include:
(i) an estimate of the capital cost of the core
plant based on one or more front end engineering
and design studies for the gasification island and
related facilities. The core plant shall include
all civil, structural, mechanical, electrical,
control, and safety systems.
(ii) an estimate of the capital cost of the
balance of the plant, including any capital costs
associated with sequestration of carbon dioxide
emissions and all interconnects and interfaces
required to operate the facility, such as
transmission of electricity, construction or
backfeed power supply, pipelines to transport

HB1865 Enrolled - 38 - LRB097 09633 ASK 49770 b
substitute natural gas or carbon dioxide, potable
water supply, natural gas supply, water supply,
water discharge, landfill, access roads, and coal
delivery.
The quoted construction costs shall be expressed
in nominal dollars as of the date that the quote is
prepared and shall include (1) capitalized financing
costs during construction, (2) taxes, insurance, and
other owner's costs, and (3) an assumed escalation in
materials and labor beyond the date as of which the
construction cost quote is expressed.
(B) The front end engineering and design study for
the gasification island and the cost study for the
balance of plant shall include sufficient design work
to permit quantification of major categories of
materials, commodities and labor hours, and receipt of
quotes from vendors of major equipment required to
construct and operate the clean coal facility.
(C) The facility cost report shall also include an
operating and maintenance cost quote that will provide
the estimated cost of delivered fuel, personnel,
maintenance contracts, chemicals, catalysts,
consumables, spares, and other fixed and variable
operations and maintenance costs.
(a) The delivered fuel cost estimate will be
provided by a recognized third party expert or

HB1865 Enrolled - 39 - LRB097 09633 ASK 49770 b
experts in the fuel and transportation industries.
(b) The balance of the operating and
maintenance cost quote, excluding delivered fuel
costs will be developed based on the inputs
provided by duly licensed engineering and
construction firms performing the construction
cost quote, potential vendors under long-term
service agreements and plant operating agreements,
or recognized third party plant operator or
operators.
The operating and maintenance cost quote
(including the cost of the front end engineering
and design study) shall be expressed in nominal
dollars as of the date that the quote is prepared
and shall include (1) taxes, insurance, and other
owner's costs, and (2) an assumed escalation in
materials and labor beyond the date as of which the
operating and maintenance cost quote is expressed.
(D) The facility cost report shall also include (i)
an analysis of the initial clean coal facility's
ability to deliver power and energy into the applicable
regional transmission organization markets and (ii) an
analysis of the expected capacity factor for the
initial clean coal facility.
(E) Amounts paid to third parties unrelated to the
owner or owners of the initial clean coal facility to

HB1865 Enrolled - 40 - LRB097 09633 ASK 49770 b
prepare the core plant construction cost quote,
including the front end engineering and design study,
and the operating and maintenance cost quote will be
reimbursed through Coal Development Bonds.
(5) Re-powering and retrofitting coal-fired power
plants previously owned by Illinois utilities to qualify as
clean coal facilities. During the 2009 procurement
planning process and thereafter, the Agency and the
Commission shall consider sourcing agreements covering
electricity generated by power plants that were previously
owned by Illinois utilities and that have been or will be
converted into clean coal facilities, as defined by Section
1-10 of this Act. Pursuant to such procurement planning
process, the owners of such facilities may propose to the
Agency sourcing agreements with utilities and alternative
retail electric suppliers required to comply with
subsection (d) of this Section and item (5) of subsection
(d) of Section 16-115 of the Public Utilities Act, covering
electricity generated by such facilities. In the case of
sourcing agreements that are power purchase agreements,
the contract price for electricity sales shall be
established on a cost of service basis. In the case of
sourcing agreements that are contracts for differences,
the contract price from which the reference price is
subtracted shall be established on a cost of service basis.
The Agency and the Commission may approve any such utility

HB1865 Enrolled - 41 - LRB097 09633 ASK 49770 b
sourcing agreements that do not exceed cost-based
benchmarks developed by the procurement administrator, in
consultation with the Commission staff, Agency staff and
the procurement monitor, subject to Commission review and
approval. The Commission shall have authority to inspect
all books and records associated with these clean coal
facilities during the term of any such contract.
(6) Costs incurred under this subsection (d) or
pursuant to a contract entered into under this subsection
(d) shall be deemed prudently incurred and reasonable in
amount and the electric utility shall be entitled to full
cost recovery pursuant to the tariffs filed with the
Commission.
(e) The draft procurement plans are subject to public
comment, as required by Section 16-111.5 of the Public
Utilities Act.
(f) The Agency shall submit the final procurement plan
to the Commission. The Agency shall revise a procurement
plan if the Commission determines that it does not meet the
standards set forth in Section 16-111.5 of the Public
Utilities Act.
(g) The Agency shall assess fees to each affected
utility to recover the costs incurred in preparation of the
annual procurement plan for the utility.
(h) The Agency shall assess fees to each bidder to
recover the costs incurred in connection with a competitive

HB1865 Enrolled - 42 - LRB097 09633 ASK 49770 b
procurement process.
(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
96-159, eff. 8-10-09; 96-1437, eff. 8-17-10.)
Section 10. The Public Utilities Act is amended by changing
Section 16-111.5 as follows:
(220 ILCS 5/16-111.5)
Sec. 16-111.5. Provisions relating to procurement.
(a) An electric utility that on December 31, 2005 served at
least 100,000 customers in Illinois shall procure power and
energy for its eligible retail customers in accordance with the
applicable provisions set forth in Section 1-75 of the Illinois
Power Agency Act and this Section. A small multi-jurisdictional
electric utility that on December 31, 2005 served less than
100,000 customers in Illinois may elect to procure power and
energy for all or a portion of its eligible Illinois retail
customers in accordance with the applicable provisions set
forth in this Section and Section 1-75 of the Illinois Power
Agency Act. This Section shall not apply to a small
multi-jurisdictional utility until such time as a small
multi-jurisdictional utility requests the Illinois Power
Agency to prepare a procurement plan for its eligible retail
customers. "Eligible retail customers" for the purposes of this
Section means those retail customers that purchase power and
energy from the electric utility under fixed-price bundled

HB1865 Enrolled - 43 - LRB097 09633 ASK 49770 b
service tariffs, other than those retail customers whose
service is declared or deemed competitive under Section 16-113
and those other customer groups specified in this Section,
including self-generating customers, customers electing hourly
pricing, or those customers who are otherwise ineligible for
fixed-price bundled tariff service. Those customers that are
excluded from the definition of "eligible retail customers"
shall not be included in the procurement plan load
requirements, and the utility shall procure any supply
requirements, including capacity, ancillary services, and
hourly priced energy, in the applicable markets as needed to
serve those customers, provided that the utility may include in
its procurement plan load requirements for the load that is
associated with those retail customers whose service has been
declared or deemed competitive pursuant to Section 16-113 of
this Act to the extent that those customers are purchasing
power and energy during one of the transition periods
identified in subsection (b) of Section 16-113 of this Act.
(b) A procurement plan shall be prepared for each electric
utility consistent with the applicable requirements of the
Illinois Power Agency Act and this Section. For purposes of
this Section, Illinois electric utilities that are affiliated
by virtue of a common parent company are considered to be a
single electric utility. Small multi-jurisdictional utilities
may request a procurement plan for a portion of or all of its
Illinois load. Each procurement plan shall analyze the

HB1865 Enrolled - 44 - LRB097 09633 ASK 49770 b
projected balance of supply and demand for eligible retail
customers over a 5-year period with the first planning year
beginning on June 1 of the year following the year in which the
plan is filed. The plan shall specifically identify the
wholesale products to be procured following plan approval, and
shall follow all the requirements set forth in the Public
Utilities Act and all applicable State and federal laws,
statutes, rules, or regulations, as well as Commission orders.
Nothing in this Section precludes consideration of contracts
longer than 5 years and related forecast data. Unless specified
otherwise in this Section, in the procurement plan or in the
implementing tariff, any procurement occurring in accordance
with this plan shall be competitively bid through a request for
proposals process. Approval and implementation of the
procurement plan shall be subject to review and approval by the
Commission according to the provisions set forth in this
Section. A procurement plan shall include each of the following
components:
(1) Hourly load analysis. This analysis shall include:
(i) multi-year historical analysis of hourly
loads;
(ii) switching trends and competitive retail
market analysis;
(iii) known or projected changes to future loads;
and
(iv) growth forecasts by customer class.

HB1865 Enrolled - 45 - LRB097 09633 ASK 49770 b
(2) Analysis of the impact of any demand side and
renewable energy initiatives. This analysis shall include:
(i) the impact of demand response programs and
energy efficiency programs, both current and
projected; for small multi-jurisdictional utilities,
the impact of demand response and energy efficiency
programs approved pursuant to Section 8-408 of this
Act, both current and projected; and
(ii) supply side needs that are projected to be
offset by purchases of renewable energy resources, if
any. ; and
(iii) the impact of energy efficiency programs,
both current and projected.
(3) A plan for meeting the expected load requirements
that will not be met through preexisting contracts. This
plan shall include:
(i) definitions of the different Illinois retail
customer classes for which supply is being purchased;
(ii) the proposed mix of demand-response products
for which contracts will be executed during the next
year. For small multi-jurisdictional electric
utilities that on December 31, 2005 served fewer than
100,000 customers in Illinois, these shall be defined
as demand-response products offered in an energy
efficiency plan approved pursuant to Section 8-408 of
this Act. The cost-effective demand-response measures

HB1865 Enrolled - 46 - LRB097 09633 ASK 49770 b
shall be procured whenever the cost is lower than
procuring comparable capacity products, provided that
such products shall:
(A) be procured by a demand-response provider
from eligible retail customers;
(B) at least satisfy the demand-response
requirements of the regional transmission
organization market in which the utility's service
territory is located, including, but not limited
to, any applicable capacity or dispatch
requirements;
(C) provide for customers' participation in
the stream of benefits produced by the
demand-response products;
(D) provide for reimbursement by the
demand-response provider of the utility for any
costs incurred as a result of the failure of the
supplier of such products to perform its
obligations thereunder; and
(E) meet the same credit requirements as apply
to suppliers of capacity, in the applicable
regional transmission organization market;
(iii) monthly forecasted system supply
requirements, including expected minimum, maximum, and
average values for the planning period;
(iv) the proposed mix and selection of standard

HB1865 Enrolled - 47 - LRB097 09633 ASK 49770 b
wholesale products for which contracts will be
executed during the next year, separately or in
combination, to meet that portion of its load
requirements not met through pre-existing contracts,
including but not limited to monthly 5 x 16 peak period
block energy, monthly off-peak wrap energy, monthly 7 x
24 energy, annual 5 x 16 energy, annual off-peak wrap
energy, annual 7 x 24 energy, monthly capacity, annual
capacity, peak load capacity obligations, capacity
purchase plan, and ancillary services;
(v) proposed term structures for each wholesale
product type included in the proposed procurement plan
portfolio of products; and
(vi) an assessment of the price risk, load
uncertainty, and other factors that are associated
with the proposed procurement plan; this assessment,
to the extent possible, shall include an analysis of
the following factors: contract terms, time frames for
securing products or services, fuel costs, weather
patterns, transmission costs, market conditions, and
the governmental regulatory environment; the proposed
procurement plan shall also identify alternatives for
those portfolio measures that are identified as having
significant price risk.
(4) Proposed procedures for balancing loads. The
procurement plan shall include, for load requirements

HB1865 Enrolled - 48 - LRB097 09633 ASK 49770 b
included in the procurement plan, the process for (i)
hourly balancing of supply and demand and (ii) the criteria
for portfolio re-balancing in the event of significant
shifts in load.
(c) The procurement process set forth in Section 1-75 of
the Illinois Power Agency Act and subsection (e) of this
Section shall be administered by a procurement administrator
and monitored by a procurement monitor.
(1) The procurement administrator shall:
(i) design the final procurement process in
accordance with Section 1-75 of the Illinois Power
Agency Act and subsection (e) of this Section following
Commission approval of the procurement plan;
(ii) develop benchmarks in accordance with
subsection (e)(3) to be used to evaluate bids; these
benchmarks shall be submitted to the Commission for
review and approval on a confidential basis prior to
the procurement event;
(iii) serve as the interface between the electric
utility and suppliers;
(iv) manage the bidder pre-qualification and
registration process;
(v) obtain the electric utilities' agreement to
the final form of all supply contracts and credit
collateral agreements;
(vi) administer the request for proposals process;

HB1865 Enrolled - 49 - LRB097 09633 ASK 49770 b
(vii) have the discretion to negotiate to
determine whether bidders are willing to lower the
price of bids that meet the benchmarks approved by the
Commission; any post-bid negotiations with bidders
shall be limited to price only and shall be completed
within 24 hours after opening the sealed bids and shall
be conducted in a fair and unbiased manner; in
conducting the negotiations, there shall be no
disclosure of any information derived from proposals
submitted by competing bidders; if information is
disclosed to any bidder, it shall be provided to all
competing bidders;
(viii) maintain confidentiality of supplier and
bidding information in a manner consistent with all
applicable laws, rules, regulations, and tariffs;
(ix) submit a confidential report to the
Commission recommending acceptance or rejection of
bids;
(x) notify the utility of contract counterparties
and contract specifics; and
(xi) administer related contingency procurement
events.
(2) The procurement monitor, who shall be retained by
the Commission, shall:
(i) monitor interactions among the procurement
administrator, suppliers, and utility;

HB1865 Enrolled - 50 - LRB097 09633 ASK 49770 b
(ii) monitor and report to the Commission on the
progress of the procurement process;
(iii) provide an independent confidential report
to the Commission regarding the results of the
procurement event;
(iv) assess compliance with the procurement plans
approved by the Commission for each utility that on
December 31, 2005 provided electric service to a least
100,000 customers in Illinois and for each small
multi-jurisdictional utility that on December 31, 2005
served less than 100,000 customers in Illinois;
(v) preserve the confidentiality of supplier and
bidding information in a manner consistent with all
applicable laws, rules, regulations, and tariffs;
(vi) provide expert advice to the Commission and
consult with the procurement administrator regarding
issues related to procurement process design, rules,
protocols, and policy-related matters; and
(vii) consult with the procurement administrator
regarding the development and use of benchmark
criteria, standard form contracts, credit policies,
and bid documents.
(d) Except as provided in subsection (j), the planning
process shall be conducted as follows:
(1) Beginning in 2008, each Illinois utility procuring
power pursuant to this Section shall annually provide a

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range of load forecasts to the Illinois Power Agency by
July 15 of each year, or such other date as may be required
by the Commission or Agency. The load forecasts shall cover
the 5-year procurement planning period for the next
procurement plan and shall include hourly data
representing a high-load, low-load and expected-load
scenario for the load of the eligible retail customers. The
utility shall provide supporting data and assumptions for
each of the scenarios.
(2) Beginning in 2008, the Illinois Power Agency shall
prepare a procurement plan by August 15th of each year, or
such other date as may be required by the Commission. The
procurement plan shall identify the portfolio of
demand-response and power and energy products to be
procured. Cost-effective demand-response measures shall be
procured as set forth in item (iii) of subsection (b) of
this Section. Copies of the procurement plan shall be
posted and made publicly available on the Agency's and
Commission's websites, and copies shall also be provided to
each affected electric utility. An affected utility shall
have 30 days following the date of posting to provide
comment to the Agency on the procurement plan. Other
interested entities also may comment on the procurement
plan. All comments submitted to the Agency shall be
specific, supported by data or other detailed analyses,
and, if objecting to all or a portion of the procurement

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plan, accompanied by specific alternative wording or
proposals. All comments shall be posted on the Agency's and
Commission's websites. During this 30-day comment period,
the Agency shall hold at least one public hearing within
each utility's service area for the purpose of receiving
public comment on the procurement plan. Within 14 days
following the end of the 30-day review period, the Agency
shall revise the procurement plan as necessary based on the
comments received and file the procurement plan with the
Commission and post the procurement plan on the websites.
(3) Within 5 days after the filing of the procurement
plan, any person objecting to the procurement plan shall
file an objection with the Commission. Within 10 days after
the filing, the Commission shall determine whether a
hearing is necessary. The Commission shall enter its order
confirming or modifying the procurement plan within 90 days
after the filing of the procurement plan by the Illinois
Power Agency.
(4) The Commission shall approve the procurement plan,
including expressly the forecast used in the procurement
plan, if the Commission determines that it will ensure
adequate, reliable, affordable, efficient, and
environmentally sustainable electric service at the lowest
total cost over time, taking into account any benefits of
price stability.
(e) The procurement process shall include each of the

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following components:
(1) Solicitation, pre-qualification, and registration
of bidders. The procurement administrator shall
disseminate information to potential bidders to promote a
procurement event, notify potential bidders that the
procurement administrator may enter into a post-bid price
negotiation with bidders that meet the applicable
benchmarks, provide supply requirements, and otherwise
explain the competitive procurement process. In addition
to such other publication as the procurement administrator
determines is appropriate, this information shall be
posted on the Illinois Power Agency's and the Commission's
websites. The procurement administrator shall also
administer the prequalification process, including
evaluation of credit worthiness, compliance with
procurement rules, and agreement to the standard form
contract developed pursuant to paragraph (2) of this
subsection (e). The procurement administrator shall then
identify and register bidders to participate in the
procurement event.
(2) Standard contract forms and credit terms and
instruments. The procurement administrator, in
consultation with the utilities, the Commission, and other
interested parties and subject to Commission oversight,
shall develop and provide standard contract forms for the
supplier contracts that meet generally accepted industry

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practices. Standard credit terms and instruments that meet
generally accepted industry practices shall be similarly
developed. The procurement administrator shall make
available to the Commission all written comments it
receives on the contract forms, credit terms, or
instruments. If the procurement administrator cannot reach
agreement with the applicable electric utility as to the
contract terms and conditions, the procurement
administrator must notify the Commission of any disputed
terms and the Commission shall resolve the dispute. The
terms of the contracts shall not be subject to negotiation
by winning bidders, and the bidders must agree to the terms
of the contract in advance so that winning bids are
selected solely on the basis of price.
(3) Establishment of a market-based price benchmark.
As part of the development of the procurement process, the
procurement administrator, in consultation with the
Commission staff, Agency staff, and the procurement
monitor, shall establish benchmarks for evaluating the
final prices in the contracts for each of the products that
will be procured through the procurement process. The
benchmarks shall be based on price data for similar
products for the same delivery period and same delivery
hub, or other delivery hubs after adjusting for that
difference. The price benchmarks may also be adjusted to
take into account differences between the information

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reflected in the underlying data sources and the specific
products and procurement process being used to procure
power for the Illinois utilities. The benchmarks shall be
confidential but shall be provided to, and will be subject
to Commission review and approval, prior to a procurement
event.
(4) Request for proposals competitive procurement
process. The procurement administrator shall design and
issue a request for proposals to supply electricity in
accordance with each utility's procurement plan, as
approved by the Commission. The request for proposals shall
set forth a procedure for sealed, binding commitment
bidding with pay-as-bid settlement, and provision for
selection of bids on the basis of price.
(5) A plan for implementing contingencies in the event
of supplier default or failure of the procurement process
to fully meet the expected load requirement due to
insufficient supplier participation, Commission rejection
of results, or any other cause.
(i) Event of supplier default: In the event of
supplier default, the utility shall review the
contract of the defaulting supplier to determine if the
amount of supply is 200 megawatts or greater, and if
there are more than 60 days remaining of the contract
term. If both of these conditions are met, and the
default results in termination of the contract, the

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utility shall immediately notify the Illinois Power
Agency that a request for proposals must be issued to
procure replacement power, and the procurement
administrator shall run an additional procurement
event. If the contracted supply of the defaulting
supplier is less than 200 megawatts or there are less
than 60 days remaining of the contract term, the
utility shall procure power and energy from the
applicable regional transmission organization market,
including ancillary services, capacity, and day-ahead
or real time energy, or both, for the duration of the
contract term to replace the contracted supply;
provided, however, that if a needed product is not
available through the regional transmission
organization market it shall be purchased from the
wholesale market.
(ii) Failure of the procurement process to fully
meet the expected load requirement: If the procurement
process fails to fully meet the expected load
requirement due to insufficient supplier participation
or due to a Commission rejection of the procurement
results, the procurement administrator, the
procurement monitor, and the Commission staff shall
meet within 10 days to analyze potential causes of low
supplier interest or causes for the Commission
decision. If changes are identified that would likely

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result in increased supplier participation, or that
would address concerns causing the Commission to
reject the results of the prior procurement event, the
procurement administrator may implement those changes
and rerun the request for proposals process according
to a schedule determined by those parties and
consistent with Section 1-75 of the Illinois Power
Agency Act and this subsection. In any event, a new
request for proposals process shall be implemented by
the procurement administrator within 90 days after the
determination that the procurement process has failed
to fully meet the expected load requirement.
(iii) In all cases where there is insufficient
supply provided under contracts awarded through the
procurement process to fully meet the electric
utility's load requirement, the utility shall meet the
load requirement by procuring power and energy from the
applicable regional transmission organization market,
including ancillary services, capacity, and day-ahead
or real time energy or both; provided, however, that if
a needed product is not available through the regional
transmission organization market it shall be purchased
from the wholesale market.
(6) The procurement process described in this
subsection is exempt from the requirements of the Illinois
Procurement Code, pursuant to Section 20-10 of that Code.

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(f) Within 2 business days after opening the sealed bids,
the procurement administrator shall submit a confidential
report to the Commission. The report shall contain the results
of the bidding for each of the products along with the
procurement administrator's recommendation for the acceptance
and rejection of bids based on the price benchmark criteria and
other factors observed in the process. The procurement monitor
also shall submit a confidential report to the Commission
within 2 business days after opening the sealed bids. The
report shall contain the procurement monitor's assessment of
bidder behavior in the process as well as an assessment of the
procurement administrator's compliance with the procurement
process and rules. The Commission shall review the confidential
reports submitted by the procurement administrator and
procurement monitor, and shall accept or reject the
recommendations of the procurement administrator within 2
business days after receipt of the reports.
(g) Within 3 business days after the Commission decision
approving the results of a procurement event, the utility shall
enter into binding contractual arrangements with the winning
suppliers using the standard form contracts; except that the
utility shall not be required either directly or indirectly to
execute the contracts if a tariff that is consistent with
subsection (l) of this Section has not been approved and placed
into effect for that utility.
(h) The names of the successful bidders and the load

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weighted average of the winning bid prices for each contract
type and for each contract term shall be made available to the
public at the time of Commission approval of a procurement
event. The Commission, the procurement monitor, the
procurement administrator, the Illinois Power Agency, and all
participants in the procurement process shall maintain the
confidentiality of all other supplier and bidding information
in a manner consistent with all applicable laws, rules,
regulations, and tariffs. Confidential information, including
the confidential reports submitted by the procurement
administrator and procurement monitor pursuant to subsection
(f) of this Section, shall not be made publicly available and
shall not be discoverable by any party in any proceeding,
absent a compelling demonstration of need, nor shall those
reports be admissible in any proceeding other than one for law
enforcement purposes.
(i) Within 2 business days after a Commission decision
approving the results of a procurement event or such other date
as may be required by the Commission from time to time, the
utility shall file for informational purposes with the
Commission its actual or estimated retail supply charges, as
applicable, by customer supply group reflecting the costs
associated with the procurement and computed in accordance with
the tariffs filed pursuant to subsection (l) of this Section
and approved by the Commission.
(j) Within 60 days following the effective date of this

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amendatory Act, each electric utility that on December 31, 2005
provided electric service to at least 100,000 customers in
Illinois shall prepare and file with the Commission an initial
procurement plan, which shall conform in all material respects
to the requirements of the procurement plan set forth in
subsection (b); provided, however, that the Illinois Power
Agency Act shall not apply to the initial procurement plan
prepared pursuant to this subsection. The initial procurement
plan shall identify the portfolio of power and energy products
to be procured and delivered for the period June 2008 through
May 2009, and shall identify the proposed procurement
administrator, who shall have the same experience and expertise
as is required of a procurement administrator hired pursuant to
Section 1-75 of the Illinois Power Agency Act. Copies of the
procurement plan shall be posted and made publicly available on
the Commission's website. The initial procurement plan may
include contracts for renewable resources that extend beyond
May 2009.
(i) Within 14 days following filing of the initial
procurement plan, any person may file a detailed objection
with the Commission contesting the procurement plan
submitted by the electric utility. All objections to the
electric utility's plan shall be specific, supported by
data or other detailed analyses. The electric utility may
file a response to any objections to its procurement plan
within 7 days after the date objections are due to be

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filed. Within 7 days after the date the utility's response
is due, the Commission shall determine whether a hearing is
necessary. If it determines that a hearing is necessary, it
shall require the hearing to be completed and issue an
order on the procurement plan within 60 days after the
filing of the procurement plan by the electric utility.
(ii) The order shall approve or modify the procurement
plan, approve an independent procurement administrator,
and approve or modify the electric utility's tariffs that
are proposed with the initial procurement plan. The
Commission shall approve the procurement plan if the
Commission determines that it will ensure adequate,
reliable, affordable, efficient, and environmentally
sustainable electric service at the lowest total cost over
time, taking into account any benefits of price stability.
(k) In order to promote price stability for residential and
small commercial customers during the transition to
competition in Illinois, and notwithstanding any other
provision of this Act, each electric utility subject to this
Section shall enter into one or more multi-year financial swap
contracts that become effective on the effective date of this
amendatory Act. These contracts may be executed with generators
and power marketers, including affiliated interests of the
electric utility. These contracts shall be for a term of no
more than 5 years and shall, for each respective utility or for
any Illinois electric utilities that are affiliated by virtue

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of a common parent company and that are thereby considered a
single electric utility for purposes of this subsection (k),
not exceed in the aggregate 3,000 megawatts for any hour of the
year. The contracts shall be financial contracts and not energy
sales contracts. The contracts shall be executed as
transactions under a negotiated master agreement based on the
form of master agreement for financial swap contracts sponsored
by the International Swaps and Derivatives Association, Inc.
and shall be considered pre-existing contracts in the
utilities' procurement plans for residential and small
commercial customers. Costs incurred pursuant to a contract
authorized by this subsection (k) shall be deemed prudently
incurred and reasonable in amount and the electric utility
shall be entitled to full cost recovery pursuant to the tariffs
filed with the Commission.
(l) An electric utility shall recover its costs incurred
under this Section, including, but not limited to, the costs of
procuring power and energy demand-response resources under
this Section. The utility shall file with the initial
procurement plan its proposed tariffs through which its costs
of procuring power that are incurred pursuant to a
Commission-approved procurement plan and those other costs
identified in this subsection (l), will be recovered. The
tariffs shall include a formula rate or charge designed to pass
through both the costs incurred by the utility in procuring a
supply of electric power and energy for the applicable customer

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classes with no mark-up or return on the price paid by the
utility for that supply, plus any just and reasonable costs
that the utility incurs in arranging and providing for the
supply of electric power and energy. The formula rate or charge
shall also contain provisions that ensure that its application
does not result in over or under recovery due to changes in
customer usage and demand patterns, and that provide for the
correction, on at least an annual basis, of any accounting
errors that may occur. A utility shall recover through the
tariff all reasonable costs incurred to implement or comply
with any procurement plan that is developed and put into effect
pursuant to Section 1-75 of the Illinois Power Agency Act and
this Section, including any fees assessed by the Illinois Power
Agency, costs associated with load balancing, and contingency
plan costs. The electric utility shall also recover its full
costs of procuring electric supply for which it contracted
before the effective date of this Section in conjunction with
the provision of full requirements service under fixed-price
bundled service tariffs subsequent to December 31, 2006. All
such costs shall be deemed to have been prudently incurred. The
pass-through tariffs that are filed and approved pursuant to
this Section shall not be subject to review under, or in any
way limited by, Section 16-111(i) of this Act.
(m) The Commission has the authority to adopt rules to
carry out the provisions of this Section. For the public
interest, safety, and welfare, the Commission also has

HB1865 Enrolled - 64 - LRB097 09633 ASK 49770 b
authority to adopt rules to carry out the provisions of this
Section on an emergency basis immediately following the
effective date of this amendatory Act.
(n) Notwithstanding any other provision of this Act, any
affiliated electric utilities that submit a single procurement
plan covering their combined needs may procure for those
combined needs in conjunction with that plan, and may enter
jointly into power supply contracts, purchases, and other
procurement arrangements, and allocate capacity and energy and
cost responsibility therefor among themselves in proportion to
their requirements.
(o) On or before June 1 of each year, the Commission shall
hold an informal hearing for the purpose of receiving comments
on the prior year's procurement process and any recommendations
for change.
(p) An electric utility subject to this Section may propose
to invest, lease, own, or operate an electric generation
facility as part of its procurement plan, provided the utility
demonstrates that such facility is the least-cost option to
provide electric service to eligible retail customers. If the
facility is shown to be the least-cost option and is included
in a procurement plan prepared in accordance with Section 1-75
of the Illinois Power Agency Act and this Section, then the
electric utility shall make a filing pursuant to Section 8-406
of the Act, and may request of the Commission any statutory
relief required thereunder. If the Commission grants all of the

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necessary approvals for the proposed facility, such supply
shall thereafter be considered as a pre-existing contract under
subsection (b) of this Section. The Commission shall in any
order approving a proposal under this subsection specify how
the utility will recover the prudently incurred costs of
investing in, leasing, owning, or operating such generation
facility through just and reasonable rates charged to eligible
retail customers. Cost recovery for facilities included in the
utility's procurement plan pursuant to this subsection shall
not be subject to review under or in any way limited by the
provisions of Section 16-111(i) of this Act. Nothing in this
Section is intended to prohibit a utility from filing for a
fuel adjustment clause as is otherwise permitted under Section
9-220 of this Act.
(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09.)
Section 99. Effective date. This Act takes effect upon
becoming law.