Bill Text: IL SB1533 | 2011-2012 | 97th General Assembly | Chaptered

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Bill Title: Amends the Illinois Power Agency Act. Makes a technical change in a Section concerning the short title. Amends the Public Utilities Act. Makes a technical change in the short title Section.

Spectrum: Slight Partisan Bill (Democrat 12-5)

Status: (Passed) 2011-07-13 - Public Act . . . . . . . . . 97-0096 [SB1533 Detail]

Download: Illinois-2011-SB1533-Chaptered.html

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Public Act 097-0096
SB1533 Enrolled LRB097 09938 ASK 50103 b
AN ACT concerning utilities.
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 1-10 and 1-20 and by adding Sections 1-77 and
1-78 as follows:
(20 ILCS 3855/1-10)
Sec. 1-10. Definitions.
"Agency" means the Illinois Power Agency.
"Agency loan agreement" means any agreement pursuant to
which the Illinois Finance Authority agrees to loan the
proceeds of revenue bonds issued with respect to a project to
the Agency upon terms providing for loan repayment installments
at least sufficient to pay when due all principal of, interest
and premium, if any, on those revenue bonds, and providing for
maintenance, insurance, and other matters in respect of the
project.
"Authority" means the Illinois Finance Authority.
"Clean coal facility" means an electric generating
facility that uses primarily coal as a feedstock and that
captures and sequesters carbon dioxide emissions at the
following levels: at least 50% of the total carbon dioxide
emissions that the facility would otherwise emit if, at the

time construction commences, the facility is scheduled to
commence operation before 2016, at least 70% of the total
carbon dioxide emissions that the facility would otherwise emit
if, at the time construction commences, the facility is
scheduled to commence operation during 2016 or 2017, and at
least 90% of the total carbon dioxide emissions that the
facility would otherwise emit if, at the time construction
commences, the facility is scheduled to commence operation
after 2017. The power block of the clean coal facility shall
not exceed allowable emission rates for sulfur dioxide,
nitrogen oxides, carbon monoxide, particulates and mercury for
a natural gas-fired combined-cycle facility the same size as
and in the same location as the clean coal facility at the time
the clean coal facility obtains an approved air permit. All
coal used by a clean coal facility shall have high volatile
bituminous rank and greater than 1.7 pounds of sulfur per
million btu content, unless the clean coal facility does not
use gasification technology and was operating as a conventional
coal-fired electric generating facility on June 1, 2009 (the
effective date of Public Act 95-1027).
"Clean coal SNG brownfield facility" means a facility that
(1) has commenced construction by July 1, 2015 on an urban
brownfield site in a municipality with at least 1,000,000
residents; (2) uses a gasification process to produce
substitute natural gas; (3) uses coal as at least 50% of the
total feedstock over the term of any sourcing agreement with a

utility and the remainder of the feedstock may be either
petroleum coke or coal, with all such coal having a high
bituminous rank and greater than 1.7 pounds of sulfur per
million Btu content unless the facility reasonably determines
that it is necessary to use additional petroleum coke to
deliver additional 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 (4) captures and sequesters
at least 85% of the total carbon dioxide emissions that the
facility would otherwise emit.
"Clean coal SNG facility" means a facility that uses a
gasification process to produce substitute natural gas, that
sequesters at least 90% of the total carbon dioxide emissions
that the facility would otherwise emit and that uses petroleum
coke or coal as a feedstock, with all such coal having a high
bituminous rank and greater than 1.7 pounds of sulfur per
million btu content; provided, however, a clean coal SNG
brownfield facility shall not be a clean coal SNG facility.
"Commission" means the Illinois Commerce Commission.
"Costs incurred in connection with the development and
construction of a facility" means:
(1) the cost of acquisition of all real property,
fixtures, and improvements in connection therewith and
equipment, personal property, and other property, rights,
and easements acquired that are deemed necessary for the
operation and maintenance of the facility;

(2) financing costs with respect to bonds, notes, and
other evidences of indebtedness of the Agency;
(3) all origination, commitment, utilization,
facility, placement, underwriting, syndication, credit
enhancement, and rating agency fees;
(4) engineering, design, procurement, consulting,
legal, accounting, title insurance, survey, appraisal,
escrow, trustee, collateral agency, interest rate hedging,
interest rate swap, capitalized interest, contingency, as
required by lenders, and other financing costs, and other
expenses for professional services; and
(5) the costs of plans, specifications, site study and
investigation, installation, surveys, other Agency costs
and estimates of costs, and other expenses necessary or
incidental to determining the feasibility of any project,
together with such other expenses as may be necessary or
incidental to the financing, insuring, acquisition, and
construction of a specific project and starting up,
commissioning, and placing that project in operation.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of the Illinois Power Agency.
"Demand-response" means measures that decrease peak
electricity demand or shift demand from peak to off-peak
periods.
"Energy efficiency" means measures that reduce the amount

of electricity or natural gas required to achieve a given end
use.
"Electric utility" has the same definition as found in
Section 16-102 of the Public Utilities Act.
"Facility" means an electric generating unit or a
co-generating unit that produces electricity along with
related equipment necessary to connect the facility to an
electric transmission or distribution system.
"Governmental aggregator" means one or more units of local
government that individually or collectively procure
electricity to serve residential retail electrical loads
located within its or their jurisdiction.
"Local government" means a unit of local government as
defined in Article VII of Section 1 of the Illinois
Constitution.
"Municipality" means a city, village, or incorporated
town.
"Person" means any natural person, firm, partnership,
corporation, either domestic or foreign, company, association,
limited liability company, joint stock company, or association
and includes any trustee, receiver, assignee, or personal
representative thereof.
"Project" means the planning, bidding, and construction of
a facility.
"Public utility" has the same definition as found in
Section 3-105 of the Public Utilities Act.

"Real property" means any interest in land together with
all structures, fixtures, and improvements thereon, including
lands under water and riparian rights, any easements,
covenants, licenses, leases, rights-of-way, uses, and other
interests, together with any liens, judgments, mortgages, or
other claims or security interests related to real property.
"Renewable energy credit" means a tradable credit that
represents the environmental attributes of a certain amount of
energy produced from a renewable energy resource.
"Renewable energy resources" includes energy and its
associated renewable energy credit or renewable energy credits
from wind, solar thermal energy, photovoltaic cells and panels,
biodiesel, crops and untreated and unadulterated organic waste
biomass, tree waste, hydropower that does not involve new
construction or significant expansion of hydropower dams, and
other alternative sources of environmentally preferable
energy. For purposes of this Act, landfill gas produced in the
State is considered a renewable energy resource. "Renewable
energy resources" does not include the incineration or burning
of tires, garbage, general household, institutional, and
commercial waste, industrial lunchroom or office waste,
landscape waste other than tree waste, railroad crossties,
utility poles, or construction or demolition debris, other than
untreated and unadulterated waste wood.
"Revenue bond" means any bond, note, or other evidence of
indebtedness issued by the Authority, the principal and

interest of which is payable solely from revenues or income
derived from any project or activity of the Agency.
"Sequester" means permanent storage of carbon dioxide by
injecting it into a saline aquifer, a depleted gas reservoir,
or an oil reservoir, directly or through an enhanced oil
recovery process that may involve intermediate storage,
regardless of whether these activities are conducted by a clean
coal facility, clean coal SNG facility, clean coal SNG
brownfield facility, or a party with which a clean coal
facility, clean coal SNG facility, or clean coal SNG brownfield
facility has contracted for such purposes in a salt dome.
"Sourcing Servicing agreement" means (i) in the case of an
electric utility, an agreement between the owner of a clean
coal facility and such electric utility, which agreement shall
have terms and conditions meeting the requirements of paragraph
(3) of subsection (d) of Section 1-75, and (ii) in the case of
an alternative retail electric supplier, an agreement between
the owner of a clean coal facility and such alternative retail
electric supplier, which agreement shall have terms and
conditions meeting the requirements of Section 16-115(d)(5) of
the Public Utilities Act, and (iii) in case of a gas utility,
an agreement between the owner of a clean coal SNG brownfield
facility and the gas utility, which agreement shall have the
terms and conditions meeting the requirements of subsection
(h-1) of Section 9-220 of the Public Utilities Act.
"Substitute natural gas" or "SNG" means a gas manufactured

by gasification of hydrocarbon feedstock, which is
substantially interchangeable in use and distribution with
conventional natural gas.
"Total resource cost test" or "TRC test" means a standard
that is met if, for an investment in energy efficiency or
demand-response measures, the benefit-cost ratio is greater
than one. The benefit-cost ratio is the ratio of the net
present value of the total benefits of the program to the net
present value of the total costs as calculated over the
lifetime of the measures. A total resource cost test compares
the sum of avoided electric utility costs, representing the
benefits that accrue to the system and the participant in the
delivery of those efficiency measures, as well as other
quantifiable societal benefits, including avoided natural gas
utility costs, to the sum of all incremental costs of end-use
measures that are implemented due to the program (including
both utility and participant contributions), plus costs to
administer, deliver, and evaluate each demand-side program, to
quantify the net savings obtained by substituting the
demand-side program for supply resources. In calculating
avoided costs of power and energy that an electric utility
would otherwise have had to acquire, reasonable estimates shall
be included of financial costs likely to be imposed by future
regulations and legislation on emissions of greenhouse gases.
(Source: P.A. 95-481, eff. 8-28-07; 95-913, eff. 1-1-09;
95-1027, eff. 6-1-09; 96-33, eff. 7-10-09; 96-159, eff.

8-10-09; 96-784, eff. 8-28-09; 96-1000, eff. 7-2-10.)
(20 ILCS 3855/1-20)
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. 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
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,
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.
(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
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
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 conduct competitive gasification feedstock
procurement processes to procure the feedstocks for the
clean coal SNG brownfield facility in accordance with the
requirements of Section 1-78 of this Act 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.
(26) To review, revise, and approve sourcing
agreements and mediate and resolve disputes between gas
utilities and the clean coal SNG brownfield facility
pursuant to subsection (h-1) of Section 9-220 of the Public
Utilities Act.

(Source: P.A. 95-481, eff. 8-28-07; 96-784, eff. 8-28-09;
96-1000, eff. 7-2-10.)
(20 ILCS 3855/1-77 new)
Sec. 1-77. The Planning and Procurement Bureau; feedstock
procurement administrator; qualified expert or expert
consulting firm.
(a) The Planning and Procurement Bureau shall at least
every 5 years beginning in 2015 develop feedstock procurement
plans and conduct competitive feedstock procurement processes
in accordance with the requirements of Section 1-78 of this
Act.
(1) The Agency shall at least every 5 years beginning
in 2015 issue a request for qualifications for experts or
expert consulting firms to develop the feedstock
procurement plans in accordance with Section 1-78 of this
Act. In order to qualify, an expert or expert consulting
firm must have:
(A) direct previous experience assembling large
scale feedstock supply plans or portfolios for
industrial customers;
(B) an advanced degree in economics, mathematics,
engineering, risk management, or a related area of
study;
(C) ten years of experience in the energy sector,
including managing supply risk;

(D) expertise in wholesale feedstock markets,
which may be particularized to the specific type of
feedstock to be purchased in that procurement event;
(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 clean coal SNG brownfield facility.
(2) The Agency shall at least every 5 years beginning
in 2015 issue a request for qualifications for a feedstock
procurement administrator to conduct the competitive
feedstock procurement processes in accordance with Section
1-78 of this Act. In order to qualify, an expert or expert
consulting firm must have:
(A) direct previous experience administering a
large scale competitive feedstock procurement process;
(B) an advanced degree in economics, mathematics,
engineering, or a related area of study;
(C) ten years of experience in the energy sector,
including risk management experience;
(D) expertise in wholesale feedstock market rules,
which may be particularized to the specific type of
feedstock to be purchased in that procurement event;
(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 clean coal SNG brownfield facility.
(3) The Agency shall provide the clean coal SNG
brownfield facility 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
feedstock procurement plans and to serve as the feedstock
procurement administrator. The Agency shall also provide
the clean coal SNG brownfield facility and other interested
parties with each qualified expert's or expert consulting
firm's response to the request for qualifications. All
information provided under this subparagraph (3) shall
also be provided to the Commission. The Agency may provide
by rule for fees associated with supplying the information
to the clean coal SNG brownfield facility and other
interested parties. The clean coal SNG brownfield facility
and other interested parties must, within 5 business days
after receiving the lists and information, 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 clean coal SNG brownfield
facility.
The Agency shall remove an expert or expert consulting
firm from the list within 10 days if there is a reasonable
basis for an objection and provide the updated list to the
clean coal SNG brownfield facility and other interested
parties. If the Agency fails to remove an expert or expert
consulting firm from a list, then 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 after the filing. There is
no right of appeal of the Commission's ruling.
(4) The Agency shall, as needed, issue requests for
proposals to the qualified experts or expert consulting
firms to develop a feedstock procurement plan for the clean
coal SNG brownfield facility and to serve as feedstock
procurement administrator.
(5) The Agency shall select an expert or expert
consulting firm to develop feedstock 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, with the approval of the
Commission, an expert or expert consulting firm to serve as

feedstock procurement administrator based on the proposals
submitted. If the Commission rejects the Agency's
selection within 5 days after being notified of the
Agency's selection, then the Agency shall submit another
recommendation within 3 days after the Commission's
rejection based on the proposals submitted. The Agency
shall award at least a one-year contract to the expert or
expert consulting firm selected with the Commission's
approval with an option for the Agency for renewal for a
term equal to the term of the contract.
(b) The experts or expert consulting firms retained by the
Agency shall, as appropriate, prepare feedstock procurement
plans and conduct a competitive feedstock procurement process
as prescribed in Section 1-78 of this Act to ensure adequate,
reliable, affordable feedstocks, taking into account any
benefits of price stability, for the clean coal SNG brownfield
facility.
(c) The draft procurement plans are subject to public
comment pursuant to Section 1-78 of this Act.
(d) The Agency shall assess fees to each bidder to recover
the costs incurred in connection with the competitive
procurement process.
(20 ILCS 3855/1-78 new)
Sec. 1-78. Feedstock procurement plan; feedstock
procurement process.

(a) A feedstock procurement plan shall at least every 5
years beginning in 2015 be prepared for the clean coal SNG
brownfield facility based on the clean coal SNG brownfield
facility's projection of feedstock usage and ratios, and
consistent with the applicable requirements of the Public
Utilities Act and this Act. The plan shall specifically
identify the wholesale feedstock products to be procured
following plan approval and shall follow all the requirements
set forth in this Act, 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. Any feedstock procurement
occurring in accordance with this plan shall be competitively
bid through a request for proposals process. Approval and
implementation of the feedstock procurement plan shall be
subject to review and approval by the Commission according to
the provisions set forth in this Section. A feedstock
procurement plan shall include each of the following
components:
(1) Daily load analysis. This analysis shall include:
(A) multi-year historical analysis of hourly
loads; and
(B) known or projected changes to future loads.
(2) Determination of the fuel specifications required
for the clean coal SNG brownfield facility, including:

(A) coal and petroleum coke mix, as set by the
clean coal SNG brownfield facility with coal
comprising at least 50% of the total feedstock over the
term of any sourcing agreement unless the facility
reasonably determines that it is necessary to use
additional petroleum coke to deliver additional
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;
(B) volume of each feedstock required;
(C) quality standards of each feedstock;
(D) delivery requirements, including cost
implications; and
(E) technical specifications of the clean coal SNG
brownfield facility for its feedstocks.
(b) The feedstock procurement process shall be
administered by a feedstock procurement administrator and
monitored by a feedstock procurement monitor.
(1) The feedstock procurement administrator shall:
(A) design the final feedstock procurement process
in accordance with subsection (d) of this Section
following Commission approval of the feedstock
procurement plan;
(B) develop feedstock benchmarks in accordance
with subsection (d)(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 feedstock procurement event;
(C) serve as the interface between the clean coal
SNG brownfield facility and coal and petroleum coke
suppliers;
(D) manage the bidder prequalification and
registration process;
(E) obtain the facility's agreement to the final
form of all supply contracts and credit collateral
agreements;
(F) administer the request for feedstock proposals
process;
(G) 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;
(H) maintain confidentiality of supplier and
bidding information in a manner consistent with all
applicable laws, rules, regulations, and tariffs;

(I) submit a confidential report to the Commission
recommending acceptance or rejection of bids;
(J) notify the facility of contract counterparties
and contract specifics; and
(K) administer related contingency feedstock
procurement events.
(2) The feedstock procurement monitor, who shall be
retained by the Commission, shall:
(A) monitor interactions among the feedstock
procurement administrator, suppliers, and the
facility;
(B) monitor and report to the Commission on the
progress of the feedstock procurement process;
(C) provide an independent, confidential report to
the Commission regarding the results of the feedstock
procurement event;
(D) preserve the confidentiality of supplier and
bidding information in a manner consistent with all
applicable laws, rules, regulations, and tariffs;
(E) provide expert advice to the Commission and
consult with the feedstock procurement administrator
regarding issues related to feedstock procurement
process design, rules, protocols, and policy-related
matters;
(F) consult with the feedstock procurement
administrator regarding the development and use of

benchmark criteria, standard form contracts, credit
policies, and bid documents; and
(G) assess compliance with the procurement plans
approved by the Commission.
(c) The feedstock planning process shall be conducted as
follows:
(1) Beginning in 2015, the clean coal SNG brownfield
facility shall annually provide a range of feedstock
requirement forecasts to the Agency by May 15 of each year,
or such other date as may be required by the Commission or
Agency. The feedstock requirement forecasts shall cover
the 5-year feedstock procurement planning period for the
next feedstock procurement plan, or such other longer
period that the Agency or the Commission may require and
shall include daily data representing a high-load,
low-load, and expected-load scenario for the load of the
utilities required to enter into sourcing agreements with
the clean coal SNG brownfield facility. The utility shall
provide supporting data and assumptions for each of the
scenarios.
(2) Beginning in 2015, the Agency shall at least every
5 years prepare a feedstock procurement plan by June 15, or
such other date as may be required by the Commission. The
clean coal SNG brownfield facility also may submit a
feedstock procurement plan. Each feedstock procurement
plan shall identify the portfolio of feedstocks to be

procured. Copies of each feedstock procurement plan shall
be posted and made publicly available on the Agency's and
Commission's websites, and copies of the Agency's
feedstock procurement plan shall also be provided to the
clean coal SNG brownfield facility. The clean coal SNG
brownfield facility shall have 30 days following the date
of posting to provide comment to the Agency on the
feedstock procurement plan. Other interested entities also
may comment on each feedstock 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 feedstock procurement
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 for the
purpose of receiving public comment on the procurement
plan. Within 14 days following the end of the 30-day
comment period, the clean coal SNG brownfield facility may
revise its feedstock procurement plan, if any, and the
Agency shall revise the feedstock procurement plan as
necessary based on the comments received, and each shall
file its feedstock procurement plan with the Commission,
and post the feedstock procurement plan on the websites.
(3) Within 5 days after the filing of a feedstock
procurement plan, any person objecting to the feedstock

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 a
feedstock procurement plan within 90 days after the filing
of the feedstock procurement plan by the Agency.
(4) The Commission shall approve a feedstock
procurement plan, including expressly the forecast used in
the feedstock procurement plan, if the Commission
determines that it will ensure adequate, reliable, and
affordable feedstocks to the clean coal SNG brownfield
facility at the lowest total cost over time, taking into
account any benefits of price stability.
(d) The feedstock procurement process shall include each of
the following components:
(1) Solicitation, prequalification, and registration
of bidders. The feedstock procurement administrator shall
disseminate information to potential bidders to promote a
feedstock procurement event, notify potential bidders that
the feedstock 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 feedstock procurement
process. In addition to such other publication as the
feedstock procurement administrator determines is
appropriate, this information shall be posted on the

Agency's and the Commission's websites. The feedstock
procurement administrator shall also administer the
prequalification process, including evaluation of
creditworthiness, compliance with feedstock procurement
rules, and agreement to the standard form contract
developed pursuant to paragraph (2) of this subsection (d).
The feedstock procurement administrator shall then
identify and register bidders to participate in the
feedstock procurement event.
(2) Standard contract forms and credit terms and
instruments. The feedstock procurement administrator, in
consultation with the clean coal SNG brownfield facility,
gas utilities, the Commission, and other interested
parties and subject to Commission oversight, shall develop
and provide standard contract forms for the supplier
contracts that meet generally accepted industry practices.
Standard credit terms and instruments that meet generally
accepted industry practices shall be similarly developed.
The feedstock procurement administrator shall make
available to the Commission all written comments it
receives on the contract forms, credit terms, or
instruments. If the feedstock procurement administrator
cannot reach agreement with the applicable clean coal SNG
brownfield facility as to the contract terms and
conditions, then the feedstock 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 feedstock procurement
process, the feedstock procurement administrator, in
consultation with the Commission staff, Agency staff, and
the feedstock procurement monitor, shall establish
benchmarks for evaluating the final prices in the contracts
for each of the feedstocks that will be procured through
the feedstock procurement process. The benchmarks shall be
based on price data for similar feedstocks for the same
delivery period and same delivery hub or other delivery
hubs after adjusting for that difference. The price
benchmarks may also be adjusted to take into account
differences between the information reflected in the
underlying data sources and the specific feedstocks and
gasification feedstock procurement process being used to
procure for the clean coal SNG brownfield facility. The
benchmarks shall be confidential but shall be provided to,
and shall be subject to, the Commission's review and
approval prior to a feedstock procurement event.
(4) Request for proposals. The feedstock procurement
administrator shall design and issue a request for

proposals to supply coal or petroleum coke in accordance
with the clean coal SNG brownfield facility's usage 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 feedstock procurement
process to fully meet the expected feedstock requirement
due to insufficient supplier participation, Commission
rejection of results, or any other cause. The plan must be
specific to the clean coal SNG brownfield facility's
feedstock specifications and requirements.
The feedstock procurement process described in this
subsection (d) is exempt from the requirements of the Illinois
Procurement Code, pursuant to Section 20-10 of that Code.
(e) Within 2 business days after opening the sealed bids,
the feedstock procurement administrator shall submit a
confidential report to the Commission. The report shall contain
the results of the bidding for each of the feedstock types
along with the feedstock 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 feedstock 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 feedstock procurement monitor's assessment of
bidder behavior in the process, as well as an assessment of the
feedstock procurement administrator's compliance with the
feedstock procurement process and rules. The Commission shall
review the confidential reports submitted by the feedstock
procurement administrator and feedstock procurement monitor
and shall accept or reject the recommendations of the feedstock
procurement administrator within 2 business days after receipt
of the reports.
(f) Within 3 business days after the Commission decision
approving the results of a feedstock procurement event, the
clean coal SNG brownfield facility shall enter into binding
contractual arrangements with the winning suppliers using
standard form contracts.
(g) The names of the successful bidders and the amount of
feedstock to be delivered for each contract type and for each
contract term shall be made available to the public at the time
of Commission approval of a feedstock procurement event. The
Commission, the procurement monitor, the feedstock procurement
administrator, the Agency, and all participants in the
feedstock 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 feedstock
procurement administrator and feedstock procurement monitor

pursuant to subsection (e) of this Section, shall not be
publicly available or discoverable by any party in any
proceeding absent a compelling demonstration of need. The
reports shall not be admissible in any proceeding other than
one for law enforcement purposes.
(h) Within 2 business days after a Commission decision
approving the results of a feedstock procurement event or such
other date as may be required by the Commission from time to
time, the clean coal SNG brownfield facility shall file for
informational purposes with the Commission its actual or
estimated feedstock costs by utility customer reflecting the
costs associated with the feedstock procurement.
(i) The clean coal SNG brownfield facility shall pay for
reasonable costs incurred by the Agency in administering the
feedstock procurement events, which costs shall be included in
the actual delivered fuel costs of the clean coal SNG
brownfield facility. The Agency shall determine the amount owed
for each feedstock procurement event, and the clean coal SNG
brownfield facility shall pay that amount to the Agency within
30 days after being informed by the Agency of the amount owed.
Those funds shall be deposited into the Illinois Power Agency
Operations Fund, pursuant to Section 1-55 of this Act, to be
used to reimburse expenses related to the feedstock
procurement.
(j) 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 the
authority to adopt rules to carry out the provisions of this
Section on an emergency basis.
(k) On or before April 1 of each year, the Commission may
hold an informal hearing for the purpose of receiving comments
on the prior year's feedstock procurement process and any
recommendations for change.
Section 7. The Illinois Procurement Code is amended by
changing Sections 1-10 and 20-10 as follows:
(30 ILCS 500/1-10)
Sec. 1-10. Application.
(a) This Code applies only to procurements for which
contractors were first solicited on or after July 1, 1998. This
Code shall not be construed to affect or impair any contract,
or any provision of a contract, entered into based on a
solicitation prior to the implementation date of this Code as
described in Article 99, including but not limited to any
covenant entered into with respect to any revenue bonds or
similar instruments. All procurements for which contracts are
solicited between the effective date of Articles 50 and 99 and
July 1, 1998 shall be substantially in accordance with this
Code and its intent.
(b) This Code shall apply regardless of the source of the
funds with which the contracts are paid, including federal

assistance moneys. This Code shall not apply to:
(1) Contracts between the State and its political
subdivisions or other governments, or between State
governmental bodies except as specifically provided in
this Code.
(2) Grants, except for the filing requirements of
Section 20-80.
(3) Purchase of care.
(4) Hiring of an individual as employee and not as an
independent contractor, whether pursuant to an employment
code or policy or by contract directly with that
individual.
(5) Collective bargaining contracts.
(6) Purchase of real estate, except that notice of this
type of contract with a value of more than $25,000 must be
published in the Procurement Bulletin within 7 days after
the deed is recorded in the county of jurisdiction. The
notice shall identify the real estate purchased, the names
of all parties to the contract, the value of the contract,
and the effective date of the contract.
(7) Contracts necessary to prepare for anticipated
litigation, enforcement actions, or investigations,
provided that the chief legal counsel to the Governor shall
give his or her prior approval when the procuring agency is
one subject to the jurisdiction of the Governor, and
provided that the chief legal counsel of any other

procuring entity subject to this Code shall give his or her
prior approval when the procuring entity is not one subject
to the jurisdiction of the Governor.
(8) Contracts for services to Northern Illinois
University by a person, acting as an independent
contractor, who is qualified by education, experience, and
technical ability and is selected by negotiation for the
purpose of providing non-credit educational service
activities or products by means of specialized programs
offered by the university.
(9) Procurement expenditures by the Illinois
Conservation Foundation when only private funds are used.
(10) Procurement expenditures by the Illinois Health
Information Exchange Authority involving private funds
from the Health Information Exchange Fund. "Private funds"
means gifts, donations, and private grants.
(c) This Code does not apply to the electric power
procurement process provided for under Section 1-75 of the
Illinois Power Agency Act and Section 16-111.5 of the Public
Utilities Act.
(d) Except for Section 20-160 and Article 50 of this Code,
and as expressly required by Section 9.1 of the Illinois
Lottery Law, the provisions of this Code do not apply to the
procurement process provided for under Section 9.1 of the
Illinois Lottery Law.
(e) This Code does not apply to the process used by the

Capital Development Board to retain a person or entity to
assist the Capital Development Board with its duties related to
the determination of costs of a clean coal SNG brownfield
facility, as defined by Section 1-10 of the Illinois Power
Agency Act, as required in subsection (h-3) of Section 9-220 of
the Public Utilities Act, including calculating the range of
capital costs, the range of operating and maintenance costs, or
the sequestration costs or monitoring the construction of clean
coal SNG brownfield facility for the full duration of
construction.
(f) This Code does not apply to the process used by the
Illinois Power Agency to retain a mediator to mediate sourcing
agreement disputes between gas utilities and the clean coal SNG
brownfield facility, as defined in Section 1-10 of the Illinois
Power Agency Act, as required under subsection (h-1) of Section
9-220 of the Public Utilities Act.
(Source: P.A. 95-481, eff. 8-28-07; 95-615, eff. 9-11-07;
95-876, eff. 8-21-08; 96-840, eff. 12-23-09; 96-1331, eff.
7-27-10.)
(30 ILCS 500/20-10)
(Text of Section from P.A. 96-159 and 96-588)
Sec. 20-10. Competitive sealed bidding; reverse auction.
(a) Conditions for use. All contracts shall be awarded by
competitive sealed bidding except as otherwise provided in
Section 20-5.

(b) Invitation for bids. An invitation for bids shall be
issued and shall include a purchase description and the
material contractual terms and conditions applicable to the
procurement.
(c) Public notice. Public notice of the invitation for bids
shall be published in the Illinois Procurement Bulletin at
least 14 days before the date set in the invitation for the
opening of bids.
(d) Bid opening. Bids shall be opened publicly in the
presence of one or more witnesses at the time and place
designated in the invitation for bids. The name of each bidder,
the amount of each bid, and other relevant information as may
be specified by rule shall be recorded. After the award of the
contract, the winning bid and the record of each unsuccessful
bid shall be open to public inspection.
(e) Bid acceptance and bid evaluation. Bids shall be
unconditionally accepted without alteration or correction,
except as authorized in this Code. Bids shall be evaluated
based on the requirements set forth in the invitation for bids,
which may include criteria to determine acceptability such as
inspection, testing, quality, workmanship, delivery, and
suitability for a particular purpose. Those criteria that will
affect the bid price and be considered in evaluation for award,
such as discounts, transportation costs, and total or life
cycle costs, shall be objectively measurable. The invitation
for bids shall set forth the evaluation criteria to be used.

(f) Correction or withdrawal of bids. Correction or
withdrawal of inadvertently erroneous bids before or after
award, or cancellation of awards of contracts based on bid
mistakes, shall be permitted in accordance with rules. After
bid opening, no changes in bid prices or other provisions of
bids prejudicial to the interest of the State or fair
competition shall be permitted. All decisions to permit the
correction or withdrawal of bids based on bid mistakes shall be
supported by written determination made by a State purchasing
officer.
(g) Award. The contract shall be awarded with reasonable
promptness by written notice to the lowest responsible and
responsive bidder whose bid meets the requirements and criteria
set forth in the invitation for bids, except when a State
purchasing officer determines it is not in the best interest of
the State and by written explanation determines another bidder
shall receive the award. The explanation shall appear in the
appropriate volume of the Illinois Procurement Bulletin.
(h) Multi-step sealed bidding. When it is considered
impracticable to initially prepare a purchase description to
support an award based on price, an invitation for bids may be
issued requesting the submission of unpriced offers to be
followed by an invitation for bids limited to those bidders
whose offers have been qualified under the criteria set forth
in the first solicitation.
(i) Alternative procedures. Notwithstanding any other

provision of this Act to the contrary, the Director of the
Illinois Power Agency may create alternative bidding
procedures to be used in procuring professional services under
subsection (a) of Section 1-75 and subsection (d) of Section
1-78 1-75(a) of the Illinois Power Agency Act and Section
16-111.5(c) of the Public Utilities Act and to procure
renewable energy resources under Section 1-56 of the Illinois
Power Agency Act. These alternative procedures shall be set
forth together with the other criteria contained in the
invitation for bids, and shall appear in the appropriate volume
of the Illinois Procurement Bulletin.
(j) Reverse auction. Notwithstanding any other provision
of this Section and in accordance with rules adopted by the
Director of Central Management Services as chief procurement
officer, a State purchasing officer under that chief
procurement officer's jurisdiction may procure supplies or
services through a competitive electronic auction bidding
process after the purchasing officer explains in writing to the
chief procurement officer his or her determination that the use
of such a process will be in the best interest of the State.
The chief procurement officer shall publish that determination
in his or her next volume of the Illinois Procurement Bulletin.
An invitation for bids shall be issued and shall include
(i) a procurement description, (ii) all contractual terms,
whenever practical, and (iii) conditions applicable to the
procurement, including a notice that bids will be received in

an electronic auction manner.
Public notice of the invitation for bids shall be given in
the same manner as provided in subsection (c).
Bids shall be accepted electronically at the time and in
the manner designated in the invitation for bids. During the
auction, a bidder's price shall be disclosed to other bidders.
Bidders shall have the opportunity to reduce their bid prices
during the auction. At the conclusion of the auction, the
record of the bid prices received and the name of each bidder
shall be open to public inspection.
After the auction period has terminated, withdrawal of bids
shall be permitted as provided in subsection (f).
The contract shall be awarded within 60 days after the
auction by written notice to the lowest responsible bidder, or
all bids shall be rejected except as otherwise provided in this
Code. Extensions of the date for the award may be made by
mutual written consent of the State purchasing officer and the
lowest responsible bidder.
This subsection does not apply to (i) procurements of
professional and artistic services, including but not limited
to telecommunications services, communications services,
Internet services, and information services, and (ii)
contracts for construction projects.
(Source: P.A. 95-481, eff. 8-28-07; 96-159, eff. 8-10-09;
96-588, eff. 8-18-09; revised 10-5-10.)

(Text of Section from P.A. 96-159 and 96-795)
Sec. 20-10. Competitive sealed bidding; reverse auction.
(a) Conditions for use. All contracts shall be awarded by
competitive sealed bidding except as otherwise provided in
Section 20-5.
(b) Invitation for bids. An invitation for bids shall be
issued and shall include a purchase description and the
material contractual terms and conditions applicable to the
procurement.
(c) Public notice. Public notice of the invitation for bids
shall be published in the Illinois Procurement Bulletin at
least 14 days before the date set in the invitation for the
opening of bids.
(d) Bid opening. Bids shall be opened publicly in the
presence of one or more witnesses at the time and place
designated in the invitation for bids. The name of each bidder,
the amount of each bid, and other relevant information as may
be specified by rule shall be recorded. After the award of the
contract, the winning bid and the record of each unsuccessful
bid shall be open to public inspection.
(e) Bid acceptance and bid evaluation. Bids shall be
unconditionally accepted without alteration or correction,
except as authorized in this Code. Bids shall be evaluated
based on the requirements set forth in the invitation for bids,
which may include criteria to determine acceptability such as
inspection, testing, quality, workmanship, delivery, and

suitability for a particular purpose. Those criteria that will
affect the bid price and be considered in evaluation for award,
such as discounts, transportation costs, and total or life
cycle costs, shall be objectively measurable. The invitation
for bids shall set forth the evaluation criteria to be used.
(f) Correction or withdrawal of bids. Correction or
withdrawal of inadvertently erroneous bids before or after
award, or cancellation of awards of contracts based on bid
mistakes, shall be permitted in accordance with rules. After
bid opening, no changes in bid prices or other provisions of
bids prejudicial to the interest of the State or fair
competition shall be permitted. All decisions to permit the
correction or withdrawal of bids based on bid mistakes shall be
supported by written determination made by a State purchasing
officer.
(g) Award. The contract shall be awarded with reasonable
promptness by written notice to the lowest responsible and
responsive bidder whose bid meets the requirements and criteria
set forth in the invitation for bids, except when a State
purchasing officer determines it is not in the best interest of
the State and by written explanation determines another bidder
shall receive the award. The explanation shall appear in the
appropriate volume of the Illinois Procurement Bulletin. The
written explanation must include:
(1) a description of the agency's needs;
(2) a determination that the anticipated cost will be

fair and reasonable;
(3) a listing of all responsible and responsive
bidders; and
(4) the name of the bidder selected, pricing, and the
reasons for selecting that bidder.
Each chief procurement officer may adopt guidelines to
implement the requirements of this subsection (g).
The written explanation shall be filed with the Legislative
Audit Commission and the Procurement Policy Board and be made
available for inspection by the public within 30 days after the
agency's decision to award the contract.
(h) Multi-step sealed bidding. When it is considered
impracticable to initially prepare a purchase description to
support an award based on price, an invitation for bids may be
issued requesting the submission of unpriced offers to be
followed by an invitation for bids limited to those bidders
whose offers have been qualified under the criteria set forth
in the first solicitation.
(i) Alternative procedures. Notwithstanding any other
provision of this Act to the contrary, the Director of the
Illinois Power Agency may create alternative bidding
procedures to be used in procuring professional services under
subsection (a) of Section 1-75 and subsection (d) of Section
1-78 1-75(a) of the Illinois Power Agency Act and Section
16-111.5(c) of the Public Utilities Act and to procure
renewable energy resources under Section 1-56 of the Illinois

Power Agency Act. These alternative procedures shall be set
forth together with the other criteria contained in the
invitation for bids, and shall appear in the appropriate volume
of the Illinois Procurement Bulletin.
(j) Reverse auction. Notwithstanding any other provision
of this Section and in accordance with rules adopted by the
chief procurement officer, that chief procurement officer may
procure supplies or services through a competitive electronic
auction bidding process after the chief procurement officer
determines that the use of such a process will be in the best
interest of the State. The chief procurement officer shall
publish that determination in his or her next volume of the
Illinois Procurement Bulletin.
An invitation for bids shall be issued and shall include
(i) a procurement description, (ii) all contractual terms,
whenever practical, and (iii) conditions applicable to the
procurement, including a notice that bids will be received in
an electronic auction manner.
Public notice of the invitation for bids shall be given in
the same manner as provided in subsection (c).
Bids shall be accepted electronically at the time and in
the manner designated in the invitation for bids. During the
auction, a bidder's price shall be disclosed to other bidders.
Bidders shall have the opportunity to reduce their bid prices
during the auction. At the conclusion of the auction, the
record of the bid prices received and the name of each bidder

shall be open to public inspection.
After the auction period has terminated, withdrawal of bids
shall be permitted as provided in subsection (f).
The contract shall be awarded within 60 days after the
auction by written notice to the lowest responsible bidder, or
all bids shall be rejected except as otherwise provided in this
Code. Extensions of the date for the award may be made by
mutual written consent of the State purchasing officer and the
lowest responsible bidder.
This subsection does not apply to (i) procurements of
professional and artistic services, (ii) telecommunications
services, communication services, and information services,
and (iii) contracts for construction projects.
(Source: P.A. 95-481, eff. 8-28-07; 96-159, eff. 8-10-09;
96-795, eff. 7-1-10 (see Section 5 of P.A. 96-793 for the
effective date of changes made by P.A. 96-795); revised
10-5-10.)
Section 10. The Public Utilities Act is amended by changing
Sections 3-101 and 9-220 and by adding Section 3-123 as
follows:
(220 ILCS 5/3-101) (from Ch. 111 2/3, par. 3-101)
Sec. 3-101. Definitions. Unless otherwise specified, the
terms set forth in Sections 3-102 through 3-123 3-121 are used
in this Act as therein defined.

(Source: P.A. 84-617; 84-1118.)
(220 ILCS 5/3-123 new)
Sec. 3-123. Clean coal SNG brownfield facility; sequester;
SNG facility; sourcing agreement; substitute natural gas or
SNG. As used in this Act:
"Clean coal SNG brownfield facility" shall have the same
meaning as provided in Section 1-10 of the Illinois Power
Agency Act.
"Sequester" shall have the same meaning as provided in
Section 1-10 of the Illinois Power Agency Act.
"SNG facility" means a facility that produces substitute
natural gas from feedstock that includes coal through a
gasification process, including a clean coal facility, the
clean coal SNG brownfield facility, and the facility described
in subsection (h) of Section 9-220 of this Act.
"Sourcing agreement" means an agreement between the owner
of a clean coal SNG brownfield facility and the gas utility
that has the terms and conditions meeting the requirements of
subsection (h-1) of Section 9-220 of this Act.
"Substitute natural gas" or "SNG" shall have the same
meaning as provided in Section 1-10 of the Illinois Power
Agency Act.
(220 ILCS 5/9-220) (from Ch. 111 2/3, par. 9-220)
Sec. 9-220. Rate changes based on changes in fuel costs.

(a) Notwithstanding the provisions of Section 9-201, the
Commission may authorize the increase or decrease of rates and
charges based upon changes in the cost of fuel used in the
generation or production of electric power, changes in the cost
of purchased power, or changes in the cost of purchased gas
through the application of fuel adjustment clauses or purchased
gas adjustment clauses. The Commission may also authorize the
increase or decrease of rates and charges based upon
expenditures or revenues resulting from the purchase or sale of
emission allowances created under the federal Clean Air Act
Amendments of 1990, through such fuel adjustment clauses, as a
cost of fuel. For the purposes of this paragraph, cost of fuel
used in the generation or production of electric power shall
include the amount of any fees paid by the utility for the
implementation and operation of a process for the
desulfurization of the flue gas when burning high sulfur coal
at any location within the State of Illinois irrespective of
the attainment status designation of such location; but shall
not include transportation costs of coal (i) except to the
extent that for contracts entered into on and after the
effective date of this amendatory Act of 1997, the cost of the
coal, including transportation costs, constitutes the lowest
cost for adequate and reliable fuel supply reasonably available
to the public utility in comparison to the cost, including
transportation costs, of other adequate and reliable sources of
fuel supply reasonably available to the public utility, or (ii)

except as otherwise provided in the next 3 sentences of this
paragraph. Such costs of fuel shall, when requested by a
utility or at the conclusion of the utility's next general
electric rate proceeding, whichever shall first occur, include
transportation costs of coal purchased under existing coal
purchase contracts. For purposes of this paragraph "existing
coal purchase contracts" means contracts for the purchase of
coal in effect on the effective date of this amendatory Act of
1991, as such contracts may thereafter be amended, but only to
the extent that any such amendment does not increase the
aggregate quantity of coal to be purchased under such contract.
Nothing herein shall authorize an electric utility to recover
through its fuel adjustment clause any amounts of
transportation costs of coal that were included in the revenue
requirement used to set base rates in its most recent general
rate proceeding. Cost shall be based upon uniformly applied
accounting principles. Annually, the Commission shall initiate
public hearings to determine whether the clauses reflect actual
costs of fuel, gas, power, or coal transportation purchased to
determine whether such purchases were prudent, and to reconcile
any amounts collected with the actual costs of fuel, power,
gas, or coal transportation prudently purchased. In each such
proceeding, the burden of proof shall be upon the utility to
establish the prudence of its cost of fuel, power, gas, or coal
transportation purchases and costs. The Commission shall issue
its final order in each such annual proceeding for an electric

utility by December 31 of the year immediately following the
year to which the proceeding pertains, provided, that the
Commission shall issue its final order with respect to such
annual proceeding for the years 1996 and earlier by December
31, 1998.
(b) A public utility providing electric service, other than
a public utility described in subsections (e) or (f) of this
Section, may at any time during the mandatory transition period
file with the Commission proposed tariff sheets that eliminate
the public utility's fuel adjustment clause and adjust the
public utility's base rate tariffs by the amount necessary for
the base fuel component of the base rates to recover the public
utility's average fuel and power supply costs per kilowatt-hour
for the 2 most recent years for which the Commission has issued
final orders in annual proceedings pursuant to subsection (a),
where the average fuel and power supply costs per kilowatt-hour
shall be calculated as the sum of the public utility's prudent
and allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years.
Notwithstanding any contrary or inconsistent provisions in
Section 9-201 of this Act, in subsection (a) of this Section or
in any rules or regulations promulgated by the Commission
pursuant to subsection (g) of this Section, the Commission
shall review and shall by order approve, or approve as
modified, the proposed tariff sheets within 60 days after the

date of the public utility's filing. The Commission may modify
the public utility's proposed tariff sheets only to the extent
the Commission finds necessary to achieve conformance to the
requirements of this subsection (b). During the 5 years
following the date of the Commission's order, but in any event
no earlier than January 1, 2007, a public utility whose fuel
adjustment clause has been eliminated pursuant to this
subsection shall not file proposed tariff sheets seeking, or
otherwise petition the Commission for, reinstatement of a fuel
adjustment clause.
(c) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service, other than a public utility
described in subsection (e) or (f) of this Section, may at any
time during the mandatory transition period file with the
Commission proposed tariff sheets that establish the rate per
kilowatt-hour to be applied pursuant to the public utility's
fuel adjustment clause at the average value for such rate
during the preceding 24 months, provided that such average rate
results in a credit to customers' bills, without making any
revisions to the public utility's base rate tariffs. The
proposed tariff sheets shall establish the fuel adjustment rate
for a specific time period of at least 3 years but not more
than 5 years, provided that the terms and conditions for any

reinstatement earlier than 5 years shall be set forth in the
proposed tariff sheets and subject to modification or approval
by the Commission. The Commission shall review and shall by
order approve the proposed tariff sheets if it finds that the
requirements of this subsection are met. The Commission shall
not conduct the annual hearings specified in the last 3
sentences of subsection (a) of this Section for the utility for
the period that the factor established pursuant to this
subsection is in effect.
(d) A public utility providing electric service, or a
public utility providing gas service may file with the
Commission proposed tariff sheets that eliminate the public
utility's fuel or purchased gas adjustment clause and adjust
the public utility's base rate tariffs to provide for recovery
of power supply costs or gas supply costs that would have been
recovered through such clause; provided, that the provisions of
this subsection (d) shall not be available to a public utility
described in subsections (e) or (f) of this Section to
eliminate its fuel adjustment clause. Notwithstanding any
contrary or inconsistent provisions in Section 9-201 of this
Act, in subsection (a) of this Section, or in any rules or
regulations promulgated by the Commission pursuant to
subsection (g) of this Section, the Commission shall review and
shall by order approve, or approve as modified in the
Commission's order, the proposed tariff sheets within 240 days
after the date of the public utility's filing. The Commission's

order shall approve rates and charges that the Commission,
based on information in the public utility's filing or on the
record if a hearing is held by the Commission, finds will
recover the reasonable, prudent and necessary jurisdictional
power supply costs or gas supply costs incurred or to be
incurred by the public utility during a 12 month period found
by the Commission to be appropriate for these purposes,
provided, that such period shall be either (i) a 12 month
historical period occurring during the 15 months ending on the
date of the public utility's filing, or (ii) a 12 month future
period ending no later than 15 months following the date of the
public utility's filing. The public utility shall include with
its tariff filing information showing both (1) its actual
jurisdictional power supply costs or gas supply costs for a 12
month historical period conforming to (i) above and (2) its
projected jurisdictional power supply costs or gas supply costs
for a future 12 month period conforming to (ii) above. If the
Commission's order requires modifications in the tariff sheets
filed by the public utility, the public utility shall have 7
days following the date of the order to notify the Commission
whether the public utility will implement the modified tariffs
or elect to continue its fuel or purchased gas adjustment
clause in force as though no order had been entered. The
Commission's order shall provide for any reconciliation of
power supply costs or gas supply costs, as the case may be, and
associated revenues through the date that the public utility's

fuel or purchased gas adjustment clause is eliminated. During
the 5 years following the date of the Commission's order, a
public utility whose fuel or purchased gas adjustment clause
has been eliminated pursuant to this subsection shall not file
proposed tariff sheets seeking, or otherwise petition the
Commission for, reinstatement or adoption of a fuel or
purchased gas adjustment clause. Nothing in this subsection (d)
shall be construed as limiting the Commission's authority to
eliminate a public utility's fuel adjustment clause or
purchased gas adjustment clause in accordance with any other
applicable provisions of this Act.
(e) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules promulgated by the Commission
pursuant to subsection (g) of this Section, a public utility
providing electric service to more than 1,000,000 customers in
this State may, within the first 6 months after the effective
date of this amendatory Act of 1997, file with the Commission
proposed tariff sheets that eliminate, effective January 1,
1997, the public utility's fuel adjustment clause without
adjusting its base rates, and such tariff sheets shall be
effective upon filing. To the extent the application of the
fuel adjustment clause had resulted in net charges to customers
after January 1, 1997, the utility shall also file a tariff
sheet that provides for a refund stated on a per kilowatt-hour
basis of such charges over a period not to exceed 6 months;

provided however, that such refund shall not include the
proportional amounts of taxes paid under the Use Tax Act,
Service Use Tax Act, Service Occupation Tax Act, and Retailers'
Occupation Tax Act on fuel used in generation. The Commission
shall issue an order within 45 days after the date of the
public utility's filing approving or approving as modified such
tariff sheet. If the fuel adjustment clause is eliminated
pursuant to this subsection, the Commission shall not conduct
the annual hearings specified in the last 3 sentences of
subsection (a) of this Section for the utility for any period
after December 31, 1996 and prior to any reinstatement of such
clause. A public utility whose fuel adjustment clause has been
eliminated pursuant to this subsection shall not file a
proposed tariff sheet seeking, or otherwise petition the
Commission for, reinstatement of the fuel adjustment clause
prior to January 1, 2007.
(f) Notwithstanding any contrary or inconsistent
provisions in Section 9-201 of this Act, in subsection (a) of
this Section, or in any rules or regulations promulgated by the
Commission pursuant to subsection (g) of this Section, a public
utility providing electric service to more than 500,000
customers but fewer than 1,000,000 customers in this State may,
within the first 6 months after the effective date of this
amendatory Act of 1997, file with the Commission proposed
tariff sheets that eliminate, effective January 1, 1997, the
public utility's fuel adjustment clause and adjust its base

rates by the amount necessary for the base fuel component of
the base rates to recover 91% of the public utility's average
fuel and power supply costs for the 2 most recent years for
which the Commission, as of January 1, 1997, has issued final
orders in annual proceedings pursuant to subsection (a), where
the average fuel and power supply costs per kilowatt-hour shall
be calculated as the sum of the public utility's prudent and
allowable fuel and power supply costs as found by the
Commission in the 2 proceedings divided by the public utility's
actual jurisdictional kilowatt-hour sales for those 2 years,
provided, that such tariff sheets shall be effective upon
filing. To the extent the application of the fuel adjustment
clause had resulted in net charges to customers after January
1, 1997, the utility shall also file a tariff sheet that
provides for a refund stated on a per kilowatt-hour basis of
such charges over a period not to exceed 6 months. Provided
however, that such refund shall not include the proportional
amounts of taxes paid under the Use Tax Act, Service Use Tax
Act, Service Occupation Tax Act, and Retailers' Occupation Tax
Act on fuel used in generation. The Commission shall issue an
order within 45 days after the date of the public utility's
filing approving or approving as modified such tariff sheet. If
the fuel adjustment clause is eliminated pursuant to this
subsection, the Commission shall not conduct the annual
hearings specified in the last 3 sentences of subsection (a) of
this Section for the utility for any period after December 31,

1996 and prior to any reinstatement of such clause. A public
utility whose fuel adjustment clause has been eliminated
pursuant to this subsection shall not file a proposed tariff
sheet seeking, or otherwise petition the Commission for,
reinstatement of the fuel adjustment clause prior to January 1,
2007.
(g) The Commission shall have authority to promulgate rules
and regulations to carry out the provisions of this Section.
(h) Any Illinois gas utility may enter into a contract on
or before March 31, 2011 for up to 10 years of supply with any
company for the purchase of substitute natural gas (SNG)
produced from coal through the gasification process if the
company has commenced construction of a coal gasification
facility by July 1, 2012 in Jefferson County and commencement
of construction shall mean that material physical site work has
occurred, such as site clearing and excavation, water runoff
prevention, water retention reservoir preparation, or
foundation development. The contract shall contain the
following provisions: (i) the only coal to be used in the
gasification process has high volatile bituminous rank and
greater than 1.7 pounds of sulfur per million Btu content; (ii)
at the time the contract term commences, the price per million
Btu may not exceed $7.95 in 2008 dollars, adjusted annually
based on the change in the Annual Consumer Price Index for All
Urban Consumers for the Midwest Region as published in April by
the United States Department of Labor, Bureau of Labor

Statistics (or a suitable Consumer Price Index calculation if
this Consumer Price Index is not available) for the previous
calendar year; provided that the price per million Btu shall
not exceed $9.95 at any time during the contract; (iii) the
utility's aggregate long-term supply contracts for the
purchase of SNG does not exceed 25% of the annual system supply
requirements of the utility as of 2008 and the quantity of SNG
supplied to a utility may not exceed 16 million MMBtus; and
(iv) contract costs pursuant to subsection (h-10) of this
Section shall not include any lobbying expenses, charitable
contributions, advertising, organizational memberships, or
marketing expenses per year.
(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 the effective date of
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 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 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 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 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 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
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 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 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.
(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
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
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)
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.
(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
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
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
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
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
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
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
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
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
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.
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
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:
(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
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 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 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
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
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
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
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
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 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
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.
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.
(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
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 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.
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 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 the capital costs, rate of return, and
operations and maintenance costs. 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) The Attorney General, on behalf of the people of the
State of Illinois, may specifically enforce the requirements of
this subsection (h-5). All contracts under subsection (h) of
this Act and all sourcing agreements under subsection (h-1) of
this Act, regardless of duration, shall require the owner of

any facility supplying SNG under the contract or sourcing
agreement to provide documentation to the Commission each year,
starting in the facility's first year of commercial operation,
accurately reporting the quantity of carbon dioxide emissions
from the facility that have been captured and sequestered and
reporting any quantities of carbon dioxide released from the
site or sites at which carbon dioxide emissions were
sequestered in prior years, based on continuous monitoring of
those sites. If, in any year, the owner of the facility
described in subsection (h) of this Act fails to demonstrate
that the SNG facility captured and sequestered at least 90% of
the total carbon dioxide emissions that the facility would
otherwise emit or that sequestration of emissions from prior
years has failed, resulting in the release of carbon dioxide
into the atmosphere, then the owner of the facility must offset
excess emissions. Any such carbon dioxide offsets must be
permanent, additional, verifiable, real, located within the
State of Illinois, and legally and practicably enforceable;
provided that the owner of the facility described in subsection
(h) of this Act shall not be obligated to acquire carbon
dioxide emission offsets to the extent that the cost of
acquiring such offsets would exceed $40 million in any given
year. No costs of any purchases of carbon offsets may be
recovered from a utility or its customers. All carbon offsets
purchased for this purpose must be permanently retired.
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 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 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).
In addition, carbon dioxide emission credits equivalent to
50% of the amount of credits associated with the required

sequestration of carbon dioxide from the facility must be
permanently retired. Compliance with the sequestration
requirements and the offset purchase requirements specified in
this subsection (h-5) for the facility described in subsection
(h) of this Act shall be assessed annually by an independent
expert retained by the owner of the SNG facility described in
subsection (h) of this Act, with the advance written approval
of the Attorney General. Compliance with the sequestration
requirements and 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. A SNG facility operating pursuant to this subsection
(h-5) shall not forfeit its designation as a clean coal SNG
facility or a clean coal SNG brownfield facility if the
facility fails to fully comply with the applicable carbon
sequestration requirements in any given year, provided the
requisite offsets are purchased 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
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
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
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
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
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
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-20) of this Section, which confirmation
shall be deemed conclusive, or as a consequence of or condition
to its performance under the contract, including (i) amounts
paid for SNG under the SNG contract and (ii) costs of
transportation and storage services of SNG purchased from
interstate pipelines under federally approved tariffs. Any
contract, the terms of which have been confirmed in writing by
the Illinois Power Agency as set forth in subsection (h-20) of
this Section and the performance of the parties under such
contract cannot be grounds for challenging prudence or cost
recovery by the utility through the purchased gas adjustment
clause, and in such cases, the Commission is directed not to
consider, and has no authority to consider, any attempted
challenges.
The contracts entered into by Illinois gas utilities
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
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
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) With respect to each contract entered into by the
company with an Illinois utility in accordance with the terms
stated in subsection (h) of this Section, within 60 days
following the completion of purchases of SNG, the Illinois
Power Agency shall conduct an analysis to determine (i) the
average contract SNG cost, which shall be calculated as the
total amount paid to a company for SNG over the contract term,
plus the cost to the utility of the required transportation and
storage services of SNG, divided by the total number of MMBtus
of SNG actually purchased under the utility contract; (ii) the
average natural gas purchase cost, which shall be calculated as

the total annual supply costs paid for natural gas (excluding
SNG) purchased by such utility over the contract term, plus the
costs of transportation and storage services of such natural
gas (excluding such costs for SNG), divided by the total number
of MMBtus of natural gas (excluding SNG) actually purchased by
the utility during the contract term; (iii) the cost
differential, which shall be the difference between the average
contract SNG cost and the average natural gas purchase cost;
and (iv) the revenue share target, which shall be the cost
differential multiplied by the total amount of SNG purchased
under such utility contract. If the average contract SNG cost
is equal to or less than the average natural gas purchase cost,
then the company shall have no further obligation to the
utility. If the average contract SNG cost for such SNG contract
is greater than the average natural gas purchase cost for such
utility, then the company shall market the daily production of
SNG and distribute on a monthly basis 5% of amounts collected
with respect to such future sales to the utilities in
proportion to each utility's SNG purchases from the company
during the term of the SNG contract to be used to reduce the
utility's natural gas costs through the purchased gas
adjustment clause; such payments to the utility shall continue
until such time as the sum of such payments equals the revenue
share target of that utility. The company or utilities shall
have no obligation to repay the revenue share target except as
provided for in this subsection (h-15).

(h-20) The General Assembly authorizes the Illinois
Finance Authority to issue bonds to the maximum extent
permitted to finance coal gasification facilities described in
this Section, which constitute both "industrial projects"
under Article 801 of the Illinois Finance Authority Act and
"clean coal and energy projects" under Sections 825-65 through
825-75 of the Illinois Finance Authority Act. The General
Assembly further authorizes the Illinois Power Agency to become
party to agreements and take such actions as necessary to
enable the Illinois Power Agency or its designate to (i) review
and confirm in writing that the terms stated in subsection (h)
of this Section are incorporated in the SNG contract, and (ii)
conduct an analysis pursuant to subsection (h-15) of this
Section. Administrative costs incurred by the Illinois Finance
Authority and Illinois Power Agency in performance of this
subsection (h-20) shall be subject to reimbursement by the
company on terms as the Illinois Finance Authority, the
Illinois Power Agency, and the company may agree. The utility
and its customers shall have no obligation to reimburse the
company, the Illinois Finance Authority, or the Illinois Power
Agency for any such costs.
(i) If a gas utility or an affiliate of a gas utility has
an ownership interest in any entity that produces or sells
synthetic natural gas, Article VII of this Act shall apply.
(Source: P.A. 95-1027, eff. 6-1-09; 96-1364, eff. 7-28-10.)

Section 15. The Illinois Gas Pipeline Safety Act is amended
by changing Sections 2.02, 2.03, 2.04, and 3 as follows:
(220 ILCS 20/2.02) (from Ch. 111 2/3, par. 552.2)
Sec. 2.02. "Gas" means natural gas, flammable gas or gas
which is toxic or corrosive. "Gas" also means carbon dioxide in
any physical form, whenever transported by pipeline for the
purpose of sequestration.
(Source: P.A. 76-1588.)
(220 ILCS 20/2.03) (from Ch. 111 2/3, par. 552.3)
Sec. 2.03. "Transportation of gas" means the gathering,
transmission, or distribution of gas by pipeline or its
storage, within this State and not subject to the jurisdiction
of the Federal Energy Regulatory Commission under the Natural
Gas Act, except that it includes the transmission of gas
through pipeline facilities within this State that transport
gas from an interstate gas pipeline to a direct sales customer
within this State purchasing gas for its own consumption.
"Transportation of gas" also includes the conveyance of gas
from a gas main through the primary fuel line to the outside
wall of residential premises. If the gas meter is placed within
3 feet of the structure, the utility's responsibility shall end
at the outlet side of the meter. "Transportation of gas" also
includes the conveyance of carbon dioxide in any physical form
for the purpose of sequestration.

(Source: P.A. 87-1092; 88-314.)
(220 ILCS 20/2.04) (from Ch. 111 2/3, par. 552.4)
Sec. 2.04. "Pipeline facilities" includes new and existing
pipe rights-of-way and any equipment, facility, or building
used in the transportation of gas or the treatment of gas
during the course of transportation and includes facilities
within this State that transport gas from an interstate gas
pipeline to a direct sales customer within this State
purchasing gas for its own consumption, but "rights-of-way" as
used in this Act does not authorize the Commission to
prescribe, under this Act, the location or routing of any
pipeline facility. "Pipeline facilities" also includes new and
existing pipes and lines and any other equipment, facility, or
structure, except customer-owned branch lines connected to the
primary fuel lines, used to convey gas from a gas main to the
outside wall of residential premises, and any person who
provides gas service directly to its residential customer
through these facilities shall be deemed to operate such
pipeline facilities for purposes of this Act irrespective of
the ownership of the facilities or the location of the
facilities with respect to the meter, except that a person who
provides gas service to a "master meter system", as that term
is defined at 49 C.F.R. Section 191.3, shall not be deemed to
operate any facilities downstream of the master meter.
"Pipeline facilities" also includes new and existing pipe

rights-of-way and any equipment, facility, or building used in
the transportation of carbon dioxide in any physical form for
the purpose of sequestration.
(Source: P.A. 87-1092; 88-314.)
(220 ILCS 20/3) (from Ch. 111 2/3, par. 553)
Sec. 3. (a) As soon as practicable, but not later than 3
months after the effective date of this Act, the Commission
shall adopt rules establishing minimum safety standards for the
transportation of gas and for pipeline facilities. Such rules
shall be at least as inclusive, as stringent, and compatible
with, the minimum safety standards adopted by the Secretary of
Transportation under the Federal Act. Thereafter, the
Commission shall maintain such rules so that the rules are at
least as inclusive, as stringent, and compatible with, the
minimum standards from time to time in effect under the Federal
Act. The Commission shall also adopt rules establishing minimum
safety standards for the transportation of carbon dioxide in
any physical form for the purpose of sequestration and for
pipeline facilities used for that function.
(b) Standards established under this Act may apply to the
design, installation, inspection, testing, construction,
extension, operation, replacement, and maintenance of pipeline
facilities. Standards affecting the design, installation,
construction, initial inspection and initial testing are not
applicable to pipeline facilities in existence on the date such

standards are adopted. Whenever the Commission finds a
particular facility to be hazardous to life or property, it may
require the person operating such facility to take the steps
necessary to remove the hazard.
(c) Standards established by the Commission under this Act
shall, subject to paragraphs (a) and (b) of this Section 3, be
practicable and designed to meet the need for pipeline safety.
In prescribing such standards, the Commission shall consider:
similar standards established in other states; relevant
available pipeline safety data; whether such standards are
appropriate for the particular type of pipeline
transportation; the reasonableness of any proposed standards;
and the extent to which such standards will contribute to
public safety.
Rules adopted under this Act are subject to "The Illinois
Administrative Procedure Act", approved September 22, 1975, as
amended.
(Source: P.A. 83-333.)
Section 20. The Illinois Environmental Protection Act is
amended by adding Section 13.7 as follows:
(415 ILCS 5/13.7 new)
Sec. 13.7. Carbon dioxide sequestration sites.
(a) For purposes of this Section, the term "carbon dioxide
sequestration site" means a site or facility for which the

Agency has issued a permit for the underground injection of
carbon dioxide.
(b) The Agency shall inspect carbon dioxide sequestration
sites for compliance with this Act, rules adopted under this
Act, and permits issued by the Agency.
(c) If the Agency issues a seal order under Section 34 of
this Act in relation to a carbon dioxide sequestration site, or
if a civil action for an injunction to halt activity at a
carbon dioxide sequestration site is initiated under Section 43
of this Act at the request of the Agency, then the Agency shall
post notice of such action on its website.
(d) Persons seeking a permit or permit modification for the
underground injection of carbon dioxide shall be liable to the
Agency for all reasonable and documented costs incurred by the
Agency that are associated with review and issuance of the
permit, including, but not limited to, costs associated with
public hearings and the review of permit applications. Once a
permit is issued, the permittee shall be liable to the Agency
for all reasonable and documented costs incurred by the Agency
that are associated with inspections and other oversight of the
carbon dioxide sequestration site. Persons liable for costs
under this subsection (d) must pay the costs upon invoicing, or
other request or demand for payment, by the Agency. Costs for
which a person is liable under this subsection (d) are in
addition to any other fees, penalties, or other relief provided
under this Act or any other law.

Moneys collected under this subsection (d) shall be
deposited into the Environmental Protection Permit and
Inspection Fund established under Section 22.8 of this Act. The
Agency may adopt rules relating to the collection of costs due
under this subsection (d).
(e) The Agency shall not issue a permit or permit
modification for the underground injection of carbon dioxide
unless all costs for which the permittee is liable under
subsection (d) of this Section have been paid.
(f) No person shall fail or refuse to pay costs for which
the person is liable under subsection (d) of this Section.
Section 85. Rulemaking. The Illinois Environmental
Protection Agency, the Illinois Commerce Commission, the
Capital Development Board, and the Illinois Department of
Natural Resources shall have rulemaking authority to implement
the provisions of this amendatory Act of the 97th General
Assembly.
Section 90. Inseverability. The provisions of this Act are
mutually dependent and inseverable. If any provision is held
invalid, then this entire Act, including all new and amendatory
provisions, is invalid.