96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3686

 

Introduced 2/11/2010, by Sen. Don Harmon

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 3855/1-10
20 ILCS 3855/1-56
20 ILCS 3855/1-75

    Amends the Illinois Power Agency Act. In provisions concerning the procurement of renewable energy resources, provides that at least 75% of the renewable energy resources shall come from wind generation and, in specified amounts by specified dates, of the renewable energy resources that must be derived from photovoltaics, at least 20% must come from large-scale distributed solar and at least 10% must come from small-scale distributed solar (rather than starting June 1, 2015, at least 6% of the renewable energy resources used to meet these standards shall come from solar photovoltaics). Provides that through June 1, 2016 (rather than June 1, 2011), renewable energy resources shall be counted for the purpose of meeting the renewable energy standards only if they are generated from facilities located in the State, provided that cost-effective renewable energy resources are available from those facilities. Provides that after June 1, 2016 (rather than June 1, 2011), cost-effective renewable energy resources located in Illinois and in states that adjoin Illinois may be counted towards compliance with specified standards. Effective immediately.


LRB096 20770 MJR 36521 b

 

 

A BILL FOR

 

SB3686 LRB096 20770 MJR 36521 b

1     AN ACT concerning State government.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Power Agency Act is amended by
5 changing Sections 1-10, 1-56, and 1-75 as follows:
 
6     (20 ILCS 3855/1-10)
7     Sec. 1-10. Definitions.
8     "Agency" means the Illinois Power Agency.
9     "Agency loan agreement" means any agreement pursuant to
10 which the Illinois Finance Authority agrees to loan the
11 proceeds of revenue bonds issued with respect to a project to
12 the Agency upon terms providing for loan repayment installments
13 at least sufficient to pay when due all principal of, interest
14 and premium, if any, on those revenue bonds, and providing for
15 maintenance, insurance, and other matters in respect of the
16 project.
17     "Authority" means the Illinois Finance Authority.
18     "Clean coal facility" means an electric generating
19 facility that uses primarily coal as a feedstock and that
20 captures and sequesters carbon emissions at the following
21 levels: at least 50% of the total carbon emissions that the
22 facility would otherwise emit if, at the time construction
23 commences, the facility is scheduled to commence operation

 

 

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1 before 2016, at least 70% of the total carbon emissions that
2 the facility would otherwise emit if, at the time construction
3 commences, the facility is scheduled to commence operation
4 during 2016 or 2017, and at least 90% of the total carbon
5 emissions that the facility would otherwise emit if, at the
6 time construction commences, the facility is scheduled to
7 commence operation after 2017. The power block of the clean
8 coal facility shall not exceed allowable emission rates for
9 sulfur dioxide, nitrogen oxides, carbon monoxide, particulates
10 and mercury for a natural gas-fired combined-cycle facility the
11 same size as and in the same location as the clean coal
12 facility at the time the clean coal facility obtains an
13 approved air permit. All coal used by a clean coal facility
14 shall have high volatile bituminous rank and greater than 1.7
15 pounds of sulfur per million btu content, unless the clean coal
16 facility does not use gasification technology and was operating
17 as a conventional coal-fired electric generating facility on
18 June 1, 2009 (the effective date of Public Act 95-1027).
19     "Clean coal SNG facility" means a facility that uses a
20 gasification process to produce substitute natural gas, that
21 sequesters at least 90% of the total carbon emissions that the
22 facility would otherwise emit and that uses petroleum coke or
23 coal as a feedstock, with all such coal having a high
24 bituminous rank and greater than 1.7 pounds of sulfur per
25 million btu content.
26     "Commission" means the Illinois Commerce Commission.

 

 

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1     "Costs incurred in connection with the development and
2 construction of a facility" means:
3         (1) the cost of acquisition of all real property and
4     improvements in connection therewith and equipment and
5     other property, rights, and easements acquired that are
6     deemed necessary for the operation and maintenance of the
7     facility;
8         (2) financing costs with respect to bonds, notes, and
9     other evidences of indebtedness of the Agency;
10         (3) all origination, commitment, utilization,
11     facility, placement, underwriting, syndication, credit
12     enhancement, and rating agency fees;
13         (4) engineering, design, procurement, consulting,
14     legal, accounting, title insurance, survey, appraisal,
15     escrow, trustee, collateral agency, interest rate hedging,
16     interest rate swap, capitalized interest and other
17     financing costs, and other expenses for professional
18     services; and
19         (5) the costs of plans, specifications, site study and
20     investigation, installation, surveys, other Agency costs
21     and estimates of costs, and other expenses necessary or
22     incidental to determining the feasibility of any project,
23     together with such other expenses as may be necessary or
24     incidental to the financing, insuring, acquisition, and
25     construction of a specific project and placing that project
26     in operation.

 

 

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1     "Department" means the Department of Commerce and Economic
2 Opportunity.
3     "Director" means the Director of the Illinois Power Agency.
4     "Demand-response" means measures that decrease peak
5 electricity demand or shift demand from peak to off-peak
6 periods.
7     "Energy efficiency" means measures that reduce the amount
8 of electricity or natural gas required to achieve a given end
9 use.
10     "Electric utility" has the same definition as found in
11 Section 16-102 of the Public Utilities Act.
12     "Facility" means an electric generating unit or a
13 co-generating unit that produces electricity along with
14 related equipment necessary to connect the facility to an
15 electric transmission or distribution system.
16     "Governmental aggregator" means one or more units of local
17 government that individually or collectively procure
18 electricity to serve residential retail electrical loads
19 located within its or their jurisdiction.
20     "Local government" means a unit of local government as
21 defined in Article VII of Section 1 of the Illinois
22 Constitution.
23     "Large-scale distributed solar" means photovoltaic systems
24 that (i) have a generation capacity greater than 10 kilowatts
25 and (ii) are located on the customer's side of customer's
26 electric meter.

 

 

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1     "Municipality" means a city, village, or incorporated
2 town.
3     "Person" means any natural person, firm, partnership,
4 corporation, either domestic or foreign, company, association,
5 limited liability company, joint stock company, or association
6 and includes any trustee, receiver, assignee, or personal
7 representative thereof.
8     "Project" means the planning, bidding, and construction of
9 a facility.
10     "Public utility" has the same definition as found in
11 Section 3-105 of the Public Utilities Act.
12     "Real property" means any interest in land together with
13 all structures, fixtures, and improvements thereon, including
14 lands under water and riparian rights, any easements,
15 covenants, licenses, leases, rights-of-way, uses, and other
16 interests, together with any liens, judgments, mortgages, or
17 other claims or security interests related to real property.
18     "Renewable energy credit" means a tradable credit that
19 represents the environmental attributes of a certain amount of
20 energy produced from a renewable energy resource.
21     "Renewable energy resources" includes energy and its
22 associated renewable energy credit or renewable energy credits
23 from wind, solar thermal energy, photovoltaic cells and panels,
24 biodiesel, crops and untreated and unadulterated organic waste
25 biomass, tree waste, hydropower that does not involve new
26 construction or significant expansion of hydropower dams, and

 

 

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1 other alternative sources of environmentally preferable
2 energy. For purposes of this Act, landfill gas produced in the
3 State is considered a renewable energy resource. "Renewable
4 energy resources" does not include the incineration or burning
5 of tires, garbage, general household, institutional, and
6 commercial waste, industrial lunchroom or office waste,
7 landscape waste other than tree waste, railroad crossties,
8 utility poles, or construction or demolition debris, other than
9 untreated and unadulterated waste wood.
10     "Small-scale distributed solar" means photovoltaic systems
11 that (i) have a generation capacity of 10 kilowatts or less and
12 (ii) are located on the customer's side of customer's electric
13 meter.
14     "Revenue bond" means any bond, note, or other evidence of
15 indebtedness issued by the Authority, the principal and
16 interest of which is payable solely from revenues or income
17 derived from any project or activity of the Agency.
18     "Sequester" means permanent storage of carbon dioxide by
19 injecting it into a saline aquifer, a depleted gas reservoir,
20 or an oil reservoir, directly or through an enhanced oil
21 recovery process that may involve intermediate storage in a
22 salt dome.
23     "Servicing agreement" means (i) in the case of an electric
24 utility, an agreement between the owner of a clean coal
25 facility and such electric utility, which agreement shall have
26 terms and conditions meeting the requirements of paragraph (3)

 

 

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1 of subsection (d) of Section 1-75, and (ii) in the case of an
2 alternative retail electric supplier, an agreement between the
3 owner of a clean coal facility and such alternative retail
4 electric supplier, which agreement shall have terms and
5 conditions meeting the requirements of Section 16-115(d)(5) of
6 the Public Utilities Act.
7     "Substitute natural gas" or "SNG" means a gas manufactured
8 by gasification of hydrocarbon feedstock, which is
9 substantially interchangeable in use and distribution with
10 conventional natural gas.
11     "Total resource cost test" or "TRC test" means a standard
12 that is met if, for an investment in energy efficiency or
13 demand-response measures, the benefit-cost ratio is greater
14 than one. The benefit-cost ratio is the ratio of the net
15 present value of the total benefits of the program to the net
16 present value of the total costs as calculated over the
17 lifetime of the measures. A total resource cost test compares
18 the sum of avoided electric utility costs, representing the
19 benefits that accrue to the system and the participant in the
20 delivery of those efficiency measures, as well as other
21 quantifiable societal benefits, including avoided natural gas
22 utility costs, to the sum of all incremental costs of end-use
23 measures that are implemented due to the program (including
24 both utility and participant contributions), plus costs to
25 administer, deliver, and evaluate each demand-side program, to
26 quantify the net savings obtained by substituting the

 

 

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1 demand-side program for supply resources. In calculating
2 avoided costs of power and energy that an electric utility
3 would otherwise have had to acquire, reasonable estimates shall
4 be included of financial costs likely to be imposed by future
5 regulations and legislation on emissions of greenhouse gases.
6 (Source: P.A. 95-481, eff. 8-28-07; 95-913, eff. 1-1-09;
7 95-1027, eff. 6-1-09; 96-33, eff. 7-10-09; 96-159, eff.
8 8-10-09; 96-784, eff. 8-28-09; revised 9-15-09.)
 
9     (20 ILCS 3855/1-56)
10     Sec. 1-56. Illinois Power Agency Renewable Energy
11 Resources Fund.
12     (a) The Illinois Power Agency Renewable Energy Resources
13 Fund is created as a special fund in the State treasury.
14     (b) The Illinois Power Agency Renewable Energy Resources
15 Fund shall be administered by the Agency to procure renewable
16 energy resources. Prior to June 1, 2016 2011, resources
17 procured pursuant to this Section shall be procured from
18 facilities located in Illinois, provided the resources are
19 available from those facilities. If resources are not available
20 in Illinois, then they shall be procured in states that adjoin
21 Illinois. If resources are not available in Illinois or in
22 states that adjoin Illinois, then they may be purchased
23 elsewhere. Beginning June 1, 2016 2011, resources procured
24 pursuant to this Section shall be procured from facilities
25 located in Illinois or states that adjoin Illinois. If

 

 

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1 resources are not available in Illinois or in states that
2 adjoin Illinois, then they may be procured elsewhere. To the
3 extent available, at least 75% of these renewable energy
4 resources shall come from wind generation. and, Of the
5 renewable energy resources that must be derived from
6 photovoltaics under this subsection (b), (0.5% by June 1, 2012,
7 1.5% by June 1, 2013, 3% by June 1, 2014, and 6% by June 15 and
8 each year thereafter) at least 20% must come from large-scale
9 distributed solar and at least 10% must come from small-scale
10 distributed solar starting June 1, 2015, at least 6% of the
11 renewable energy resources used to meet these standards shall
12 come from solar photovoltaics.
13     (c) The Agency shall procure renewable energy resources at
14 least once each year in conjunction with a procurement event
15 for electric utilities required to comply with Section 1-75 of
16 the Act and shall, whenever possible, enter into long-term
17 contracts.
18     (d) The price paid to procure renewable energy credits
19 using monies from the Illinois Power Agency Renewable Energy
20 Resources Fund shall not exceed the winning bid prices paid for
21 like resources procured for electric utilities required to
22 comply with Section 1-75 of this Act.
23     (e) All renewable energy credits procured using monies from
24 the Illinois Power Agency Renewable Energy Resources Fund shall
25 be permanently retired.
26     (f) The procurement process described in this Section is

 

 

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1 exempt from the requirements of the Illinois Procurement Code,
2 pursuant to Section 20-10 of that Code.
3     (g) All disbursements from the Illinois Power Agency
4 Renewable Energy Resources Fund shall be made only upon
5 warrants of the Comptroller drawn upon the Treasurer as
6 custodian of the Fund upon vouchers signed by the Director or
7 by the person or persons designated by the Director for that
8 purpose. The Comptroller is authorized to draw the warrant upon
9 vouchers so signed. The Treasurer shall accept all warrants so
10 signed and shall be released from liability for all payments
11 made on those warrants.
12     (h) The Illinois Power Agency Renewable Energy Resources
13 Fund shall not be subject to sweeps, administrative charges, or
14 chargebacks, including, but not limited to, those authorized
15 under Section 8h of the State Finance Act, that would in any
16 way result in the transfer of any funds from this Fund to any
17 other fund of this State or in having any such funds utilized
18 for any purpose other than the express purposes set forth in
19 this Section.
20 (Source: P.A. 96-159, eff. 8-10-09.)
 
21     (20 ILCS 3855/1-75)
22     Sec. 1-75. Planning and Procurement Bureau. The Planning
23 and Procurement Bureau has the following duties and
24 responsibilities:
25         (a) The Planning and Procurement Bureau shall each

 

 

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1     year, beginning in 2008, develop procurement plans and
2     conduct competitive procurement processes in accordance
3     with the requirements of Section 16-111.5 of the Public
4     Utilities Act for the eligible retail customers of electric
5     utilities that on December 31, 2005 provided electric
6     service to at least 100,000 customers in Illinois. For the
7     purposes of this Section, the term "eligible retail
8     customers" has the same definition as found in Section
9     16-111.5(a) of the Public Utilities Act.
10             (1) The Agency shall each year, beginning in 2008,
11         as needed, issue a request for qualifications for
12         experts or expert consulting firms to develop the
13         procurement plans in accordance with Section 16-111.5
14         of the Public Utilities Act. In order to qualify an
15         expert or expert consulting firm must have:
16                 (A) direct previous experience assembling
17             large-scale power supply plans or portfolios for
18             end-use customers;
19                 (B) an advanced degree in economics,
20             mathematics, engineering, risk management, or a
21             related area of study;
22                 (C) 10 years of experience in the electricity
23             sector, including managing supply risk;
24                 (D) expertise in wholesale electricity market
25             rules, including those established by the Federal
26             Energy Regulatory Commission and regional

 

 

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1             transmission organizations;
2                 (E) expertise in credit protocols and
3             familiarity with contract protocols;
4                 (F) adequate resources to perform and fulfill
5             the required functions and responsibilities; and
6                 (G) the absence of a conflict of interest and
7             inappropriate bias for or against potential
8             bidders or the affected electric utilities.
9             (2) The Agency shall each year, as needed, issue a
10         request for qualifications for a procurement
11         administrator to conduct the competitive procurement
12         processes in accordance with Section 16-111.5 of the
13         Public Utilities Act. In order to qualify an expert or
14         expert consulting firm must have:
15                 (A) direct previous experience administering a
16             large-scale competitive procurement process;
17                 (B) an advanced degree in economics,
18             mathematics, engineering, or a related area of
19             study;
20                 (C) 10 years of experience in the electricity
21             sector, including risk management experience;
22                 (D) expertise in wholesale electricity market
23             rules, including those established by the Federal
24             Energy Regulatory Commission and regional
25             transmission organizations;
26                 (E) expertise in credit and contract

 

 

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1             protocols;
2                 (F) adequate resources to perform and fulfill
3             the required functions and responsibilities; and
4                 (G) the absence of a conflict of interest and
5             inappropriate bias for or against potential
6             bidders or the affected electric utilities.
7             (3) The Agency shall provide affected utilities
8         and other interested parties with the lists of
9         qualified experts or expert consulting firms
10         identified through the request for qualifications
11         processes that are under consideration to develop the
12         procurement plans and to serve as the procurement
13         administrator. The Agency shall also provide each
14         qualified expert's or expert consulting firm's
15         response to the request for qualifications. All
16         information provided under this subparagraph shall
17         also be provided to the Commission. The Agency may
18         provide by rule for fees associated with supplying the
19         information to utilities and other interested parties.
20         These parties shall, within 5 business days, notify the
21         Agency in writing if they object to any experts or
22         expert consulting firms on the lists. Objections shall
23         be based on:
24                 (A) failure to satisfy qualification criteria;
25                 (B) identification of a conflict of interest;
26             or

 

 

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1                 (C) evidence of inappropriate bias for or
2             against potential bidders or the affected
3             utilities.
4             The Agency shall remove experts or expert
5         consulting firms from the lists within 10 days if there
6         is a reasonable basis for an objection and provide the
7         updated lists to the affected utilities and other
8         interested parties. If the Agency fails to remove an
9         expert or expert consulting firm from a list, an
10         objecting party may seek review by the Commission
11         within 5 days thereafter by filing a petition, and the
12         Commission shall render a ruling on the petition within
13         10 days. There is no right of appeal of the
14         Commission's ruling.
15             (4) The Agency shall issue requests for proposals
16         to the qualified experts or expert consulting firms to
17         develop a procurement plan for the affected utilities
18         and to serve as procurement administrator.
19             (5) The Agency shall select an expert or expert
20         consulting firm to develop procurement plans based on
21         the proposals submitted and shall award one-year
22         contracts to those selected with an option for the
23         Agency for a one-year renewal.
24             (6) The Agency shall select an expert or expert
25         consulting firm, with approval of the Commission, to
26         serve as procurement administrator based on the

 

 

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1         proposals submitted. If the Commission rejects, within
2         5 days, the Agency's selection, the Agency shall submit
3         another recommendation within 3 days based on the
4         proposals submitted. The Agency shall award a one-year
5         contract to the expert or expert consulting firm so
6         selected with Commission approval with an option for
7         the Agency for a one-year renewal.
8         (b) The experts or expert consulting firms retained by
9     the Agency shall, as appropriate, prepare procurement
10     plans, and conduct a competitive procurement process as
11     prescribed in Section 16-111.5 of the Public Utilities Act,
12     to ensure adequate, reliable, affordable, efficient, and
13     environmentally sustainable electric service at the lowest
14     total cost over time, taking into account any benefits of
15     price stability, for eligible retail customers of electric
16     utilities that on December 31, 2005 provided electric
17     service to at least 100,000 customers in the State of
18     Illinois.
19         (c) Renewable portfolio standard.
20             (1) The procurement plans shall include
21         cost-effective renewable energy resources. A minimum
22         percentage of each utility's total supply to serve the
23         load of eligible retail customers, as defined in
24         Section 16-111.5(a) of the Public Utilities Act,
25         procured for each of the following years shall be
26         generated from cost-effective renewable energy

 

 

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1         resources: at least 2% by June 1, 2008; at least 4% by
2         June 1, 2009; at least 5% by June 1, 2010; at least 6%
3         by June 1, 2011; at least 7% by June 1, 2012; at least
4         8% by June 1, 2013; at least 9% by June 1, 2014; at
5         least 10% by June 1, 2015; and increasing by at least
6         1.5% each year thereafter to at least 25% by June 1,
7         2025. To the extent that it is available, at least 75%
8         of the renewable energy resources used to meet these
9         standards shall come from wind generation and,
10         beginning on June 1, 2011 2015, at least the following
11         percentages 6% of the renewable energy resources used
12         to meet these standards shall come from photovoltaics:
13         0.5% by June 1, 2012, 1.5% by June 1, 2013, 3% by June
14         1, 2014, and 6% by June 1, 2015 and each year
15         thereafter. Of the renewable energy resources that
16         must be derived from photovoltaics under this
17         subsection (c), at least 20% must come from large-scale
18         distributed solar and at least 10% must come from
19         small-scale distributed solar. For purposes of this
20         subsection (c), "cost-effective" means that the costs
21         of procuring renewable energy resources do not cause
22         the limit stated in paragraph (2) of this subsection
23         (c) to be exceeded and do not exceed benchmarks based
24         on market prices for renewable energy resources in the
25         region, which shall be developed by the procurement
26         administrator, in consultation with the Commission

 

 

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1         staff, Agency staff, and the procurement monitor and
2         shall be subject to Commission review and approval.
3             (2) For purposes of this subsection (c), the
4         required procurement of cost-effective renewable
5         energy resources for a particular year shall be
6         measured as a percentage of the actual amount of
7         electricity (megawatt-hours) supplied by the electric
8         utility to eligible retail customers in the planning
9         year ending immediately prior to the procurement. For
10         purposes of this subsection (c), the amount paid per
11         kilowatthour means the total amount paid for electric
12         service expressed on a per kilowatthour basis. For
13         purposes of this subsection (c), the total amount paid
14         for electric service includes without limitation
15         amounts paid for supply, transmission, distribution,
16         surcharges, and add-on taxes.
17             Notwithstanding the requirements of this
18         subsection (c), the total of renewable energy
19         resources procured pursuant to the procurement plan
20         for any single year shall be reduced by an amount
21         necessary to limit the annual estimated average net
22         increase due to the costs of these resources included
23         in the amounts paid by eligible retail customers in
24         connection with electric service to:
25                 (A) in 2008, no more than 0.5% of the amount
26             paid per kilowatthour by those customers during

 

 

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1             the year ending May 31, 2007;
2                 (B) in 2009, the greater of an additional 0.5%
3             of the amount paid per kilowatthour by those
4             customers during the year ending May 31, 2008 or 1%
5             of the amount paid per kilowatthour by those
6             customers during the year ending May 31, 2007;
7                 (C) in 2010, the greater of an additional 0.5%
8             of the amount paid per kilowatthour by those
9             customers during the year ending May 31, 2009 or
10             1.5% of the amount paid per kilowatthour by those
11             customers during the year ending May 31, 2007;
12                 (D) in 2011, the greater of an additional 0.5%
13             of the amount paid per kilowatthour by those
14             customers during the year ending May 31, 2010 or 2%
15             of the amount paid per kilowatthour by those
16             customers during the year ending May 31, 2007; and
17                 (E) thereafter, the amount of renewable energy
18             resources procured pursuant to the procurement
19             plan for any single year shall be reduced by an
20             amount necessary to limit the estimated average
21             net increase due to the cost of these resources
22             included in the amounts paid by eligible retail
23             customers in connection with electric service to
24             no more than the greater of 2.015% of the amount
25             paid per kilowatthour by those customers during
26             the year ending May 31, 2007 or the incremental

 

 

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1             amount per kilowatthour paid for these resources
2             in 2011.
3             No later than June 30, 2011, the Commission shall
4         review the limitation on the amount of renewable energy
5         resources procured pursuant to this subsection (c) and
6         report to the General Assembly its findings as to
7         whether that limitation unduly constrains the
8         procurement of cost-effective renewable energy
9         resources.
10             (3) Through June 1, 2016 2011, renewable energy
11         resources shall be counted for the purpose of meeting
12         the renewable energy standards set forth in paragraph
13         (1) of this subsection (c) only if they are generated
14         from facilities located in the State, provided that
15         cost-effective renewable energy resources are
16         available from those facilities. If those
17         cost-effective resources are not available in
18         Illinois, they shall be procured in states that adjoin
19         Illinois and may be counted towards compliance. If
20         those cost-effective resources are not available in
21         Illinois or in states that adjoin Illinois, they shall
22         be purchased elsewhere and shall be counted towards
23         compliance. After June 1, 2016 2011, cost-effective
24         renewable energy resources located in Illinois and in
25         states that adjoin Illinois may be counted towards
26         compliance with the standards set forth in paragraph

 

 

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1         (1) of this subsection (c). If those cost-effective
2         resources are not available in Illinois or in states
3         that adjoin Illinois, they shall be purchased
4         elsewhere and shall be counted towards compliance.
5             (4) The electric utility shall retire all
6         renewable energy credits used to comply with the
7         standard.
8             (5) Beginning with the year commencing June 1,
9         2010, an electric utility subject to this subsection
10         (c) shall apply the lesser of the maximum alternative
11         compliance payment rate or the most recent estimated
12         alternative compliance payment rate for its service
13         territory for the corresponding compliance period,
14         established pursuant to subsection (d) of Section
15         16-115D of the Public Utilities Act to its retail
16         customers that take service pursuant to the electric
17         utility's hourly pricing tariff or tariffs. The
18         electric utility shall retain all amounts collected as
19         a result of the application of the alternative
20         compliance payment rate or rates to such customers,
21         and, beginning in 2011, the utility shall include in
22         the information provided under item (1) of subsection
23         (d) of Section 16-111.5 of the Public Utilities Act the
24         amounts collected under the alternative compliance
25         payment rate or rates for the prior year ending May 31.
26         Notwithstanding any limitation on the procurement of

 

 

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1         renewable energy resources imposed by item (2) of this
2         subsection (c), the Agency shall increase its spending
3         on the purchase of renewable energy resources to be
4         procured by the electric utility for the next plan year
5         by an amount equal to the amounts collected by the
6         utility under the alternative compliance payment rate
7         or rates in the prior year ending May 31.
8     (d) Clean coal portfolio standard.
9         (1) The procurement plans shall include electricity
10     generated using clean coal. Each utility shall enter into
11     one or more sourcing agreements with the initial clean coal
12     facility, as provided in paragraph (3) of this subsection
13     (d), covering electricity generated by the initial clean
14     coal facility representing at least 5% of each utility's
15     total supply to serve the load of eligible retail customers
16     in 2015 and each year thereafter, as described in paragraph
17     (3) of this subsection (d), subject to the limits specified
18     in paragraph (2) of this subsection (d). It is the goal of
19     the State that by January 1, 2025, 25% of the electricity
20     used in the State shall be generated by cost-effective
21     clean coal facilities. For purposes of this subsection (d),
22     "cost-effective" means that the expenditures pursuant to
23     such sourcing agreements do not cause the limit stated in
24     paragraph (2) of this subsection (d) to be exceeded and do
25     not exceed cost-based benchmarks, which shall be developed
26     to assess all expenditures pursuant to such sourcing

 

 

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1     agreements covering electricity generated by clean coal
2     facilities, other than the initial clean coal facility, by
3     the procurement administrator, in consultation with the
4     Commission staff, Agency staff, and the procurement
5     monitor and shall be subject to Commission review and
6     approval.
7             (A) A utility party to a sourcing agreement shall
8         immediately retire any emission credits that it
9         receives in connection with the electricity covered by
10         such agreement.
11             (B) Utilities shall maintain adequate records
12         documenting the purchases under the sourcing agreement
13         to comply with this subsection (d) and shall file an
14         accounting with the load forecast that must be filed
15         with the Agency by July 15 of each year, in accordance
16         with subsection (d) of Section 16-111.5 of the Public
17         Utilities Act.
18             (C) A utility shall be deemed to have complied with
19         the clean coal portfolio standard specified in this
20         subsection (d) if the utility enters into a sourcing
21         agreement as required by this subsection (d).
22         (2) For purposes of this subsection (d), the required
23     execution of sourcing agreements with the initial clean
24     coal facility for a particular year shall be measured as a
25     percentage of the actual amount of electricity
26     (megawatt-hours) supplied by the electric utility to

 

 

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1     eligible retail customers in the planning year ending
2     immediately prior to the agreement's execution. For
3     purposes of this subsection (d), the amount paid per
4     kilowatthour means the total amount paid for electric
5     service expressed on a per kilowatthour basis. For purposes
6     of this subsection (d), the total amount paid for electric
7     service includes without limitation amounts paid for
8     supply, transmission, distribution, surcharges and add-on
9     taxes.
10         Notwithstanding the requirements of this subsection
11     (d), the total amount paid under sourcing agreements with
12     clean coal facilities pursuant to the procurement plan for
13     any given year shall be reduced by an amount necessary to
14     limit the annual estimated average net increase due to the
15     costs of these resources included in the amounts paid by
16     eligible retail customers in connection with electric
17     service to:
18                 (A) in 2010, no more than 0.5% of the amount
19             paid per kilowatthour by those customers during
20             the year ending May 31, 2009;
21                 (B) in 2011, the greater of an additional 0.5%
22             of the amount paid per kilowatthour by those
23             customers during the year ending May 31, 2010 or 1%
24             of the amount paid per kilowatthour by those
25             customers during the year ending May 31, 2009;
26                 (C) in 2012, the greater of an additional 0.5%

 

 

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1             of the amount paid per kilowatthour by those
2             customers during the year ending May 31, 2011 or
3             1.5% of the amount paid per kilowatthour by those
4             customers during the year ending May 31, 2009;
5                 (D) in 2013, the greater of an additional 0.5%
6             of the amount paid per kilowatthour by those
7             customers during the year ending May 31, 2012 or 2%
8             of the amount paid per kilowatthour by those
9             customers during the year ending May 31, 2009; and
10                 (E) thereafter, the total amount paid under
11             sourcing agreements with clean coal facilities
12             pursuant to the procurement plan for any single
13             year shall be reduced by an amount necessary to
14             limit the estimated average net increase due to the
15             cost of these resources included in the amounts
16             paid by eligible retail customers in connection
17             with electric service to no more than the greater
18             of (i) 2.015% of the amount paid per kilowatthour
19             by those customers during the year ending May 31,
20             2009 or (ii) the incremental amount per
21             kilowatthour paid for these resources in 2013.
22             These requirements may be altered only as provided
23             by statute. No later than June 30, 2015, the
24             Commission shall review the limitation on the
25             total amount paid under sourcing agreements, if
26             any, with clean coal facilities pursuant to this

 

 

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1             subsection (d) and report to the General Assembly
2             its findings as to whether that limitation unduly
3             constrains the amount of electricity generated by
4             cost-effective clean coal facilities that is
5             covered by sourcing agreements.
6         (3) Initial clean coal facility. In order to promote
7     development of clean coal facilities in Illinois, each
8     electric utility subject to this Section shall execute a
9     sourcing agreement to source electricity from a proposed
10     clean coal facility in Illinois (the "initial clean coal
11     facility") that will have a nameplate capacity of at least
12     500 MW when commercial operation commences, that has a
13     final Clean Air Act permit on the effective date of this
14     amendatory Act of the 95th General Assembly, and that will
15     meet the definition of clean coal facility in Section 1-10
16     of this Act when commercial operation commences. The
17     sourcing agreements with this initial clean coal facility
18     shall be subject to both approval of the initial clean coal
19     facility by the General Assembly and satisfaction of the
20     requirements of paragraph (4) of this subsection (d) and
21     shall be executed within 90 days after any such approval by
22     the General Assembly. The Agency and the Commission shall
23     have authority to inspect all books and records associated
24     with the initial clean coal facility during the term of
25     such a sourcing agreement. A utility's sourcing agreement
26     for electricity produced by the initial clean coal facility

 

 

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1     shall include:
2             (A) a formula contractual price (the "contract
3         price") approved pursuant to paragraph (4) of this
4         subsection (d), which shall:
5                 (i) be determined using a cost of service
6             methodology employing either a level or deferred
7             capital recovery component, based on a capital
8             structure consisting of 45% equity and 55% debt,
9             and a return on equity as may be approved by the
10             Federal Energy Regulatory Commission, which in any
11             case may not exceed the lower of 11.5% or the rate
12             of return approved by the General Assembly
13             pursuant to paragraph (4) of this subsection (d);
14             and
15                 (ii) provide that all miscellaneous net
16             revenue, including but not limited to net revenue
17             from the sale of emission allowances, if any,
18             substitute natural gas, if any, grants or other
19             support provided by the State of Illinois or the
20             United States Government, firm transmission
21             rights, if any, by-products produced by the
22             facility, energy or capacity derived from the
23             facility and not covered by a sourcing agreement
24             pursuant to paragraph (3) of this subsection (d) or
25             item (5) of subsection (d) of Section 16-115 of the
26             Public Utilities Act, whether generated from the

 

 

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1             synthesis gas derived from coal, from SNG, or from
2             natural gas, shall be credited against the revenue
3             requirement for this initial clean coal facility;
4             (B) power purchase provisions, which shall:
5                 (i) provide that the utility party to such
6             sourcing agreement shall pay the contract price
7             for electricity delivered under such sourcing
8             agreement;
9                 (ii) require delivery of electricity to the
10             regional transmission organization market of the
11             utility that is party to such sourcing agreement;
12                 (iii) require the utility party to such
13             sourcing agreement to buy from the initial clean
14             coal facility in each hour an amount of energy
15             equal to all clean coal energy made available from
16             the initial clean coal facility during such hour
17             times a fraction, the numerator of which is such
18             utility's retail market sales of electricity
19             (expressed in kilowatthours sold) in the State
20             during the prior calendar month and the
21             denominator of which is the total retail market
22             sales of electricity (expressed in kilowatthours
23             sold) in the State by utilities during such prior
24             month and the sales of electricity (expressed in
25             kilowatthours sold) in the State by alternative
26             retail electric suppliers during such prior month

 

 

SB3686 - 28 - LRB096 20770 MJR 36521 b

1             that are subject to the requirements of this
2             subsection (d) and paragraph (5) of subsection (d)
3             of Section 16-115 of the Public Utilities Act,
4             provided that the amount purchased by the utility
5             in any year will be limited by paragraph (2) of
6             this subsection (d); and
7                 (iv) be considered pre-existing contracts in
8             such utility's procurement plans for eligible
9             retail customers;
10             (C) contract for differences provisions, which
11         shall:
12                 (i) require the utility party to such sourcing
13             agreement to contract with the initial clean coal
14             facility in each hour with respect to an amount of
15             energy equal to all clean coal energy made
16             available from the initial clean coal facility
17             during such hour times a fraction, the numerator of
18             which is such utility's retail market sales of
19             electricity (expressed in kilowatthours sold) in
20             the utility's service territory in the State
21             during the prior calendar month and the
22             denominator of which is the total retail market
23             sales of electricity (expressed in kilowatthours
24             sold) in the State by utilities during such prior
25             month and the sales of electricity (expressed in
26             kilowatthours sold) in the State by alternative

 

 

SB3686 - 29 - LRB096 20770 MJR 36521 b

1             retail electric suppliers during such prior month
2             that are subject to the requirements of this
3             subsection (d) and paragraph (5) of subsection (d)
4             of Section 16-115 of the Public Utilities Act,
5             provided that the amount paid by the utility in any
6             year will be limited by paragraph (2) of this
7             subsection (d);
8                 (ii) provide that the utility's payment
9             obligation in respect of the quantity of
10             electricity determined pursuant to the preceding
11             clause (i) shall be limited to an amount equal to
12             (1) the difference between the contract price
13             determined pursuant to subparagraph (A) of
14             paragraph (3) of this subsection (d) and the
15             day-ahead price for electricity delivered to the
16             regional transmission organization market of the
17             utility that is party to such sourcing agreement
18             (or any successor delivery point at which such
19             utility's supply obligations are financially
20             settled on an hourly basis) (the "reference
21             price") on the day preceding the day on which the
22             electricity is delivered to the initial clean coal
23             facility busbar, multiplied by (2) the quantity of
24             electricity determined pursuant to the preceding
25             clause (i); and
26                 (iii) not require the utility to take physical

 

 

SB3686 - 30 - LRB096 20770 MJR 36521 b

1             delivery of the electricity produced by the
2             facility;
3             (D) general provisions, which shall:
4                 (i) specify a term of no more than 30 years,
5             commencing on the commercial operation date of the
6             facility;
7                 (ii) provide that utilities shall maintain
8             adequate records documenting purchases under the
9             sourcing agreements entered into to comply with
10             this subsection (d) and shall file an accounting
11             with the load forecast that must be filed with the
12             Agency by July 15 of each year, in accordance with
13             subsection (d) of Section 16-111.5 of the Public
14             Utilities Act.
15                 (iii) provide that all costs associated with
16             the initial clean coal facility will be
17             periodically reported to the Federal Energy
18             Regulatory Commission and to purchasers in
19             accordance with applicable laws governing
20             cost-based wholesale power contracts;
21                 (iv) permit the Illinois Power Agency to
22             assume ownership of the initial clean coal
23             facility, without monetary consideration and
24             otherwise on reasonable terms acceptable to the
25             Agency, if the Agency so requests no less than 3
26             years prior to the end of the stated contract term;

 

 

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1                 (v) require the owner of the initial clean coal
2             facility to provide documentation to the
3             Commission each year, starting in the facility's
4             first year of commercial operation, accurately
5             reporting the quantity of carbon emissions from
6             the facility that have been captured and
7             sequestered and report any quantities of carbon
8             released from the site or sites at which carbon
9             emissions were sequestered in prior years, based
10             on continuous monitoring of such sites. If, in any
11             year after the first year of commercial operation,
12             the owner of the facility fails to demonstrate that
13             the initial clean coal facility captured and
14             sequestered at least 50% of the total carbon
15             emissions that the facility would otherwise emit
16             or that sequestration of emissions from prior
17             years has failed, resulting in the release of
18             carbon dioxide into the atmosphere, the owner of
19             the facility must offset excess emissions. Any
20             such carbon offsets must be permanent, additional,
21             verifiable, real, located within the State of
22             Illinois, and legally and practicably enforceable.
23             The cost of such offsets for the facility that are
24             not recoverable shall not exceed $15 million in any
25             given year. No costs of any such purchases of
26             carbon offsets may be recovered from a utility or

 

 

SB3686 - 32 - LRB096 20770 MJR 36521 b

1             its customers. All carbon offsets purchased for
2             this purpose and any carbon emission credits
3             associated with sequestration of carbon from the
4             facility must be permanently retired. The initial
5             clean coal facility shall not forfeit its
6             designation as a clean coal facility if the
7             facility fails to fully comply with the applicable
8             carbon sequestration requirements in any given
9             year, provided the requisite offsets are
10             purchased. However, the Attorney General, on
11             behalf of the People of the State of Illinois, may
12             specifically enforce the facility's sequestration
13             requirement and the other terms of this contract
14             provision. Compliance with the sequestration
15             requirements and offset purchase requirements
16             specified in paragraph (3) of this subsection (d)
17             shall be reviewed annually by an independent
18             expert retained by the owner of the initial clean
19             coal facility, with the advance written approval
20             of the Attorney General. The Commission may, in the
21             course of the review specified in item (vii),
22             reduce the allowable return on equity for the
23             facility if the facility wilfully fails to comply
24             with the carbon capture and sequestration
25             requirements set forth in this item (v);
26                 (vi) include limits on, and accordingly

 

 

SB3686 - 33 - LRB096 20770 MJR 36521 b

1             provide for modification of, the amount the
2             utility is required to source under the sourcing
3             agreement consistent with paragraph (2) of this
4             subsection (d);
5                 (vii) require Commission review: (1) to
6             determine the justness, reasonableness, and
7             prudence of the inputs to the formula referenced in
8             subparagraphs (A)(i) through (A)(iii) of paragraph
9             (3) of this subsection (d), prior to an adjustment
10             in those inputs including, without limitation, the
11             capital structure and return on equity, fuel
12             costs, and other operations and maintenance costs
13             and (2) to approve the costs to be passed through
14             to customers under the sourcing agreement by which
15             the utility satisfies its statutory obligations.
16             Commission review shall occur no less than every 3
17             years, regardless of whether any adjustments have
18             been proposed, and shall be completed within 9
19             months;
20                 (viii) limit the utility's obligation to such
21             amount as the utility is allowed to recover through
22             tariffs filed with the Commission, provided that
23             neither the clean coal facility nor the utility
24             waives any right to assert federal pre-emption or
25             any other argument in response to a purported
26             disallowance of recovery costs;

 

 

SB3686 - 34 - LRB096 20770 MJR 36521 b

1                 (ix) limit the utility's or alternative retail
2             electric supplier's obligation to incur any
3             liability until such time as the facility is in
4             commercial operation and generating power and
5             energy and such power and energy is being delivered
6             to the facility busbar;
7                 (x) provide that the owner or owners of the
8             initial clean coal facility, which is the
9             counterparty to such sourcing agreement, shall
10             have the right from time to time to elect whether
11             the obligations of the utility party thereto shall
12             be governed by the power purchase provisions or the
13             contract for differences provisions;
14                 (xi) append documentation showing that the
15             formula rate and contract, insofar as they relate
16             to the power purchase provisions, have been
17             approved by the Federal Energy Regulatory
18             Commission pursuant to Section 205 of the Federal
19             Power Act;
20                 (xii) provide that any changes to the terms of
21             the contract, insofar as such changes relate to the
22             power purchase provisions, are subject to review
23             under the public interest standard applied by the
24             Federal Energy Regulatory Commission pursuant to
25             Sections 205 and 206 of the Federal Power Act; and
26                 (xiii) conform with customary lender

 

 

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1             requirements in power purchase agreements used as
2             the basis for financing non-utility generators.
3         (4) Effective date of sourcing agreements with the
4     initial clean coal facility. Any proposed sourcing
5     agreement with the initial clean coal facility shall not
6     become effective unless the following reports are prepared
7     and submitted and authorizations and approvals obtained:
8                 (i) Facility cost report. The owner of the
9             initial clean coal facility shall submit to the
10             Commission, the Agency, and the General Assembly a
11             front-end engineering and design study, a facility
12             cost report, method of financing (including but
13             not limited to structure and associated costs),
14             and an operating and maintenance cost quote for the
15             facility (collectively "facility cost report"),
16             which shall be prepared in accordance with the
17             requirements of this paragraph (4) of subsection
18             (d) of this Section, and shall provide the
19             Commission and the Agency access to the work
20             papers, relied upon documents, and any other
21             backup documentation related to the facility cost
22             report.
23                 (ii) Commission report. Within 6 months
24             following receipt of the facility cost report, the
25             Commission, in consultation with the Agency, shall
26             submit a report to the General Assembly setting

 

 

SB3686 - 36 - LRB096 20770 MJR 36521 b

1             forth its analysis of the facility cost report.
2             Such report shall include, but not be limited to, a
3             comparison of the costs associated with
4             electricity generated by the initial clean coal
5             facility to the costs associated with electricity
6             generated by other types of generation facilities,
7             an analysis of the rate impacts on residential and
8             small business customers over the life of the
9             sourcing agreements, and an analysis of the
10             likelihood that the initial clean coal facility
11             will commence commercial operation by and be
12             delivering power to the facility's busbar by 2016.
13             To assist in the preparation of its report, the
14             Commission, in consultation with the Agency, may
15             hire one or more experts or consultants, the costs
16             of which shall be paid for by the owner of the
17             initial clean coal facility. The Commission and
18             Agency may begin the process of selecting such
19             experts or consultants prior to receipt of the
20             facility cost report.
21                 (iii) General Assembly approval. The proposed
22             sourcing agreements shall not take effect unless,
23             based on the facility cost report and the
24             Commission's report, the General Assembly enacts
25             authorizing legislation approving (A) the
26             projected price, stated in cents per kilowatthour,

 

 

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1             to be charged for electricity generated by the
2             initial clean coal facility, (B) the projected
3             impact on residential and small business
4             customers' bills over the life of the sourcing
5             agreements, and (C) the maximum allowable return
6             on equity for the project; and
7                 (iv) Commission review. If the General
8             Assembly enacts authorizing legislation pursuant
9             to subparagraph (iii) approving a sourcing
10             agreement, the Commission shall, within 90 days of
11             such enactment, complete a review of such sourcing
12             agreement. During such time period, the Commission
13             shall implement any directive of the General
14             Assembly, resolve any disputes between the parties
15             to the sourcing agreement concerning the terms of
16             such agreement, approve the form of such
17             agreement, and issue an order finding that the
18             sourcing agreement is prudent and reasonable.
19     The facility cost report shall be prepared as follows:
20             (A) The facility cost report shall be prepared by
21         duly licensed engineering and construction firms
22         detailing the estimated capital costs payable to one or
23         more contractors or suppliers for the engineering,
24         procurement and construction of the components
25         comprising the initial clean coal facility and the
26         estimated costs of operation and maintenance of the

 

 

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1         facility. The facility cost report shall include:
2                 (i) an estimate of the capital cost of the core
3             plant based on one or more front end engineering
4             and design studies for the gasification island and
5             related facilities. The core plant shall include
6             all civil, structural, mechanical, electrical,
7             control, and safety systems.
8                 (ii) an estimate of the capital cost of the
9             balance of the plant, including any capital costs
10             associated with sequestration of carbon dioxide
11             emissions and all interconnects and interfaces
12             required to operate the facility, such as
13             transmission of electricity, construction or
14             backfeed power supply, pipelines to transport
15             substitute natural gas or carbon dioxide, potable
16             water supply, natural gas supply, water supply,
17             water discharge, landfill, access roads, and coal
18             delivery.
19             The quoted construction costs shall be expressed
20         in nominal dollars as of the date that the quote is
21         prepared and shall include (1) capitalized financing
22         costs during construction, (2) taxes, insurance, and
23         other owner's costs, and (3) an assumed escalation in
24         materials and labor beyond the date as of which the
25         construction cost quote is expressed.
26             (B) The front end engineering and design study for

 

 

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1         the gasification island and the cost study for the
2         balance of plant shall include sufficient design work
3         to permit quantification of major categories of
4         materials, commodities and labor hours, and receipt of
5         quotes from vendors of major equipment required to
6         construct and operate the clean coal facility.
7             (C) The facility cost report shall also include an
8         operating and maintenance cost quote that will provide
9         the estimated cost of delivered fuel, personnel,
10         maintenance contracts, chemicals, catalysts,
11         consumables, spares, and other fixed and variable
12         operations and maintenance costs.
13                 (a) The delivered fuel cost estimate will be
14             provided by a recognized third party expert or
15             experts in the fuel and transportation industries.
16                 (b) The balance of the operating and
17             maintenance cost quote, excluding delivered fuel
18             costs will be developed based on the inputs
19             provided by duly licensed engineering and
20             construction firms performing the construction
21             cost quote, potential vendors under long-term
22             service agreements and plant operating agreements,
23             or recognized third party plant operator or
24             operators.
25                 The operating and maintenance cost quote
26             (including the cost of the front end engineering

 

 

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1             and design study) shall be expressed in nominal
2             dollars as of the date that the quote is prepared
3             and shall include (1) taxes, insurance, and other
4             owner's costs, and (2) an assumed escalation in
5             materials and labor beyond the date as of which the
6             operating and maintenance cost quote is expressed.
7             (D) The facility cost report shall also include (i)
8         an analysis of the initial clean coal facility's
9         ability to deliver power and energy into the applicable
10         regional transmission organization markets and (ii) an
11         analysis of the expected capacity factor for the
12         initial clean coal facility.
13             (E) Amounts paid to third parties unrelated to the
14         owner or owners of the initial clean coal facility to
15         prepare the core plant construction cost quote,
16         including the front end engineering and design study,
17         and the operating and maintenance cost quote will be
18         reimbursed through Coal Development Bonds.
19         (5) Re-powering and retrofitting coal-fired power
20     plants previously owned by Illinois utilities to qualify as
21     clean coal facilities. During the 2009 procurement
22     planning process and thereafter, the Agency and the
23     Commission shall consider sourcing agreements covering
24     electricity generated by power plants that were previously
25     owned by Illinois utilities and that have been or will be
26     converted into clean coal facilities, as defined by Section

 

 

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1     1-10 of this Act. Pursuant to such procurement planning
2     process, the owners of such facilities may propose to the
3     Agency sourcing agreements with utilities and alternative
4     retail electric suppliers required to comply with
5     subsection (d) of this Section and item (5) of subsection
6     (d) of Section 16-115 of the Public Utilities Act, covering
7     electricity generated by such facilities. In the case of
8     sourcing agreements that are power purchase agreements,
9     the contract price for electricity sales shall be
10     established on a cost of service basis. In the case of
11     sourcing agreements that are contracts for differences,
12     the contract price from which the reference price is
13     subtracted shall be established on a cost of service basis.
14     The Agency and the Commission may approve any such utility
15     sourcing agreements that do not exceed cost-based
16     benchmarks developed by the procurement administrator, in
17     consultation with the Commission staff, Agency staff and
18     the procurement monitor, subject to Commission review and
19     approval. The Commission shall have authority to inspect
20     all books and records associated with these clean coal
21     facilities during the term of any such contract.
22         (6) Costs incurred under this subsection (d) or
23     pursuant to a contract entered into under this subsection
24     (d) shall be deemed prudently incurred and reasonable in
25     amount and the electric utility shall be entitled to full
26     cost recovery pursuant to the tariffs filed with the

 

 

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1     Commission.
2         (e) The draft procurement plans are subject to public
3     comment, as required by Section 16-111.5 of the Public
4     Utilities Act.
5         (f) The Agency shall submit the final procurement plan
6     to the Commission. The Agency shall revise a procurement
7     plan if the Commission determines that it does not meet the
8     standards set forth in Section 16-111.5 of the Public
9     Utilities Act.
10         (g) The Agency shall assess fees to each affected
11     utility to recover the costs incurred in preparation of the
12     annual procurement plan for the utility.
13         (h) The Agency shall assess fees to each bidder to
14     recover the costs incurred in connection with a competitive
15     procurement process.
16 (Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
17 96-159, eff. 8-10-09.)
 
18     Section 99. Effective date. This Act takes effect upon
19 becoming law.