Public Act 094-0063
 		





SB0090 Enrolled
LRB094 07173 MKM 37328 b






    AN ACT concerning regulation.

 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:


 
    Section 5. The Public Utilities Act is amended  by changing 
Section 9-220 as follows:
 



    (220 ILCS 5/9-220)  (from Ch. 111 2/3, par. 9-220)



    Sec. 9-220. Rate changes based on changes in fuel costs. 

    (a) Notwithstanding the provisions of Section 9-201, the

Commission may authorize the increase or decrease of rates and 
charges
based upon changes in the cost of fuel used in the 
generation or production
of electric power, changes in the cost 
of purchased power, or changes in
the cost of purchased gas 
through the application of fuel adjustment
clauses or purchased 
gas adjustment clauses.  The Commission may also
authorize the 
increase or decrease of rates and charges based upon 
expenditures
or revenues resulting from the purchase or sale of 
emission allowances created
under the federal Clean Air Act 
Amendments of 1990,
through such fuel adjustment clauses, as a 
cost of fuel.  For the purposes of
this paragraph, cost of fuel 
used in the generation or production of electric
power shall 
include the amount of any fees paid by the utility for the

implementation and operation of a process for the 
desulfurization of the
flue gas when burning high sulfur coal 
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 gas utility may enter into a 20-year supply 
contract with any company for synthetic natural gas produced 
from coal through the gasification process if the company has 
commenced construction of a coal gasification facility by July 
1, 2008. The cost for the synthetic natural gas is reasonable 
and prudent and recoverable through the purchased gas 
adjustment clause for years one through 10 of the contract if: 
(i) the only coal used in the gasification process has high 
volatile bituminous rank and greater than 1.7 pounds of sulfur 
per million Btu content; (ii) at the time the contract term 
commences, the price per million Btu does not exceed $5 in 2004 
dollars, adjusted annually based on the change in the Annual 
Consumer Price Index for All Urban Consumers for the Midwest 
Region as published in April by the United States Department of 
Labor, Bureau of Labor Statistics (or a suitable Consumer Price 
Index calculation if this Consumer Price Index is not 
available) for the previous calendar year; provided that the 
price per million Btu shall not exceed $5.50 at any time during 
the contract; (iii) the utility's aggregate long-term supply 
contracts for the purchase of synthetic natural gas produced 
from coal through the gasification process does not exceed 25% 
of the annual system supply requirements of the utility at the 
time the contract is entered into; and (iv) the contract is 
entered into within one year after the effective date of this 
amendatory Act of the 94th General Assembly and terminates 20 
years after the commencement of the production of synthetic 
natural gas. The contract shall provide that if, at any time 
during years 11 through 20 of  the contract, the Commission 
determines that the cost for the synthetic natural gas under 
the contract is not reasonable and prudent, then the company 
shall reimburse the utility for the difference between the cost 
deemed reasonable and prudent by the Commission and the cost 
imposed under the contract.
    (i) If a gas utility or an affiliate of a gas utility has 
an ownership interest in any entity that produces or sells 
synthetic natural gas, Article VII of this Act shall apply.

(Source: P.A. 92-537, eff. 6-6-02.)

 

    Section 99. Effective date. This Act takes effect upon 
becoming law.