SB1184sam002 95TH GENERAL ASSEMBLY

Sen. Don Harmon

Filed: 3/23/2007

09500SB1184sam002 LRB095 10949 MJR 34530 a

AMENDMENT TO SENATE BILL 1184

AMENDMENT NO. ______. Amend Senate Bill 1184 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Affordable and Clean Energy Standards (ACES) Act.

Section 5. Findings. The General Assembly finds the following:

(1) Energy efficiency is a cost-effective resource that ensures affordable and reliable energy to Illinois consumers.

(2) It is desirable to obtain the environmental quality, public health, employment, economic development, rate stabilization, and fuel diversity benefits of developing new renewable energy resources for use in Illinois.

(3) The General Assembly has previously found and declared that the benefits of electricity from renewable energy resources accrue to the public at large, thus consumers and electric utilities and alternative retail electric suppliers share an interest in developing and using a significant level of these environmentally preferable resources in the State's electricity supply portfolio.

(4) Energy efficiency and renewable energy in Illinois are resources that are currently underutilized.

(5) Investment in energy efficiency and load management, combined with energy efficiency codes and standards, present important opportunities to increase Illinois' energy security, protect Illinois energy consumers from price volatility, preserve the State's natural resources and pursue an improved environment in Illinois.

(6) It serves the public interest to support public utility investments in cost-effective energy efficiency and load management by allowing recovery of costs for reasonable and prudently incurred expenses of energy efficiency, renewable energy, and load management programs.

(7) Investments in energy efficiency and implementation of utility energy efficiency programs dedicated to economically-disadvantaged Illinois residents, in addition to existing low-income weatherization programs managed by the State of Illinois, will reduce the burden of utility costs on low-income customers.

(8) Public utility investments in cost-effective energy efficiency, renewable energy, and load management, combined with the adoption of efficiency codes and standards, can provide significant reductions in greenhouse gas emissions, regulated air emissions, water consumption, and natural resource depletion and can avoid or delay the need for more expensive generation, transmission, and distribution infrastructure.

(9) It serves the public interest, the reliability of the electric transmission grid, and the natural gas infrastructure, as well as the State of Illinois' economy, to treat energy efficiency programs as a resource similar to any other supply side resource whose costs are eligible for recovery through rates.

(10) Investment in energy efficiency programs is a public good that public utility should be required to deliver cost-effectively in order to provide real and sustained relief to customers whose rising energy costs continue to threaten the economic well-being of residential customers, businesses, and industries in the State.

Section 10. Definitions.

"Commission" means the Illinois Commerce Commission.

"Cost-effective" means that the program being evaluated satisfies the total resource cost test as defined in this Section.

"Department" means the Department of Commerce and Economic Opportunity.

"Energy conservation" is any reduction in electric power consumption or natural gas consumption resulting from: (i) increased energy efficiency in the production, transmission, distribution, and customer end-use applications of electricity and natural gas and (ii) increased customer knowledge concerning the societal impacts of consumption. Such knowledge may be the result of economically efficient energy prices or other means of communication when prices are of the second best nature.

"Energy efficiency" means measures, including energy conservation measures, or programs that target consumer behavior, equipment or devices, or development and demonstration of breakthrough energy efficiency equipment or devices, that result in a decrease in consumption of electricity and natural gas without reducing the amount or quality of energy service.

"External costs" or "negative externalities" are costs imposed on society that are not directly borne by the producer in production and delivery activities. Due to imperfections in, or the absence of, markets, the producer's production, and pricing decisions do not account for these costs.

"Large customer" means a utility customer at a single, contiguous field, location, or facility, regardless of the number of meters at that field, location, or facility, with electricity consumption greater than 7,000 megawatt-hours per year or natural gas use greater than 5,000 therms per year.

"Load management" means measures or programs that target equipment or devices to result in decrease peak electricity demand or shift demand from peak to off-peak periods

"Municipality" means any city, village, or incorporated town.

"Planning costs" are the costs of evaluating the future demand for energy services and of evaluating alternative methods of satisfying that demand. Planning costs include, but are not be limited to, costs associated with: (i) econometric and end-use forecasting, (ii) identification and evaluation of alternative demand-side and supply-side resource options, and (iii) evaluation of externalities associated with alternative resources.

"Portfolio development costs" are costs of preparing a resource in a portfolio for prompt and timely acquisition. Portfolio development costs include, but are not be limited to, costs associated with: (i) negotiating contracts with competitively acquired resources, (ii) acquiring and holding resource options; and (iii) developing and maintaining the capability to rapidly acquire demand-side resources.

"Renewable energy resources" includes energy and renewable energy credits from wind, solar thermal energy, photovoltaic cells and panels, dedicated crops grown for energy production and organic waste biomass, hydropower that does not involve new construction or significant expansion of hydropower dams, and other such alternative sources of environmentally preferable energy. "Renewable energy resources" does not include energy from the incineration, burning or heating of waste wood, tires, garbage, general household, institutional and commercial waste, industrial lunchroom or office waste, landscape waste, or construction or demolition debris.

"Renewable energy credit" means a tradable credit that represents the environmental attributes of a certain amount of energy produced from a Renewable energy resource.

"Energy efficiency resources" means energy efficiency programs designed to assist customers to use energy more efficiently, reduce or control their consumption of energy, as measured in kilowatts, kilowatthours or therms, or otherwise control the level of their electric utility bills.

"Total resource cost test" means a standard that is met if, for an investment in energy efficiency or load management, 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's:

(1) benefits include, but are not limited to, avoided supply costs, reductions in transmission, distribution, generation, and capacity costs valued at marginal costs for the periods when load is reduced, avoided environmental damage, increased system reliability, and others deemed appropriate by the Commission;

(2) costs are program costs paid by both the utility and participant including, but not limited to, equipment costs, installation, net operation and maintenance costs or benefits, and program administration; and

(3) provisions include an oversight and evaluation process that shall periodically monitor and develop data on the cost effectiveness and actual productivity of demand side efficiency and conservation programs.

Section 15. Utility energy efficiency programs.

(a) It is the policy of the State that electric and natural gas utilities utilize cost-effective energy efficiency and load management investments in their energy resource portfolios.

(b) Electric utilities shall use energy efficiency resources to meet the following energy savings goals:

(1) 0.2% of total load to be saved in 2008;

(2) 0.4% of total load to be saved in 2009;

(3) 0.6% of total load to be saved in 2010;

(4) 0.8% of total load to be saved in 2011;

(5) 1% of total load to be saved in 2012; and

(6) 2% of total load to be saved in 2015 and each year thereafter.

(c) Natural gas utilities shall use energy efficiency resources to meet the following energy savings goals:

(1) 0.2% of total annual Mcf to be saved in 2008;

(2) 0.4% of total annual Mcf to be saved in 2009;

(3) 0.6% of total annual Mcf to be saved in 2010;

(4) 0.8% of total annual Mcf to be saved in 2011;

(5) 1% of total annual Mcf to be saved in 2012; and

(6) 2% of total annual Mcf to be saved in 2015 and each year thereafter.

(d) Notwithstanding the requirements of subsections (b) and (c) of this Section, an electric or natural gas utility may reduce the amount of energy efficiency resources it procures to meet energy savings goals in any single year by an amount necessary to limit the estimated average net increase to customers, due to this provision to be no more than 0.5% of customers' total electricity bills for the calendar year ending immediately prior to the procurement, with such limit increasing by 0.5% in each of the 4 years 2009 through 2011, for a maximum cap on the allowed estimated average increase due to the cost of these resources of 2.0%. No later than June 30, 2011 the Commission shall review the rate limitation and report to the General Assembly its findings as to whether the rate cap unduly constrains the procurement of energy efficiency resources that would be cost effective.

(e) Implementation of the energy efficiency programs under this Act shall be split between the utilities and the Department of Commerce and Economic Opportunity. Electric and natural gas utilities must implement programs accounting for 75% of the total energy efficiency program identified in each utility's energy efficiency plan. Electric and natural gas utilities shall administer aggressive energy savings incentive programs in a market-neutral, nondiscriminatory manner.

Each electric and natural gas utility shall provide, through market-based standard offer and other related programs, incentives sufficient for retail electric and natural gas customers and competitive energy service customers to acquire additional, direct cost-effective energy efficiency according to the goals set forth in this Plan.

The guidelines provide the utilities with policy and planning guidance. Each utility's plan shall be the result of that utility's unique planning process and judgment on how to meet the energy efficiency savings goals identified in this Act based on the best interests of consumers, the cost-effectiveness of program offerings, and the circumstances of the utility's service territory. The Department shall implement energy efficiency programs accounting for 25% of the total energy efficiency program budget identified in the utilities' energy efficiency plans. The Department shall focus on targeted market-transformation and educational programs that provide additional energy savings beyond the utility implemented programs.

(f) Within 3 months after the effective date of this Act, the Commission shall adopt rules specifying the procedure for electric and natural gas utilities to develop and submit an energy efficiency plan. Rules shall specify the process for coordination of energy efficiency program planning between the Department and the utilities. Within 3 months after adoption by the Commission of rules, and biennially thereafter, Illinois electric and natural gas utilities shall file an energy efficiency plan with the Commission. In submitting proposed energy efficiency program plans and funding levels to meet the savings goals adopted by this Act, the utility shall:

(1) Demonstrate that their proposed level of electric and natural gas energy efficiency program activities and funding is consistent with the adopted electric and natural gas savings goals.

(2) Present specific proposals for programs that support new building and appliance standards.

(3) Present estimates of the net short-term and long-term rate impacts and bill impacts associated with the proposed portfolio of programs designed to meet the adopted energy savings goals. The utilities shall work with Commission to develop a consistent format for presenting these estimates in their filings.

(4) Present a suite of energy efficiency programs targeted to households at or below 150% of the poverty level at a level proportionate to those households' share of total annual utility expenditures in Illinois.

(5) Demonstrate that their investments in energy efficiency are cost effective using the total resource cost test.

(6) Include a proposed cost recovery tariff mechanism to fund the proposed energy efficiency programs.

(g) The Commission shall require electric and natural gas utilities to aggressively implement cost-effective energy efficiency programs and utilities shall be eligible to recover the costs of investments in energy efficiency under the following conditions:

(1) A public utility that undertakes energy efficiency programs shall recover the costs of energy efficiency programs implemented after the effective date of this Act, if the utility complies with the energy efficiency plan process described in subsection (d) of this Section and in good faith implements the approved programs.

(2) A public utility that undertakes energy efficiency programs under the requirements of this Act shall be eligible to recover the costs of approved programs implemented after the effective date through an approved tariff rider.

(3) The tariff rider shall provide for the recovery, on a monthly basis or otherwise, of all reasonable costs of approved energy efficiency programs.

(4) The Commission may not arbitrarily limit cost recovery for cost-effective programs based on previous rate impact limits.

(h) No more than 1% of energy efficiency program revenue may be allocated for demonstration and deployment of breakthrough energy efficiency equipment and devices.

Section 20. Renewable portfolio standard.

(a) An electric utility shall procure or obtain renewable energy resources in amounts equal to at least the following percentages of the total electricity that it supplies to its Illinois customers: 3% by December 31, 2008; 4% by December 31, 2009; 5% by December 31, 2010; 6% by December 31, 2011; 7% by December 31, 2012; 8% by December 31, 2013; 9% by December 31, 2014; and 10% by December 31, 2015. It shall be the goal of the State to ensure that the percentage of renewable energy resources provided under this section continue to increase after 2015 by 1.5% per year to 25% by 2025. To the extent that it is available, at least 75% of the renewable energy resources used to meet these standards shall come from wind generation.

(b) For the purpose of this Section, the required procurement of renewable energy resources for a particular year shall be measured as a percentage of the actual amount of electricity (megawatthours) supplied by the electric utility in the calendar year ending immediately prior to the procurement.

(c) Notwithstanding the requirements of subsection (a), an electric utility may reduce the amount of electric energy procured under new contracts from renewable energy resources in any single year by an amount necessary to limit the estimated average net increase to customers, due to these contracts, to be no more than 0.5% of customers' total electricity bills for the calendar year ending immediately prior to the procurement, subject to adjustments for any known subsequent rate increases. Any reductions in one year shall be offset by additional procurement in the following years subject to the annual limitation in this Section, with such limit increasing by 0.5% in each of the 4 years 2009 through 2012, for a maximum cap on the allowed estimated average increase due to the cost of these resources of 2.5%. No later than June 30, 2012, the Commission shall review the rate limitation and report to the General Assembly its findings as to whether the rate cap unduly constrains the procurement of renewable energy resources that are cost effective.

(d) Renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in subsection (a) of this Section only if they are generated from facilities located in the State, provided that cost-effective renewable resources are available from such facilities. If it is necessary to achieve the goals of the program without exceeding the cost limit set forth in subsection (c) of this Section, renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in subsection (a) of this Section only if they are generated in facilities located in an area served by the regional transmission organization of which the utility is a member.

(e) The Department of Commerce and Economic Opportunity and other state officials shall attempt to work with public officials in directly adjacent states and other states currently in United States Environmental Protection Agency Region V to develop an agreement in which electric utilities in the State shall be allowed, after December 31, 2010, to count for the purpose of meeting the designated renewable energy standards set forth in subsection (a) of this Section some renewable energy resources generated in a directly adjacent state or in any state that is currently in United States Environmental Protection Agency Region V if that state has enacted renewable energy portfolio standards and that other state also allows renewable energy resources generated in the State to be counted towards meeting its statutory renewable energy standards on substantially the same basis. For the purposes of such an agreement, all renewable energy resources procured must meet the method of calculation set forth in this Act.

(f) Each electric utility shall report to the Commission on compliance with these standards by April 1 of each year, beginning in 2008.

(g) If an electric utility does not procure or obtain the full amount of renewable energy resources specified by the standards in subsection (a) of this Section, as modified by the limitations of subsection (c) of this Section, then the electric utility shall pay a penalty of $40 per megawatthour each year for any shortfall unless and until the utility makes sufficient purchases to meet the requirement. Provided, however, that, if the electric utility proves to the Commission that renewable energy resources are not available in sufficient quantities to meet the renewable energy standards set forth in subsection (a) of this Section, as modified by the limitations of subsection (c) of this Section, and, if the Commission finds that the electric utility has, in fact, proved that the renewable energy resources are not available in sufficient quantities, after notice and a hearing conducted in accordance with the Commission's rules of practice, then the Commission shall waive the penalty. Any penalty payment shall be deposited into the Renewable Energy Resources Trust Fund to be used by the Department of Commerce and Economic Opportunity for the sole purposes of supporting the actual development, construction, and utilization of renewable energy projects in the State.

(h) The Commission shall promulgate rules as necessary within 12 months after the effective date of this Act to assist in implementing this Section including, but not limited to, methods of procurement, accounting, tracking, and reporting in order to achieve the full objectives of this Section. The rules shall also provide for recovery of costs incurred and the pass through to customers of any savings achieved by electric utilities as a result of procuring or obtaining the renewable energy resources specified under subsection (a) of this Section. The rate elements and rates used for such cost recovery may be established by the electric utility, subject to the Commission's review and approval, outside the context of a general rate case.

(i) In connection with their compliance with the requirements of subsection (a) of this Section, electric utilities may enter into long-term contracts of up to 20 years in length with providers of renewable energy resources, and the costs or savings associated with those contracts shall be reflected in tariffed rates for the duration of those contracts.

(j) Nothing shall prohibit an electric utility from issuing a competitive solicitation for renewable energy resources in order to meet the standards of subsection (a) of this Section and from beginning to recover the associated costs in advance of the conclusion of the rulemaking referenced in subsection (h) of this Section, provided that such electric utility shall have first requested and received Commission approval for the design and conduct of such solicitation and the associated cost recovery methodology and tariff, which the Commission shall review and consider.

Section 905. The Energy Assistance Act is amended by changing Section 13 as follows:

(305 ILCS 20/13)

(Section scheduled to be repealed on December 31, 2007)

Sec. 13. Supplemental Low-Income Energy Assistance Fund.

(a) The Supplemental Low-Income Energy Assistance Fund is hereby created as a special fund in the State Treasury. The Supplemental Low-Income Energy Assistance Fund is authorized to receive moneys from voluntary donations from individuals, foundations, corporations, and other sources, moneys received pursuant to Section 17, and, by statutory deposit, the moneys collected pursuant to this Section. The Fund is also authorized to receive voluntary donations from individuals, foundations, corporations, and other sources, as well as contributions made in accordance with Section 507MM of the Illinois Income Tax Act. Subject to appropriation, the Department shall use moneys from the Supplemental Low-Income Energy Assistance Fund for payments to electric or gas public utilities, municipal electric or gas utilities, and electric cooperatives on behalf of their customers who are participants in the program authorized by Section 4 of this Act, for the provision of weatherization services and for administration of the Supplemental Low-Income Energy Assistance Fund. The yearly expenditures for weatherization may not exceed 10% of the amount collected during the year pursuant to this Section. The yearly administrative expenses of the Supplemental Low-Income Energy Assistance Fund may not exceed 10% of the amount collected during that year pursuant to this Section.

(b) Notwithstanding the provisions of Section 16-111 of the Public Utilities Act but subject to subsection (k) of this Section, each public utility, electric cooperative, as defined in Section 3.4 of the Electric Supplier Act, and municipal utility, as referenced in Section 3-105 of the Public Utilities Act, that is engaged in the delivery of electricity or the distribution of natural gas within the State of Illinois shall, effective January 1, 1998, assess each of its customer accounts a monthly Energy Assistance Charge for the Supplemental Low-Income Energy Assistance Fund. The delivering public utility, municipal electric or gas utility, or electric or gas cooperative for a self-assessing purchaser remains subject to the collection of the fee imposed by this Section. The monthly charge shall be as follows:

(1) $0.40 per month on each account for residential electric service;

(2) $0.40 per month on each account for residential gas service;

(3) $4 per month on each account for non-residential electric service which had less than 10 megawatts of peak demand during the previous calendar year;

(4) $4 per month on each account for non-residential gas service which had distributed to it less than 4,000,000 therms of gas during the previous calendar year;

(5) $300 per month on each account for non-residential electric service which had 10 megawatts or greater of peak demand during the previous calendar year; and

(6) $300 per month on each account for non-residential gas service which had 4,000,000 or more therms of gas distributed to it during the previous calendar year.

(c) For purposes of this Section:

(1) "residential electric service" means electric utility service for household purposes delivered to a dwelling of 2 or fewer units which is billed under a residential rate, or electric utility service for household purposes delivered to a dwelling unit or units which is billed under a residential rate and is registered by a separate meter for each dwelling unit;

(2) "residential gas service" means gas utility service for household purposes distributed to a dwelling of 2 or fewer units which is billed under a residential rate, or gas utility service for household purposes distributed to a dwelling unit or units which is billed under a residential rate and is registered by a separate meter for each dwelling unit;

(3) "non-residential electric service" means electric utility service which is not residential electric service; and

(4) "non-residential gas service" means gas utility service which is not residential gas service.

(d) At least 45 days prior to the date on which it must begin assessing Energy Assistance Charges, each public utility engaged in the delivery of electricity or the distribution of natural gas shall file with the Illinois Commerce Commission tariffs incorporating the Energy Assistance Charge in other charges stated in such tariffs.

(e) The Energy Assistance Charge assessed by electric and gas public utilities shall be considered a charge for public utility service.

(f) By the 20th day of the month following the month in which the charges imposed by the Section were collected, each public utility, municipal utility, and electric cooperative shall remit to the Department of Revenue all moneys received as payment of the Energy Assistance Charge on a return prescribed and furnished by the Department of Revenue showing such information as the Department of Revenue may reasonably require. If a customer makes a partial payment, a public utility, municipal utility, or electric cooperative may elect either: (i) to apply such partial payments first to amounts owed to the utility or cooperative for its services and then to payment for the Energy Assistance Charge or (ii) to apply such partial payments on a pro-rata basis between amounts owed to the utility or cooperative for its services and to payment for the Energy Assistance Charge.

(g) The Department of Revenue shall deposit into the Supplemental Low-Income Energy Assistance Fund all moneys remitted to it in accordance with subsection (f) of this Section.

(h) (Blank).

On or before December 31, 2002, the Department shall prepare a report for the General Assembly on the expenditure of funds appropriated from the Low-Income Energy Assistance Block Grant Fund for the program authorized under Section 4 of this Act.

(i) The Department of Revenue may establish such rules as it deems necessary to implement this Section.

(j) The Department of Healthcare and Family Services Economic Opportunity may establish such rules as it deems necessary to implement this Section.

(k) The charges imposed by this Section shall only apply to customers of municipal electric or gas utilities and electric or gas cooperatives if the municipal electric or gas utility or electric or gas cooperative makes an affirmative decision to impose the charge. If a municipal electric or gas utility or an electric cooperative makes an affirmative decision to impose the charge provided by this Section, the municipal electric or gas utility or electric cooperative shall inform the Department of Revenue in writing of such decision when it begins to impose the charge. If a municipal electric or gas utility or electric or gas cooperative does not assess this charge, the Department may not use funds from the Supplemental Low-Income Energy Assistance Fund to provide benefits to its customers under the program authorized by Section 4 of this Act.

In its use of federal funds under this Act, the Department may not cause a disproportionate share of those federal funds to benefit customers of systems which do not assess the charge provided by this Section.

This Section is repealed effective December 31, 2015 2007 unless renewed by action of the General Assembly. The General Assembly shall consider the results of the evaluations described in Section 8 in its deliberations.

(Source: P.A. 94-773, eff. 5-18-06; 94-793, eff. 5-19-06; 94-817, eff. 5-30-06; revised 8-3-06.)

Section 997. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 999. Effective date. This Act takes effect upon becoming law.".