HB1534 EngrossedLRB098 03811 RPM 33827 b

1    AN ACT concerning utilities.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Utilities Act is amended by changing
5Section 8-104 as follows:
 
6    (220 ILCS 5/8-104)
7    Sec. 8-104. Natural gas energy efficiency programs.
8    (a) It is the policy of the State that natural gas
9utilities and the Department of Commerce and Economic
10Opportunity are required to use cost-effective energy
11efficiency to reduce direct and indirect costs to consumers. It
12serves the public interest to allow natural gas utilities to
13recover costs for reasonably and prudently incurred expenses
14for cost-effective energy efficiency measures.
15    (b) For purposes of this Section, "energy efficiency" means
16measures that reduce the amount of energy required to achieve a
17given end use and "cost-effective" means that the measures
18satisfy the total resource cost test which, for purposes of
19this Section, means a standard that is met if, for an
20investment in energy efficiency, the benefit-cost ratio is
21greater than one. The benefit-cost ratio is the ratio of the
22net present value of the total benefits of the measures to the
23net present value of the total costs as calculated over the

 

 

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1lifetime of the measures. The total resource cost test compares
2the sum of avoided natural gas utility costs, representing the
3benefits that accrue to the system and the participant in the
4delivery of those efficiency measures, as well as other
5quantifiable societal benefits, including avoided electric
6utility costs, to the sum of all incremental costs of end use
7measures (including both utility and participant
8contributions), plus costs to administer, deliver, and
9evaluate each demand-side measure, to quantify the net savings
10obtained by substituting demand-side measures for supply
11resources. In calculating avoided costs, reasonable estimates
12shall be included for financial costs likely to be imposed by
13future regulation of emissions of greenhouse gases. The
14low-income programs described in item (4) of subsection (f) of
15this Section shall not be required to meet the total resource
16cost test.
17    (c) Natural gas utilities shall implement cost-effective
18energy efficiency measures to meet at least the following
19natural gas savings requirements, which shall be based upon the
20total amount of gas delivered to retail customers, other than
21the customers described in subsection (m) of this Section,
22during calendar year 2009 multiplied by the applicable
23percentage. Natural gas utilities may comply with this Section
24by meeting the annual incremental savings goal in the
25applicable year or by showing that total savings associated
26with measures implemented after May 31, 2011 were equal to the

 

 

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1sum of each annual incremental savings requirement from May 31,
22011 through the end of the applicable year:
3        (1) 0.2% by May 31, 2012;
4        (2) an additional 0.4% by May 31, 2013, increasing
5    total savings to .6%;
6        (3) an additional 0.6% by May 31, 2014, increasing
7    total savings to 1.2%;
8        (4) an additional 0.8% by May 31, 2015, increasing
9    total savings to 2.0%;
10        (5) an additional 1% by May 31, 2016, increasing total
11    savings to 3.0%;
12        (6) an additional 1.2% by May 31, 2017, increasing
13    total savings to 4.2%;
14        (7) an additional 1.4% by May 31, 2018, increasing
15    total savings to 5.6%;
16        (8) an additional 1.5% by May 31, 2019, increasing
17    total savings to 7.1%; and
18        (9) an additional 1.5% in each 12-month period
19    thereafter.
20    (d) Notwithstanding the requirements of subsection (c) of
21this Section, a natural gas utility shall limit the amount of
22energy efficiency implemented in any 3-year reporting period
23established by subsection (f) of Section 8-104 of this Act, by
24an amount necessary to limit the estimated average increase in
25the amounts paid by retail customers in connection with natural
26gas service to no more than 2% in the applicable 3-year

 

 

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1reporting period. The energy savings requirements in
2subsection (c) of this Section may be reduced by the Commission
3for the subject plan, if the utility demonstrates by
4substantial evidence that it is highly unlikely that the
5requirements could be achieved without exceeding the
6applicable spending limits in any 3-year reporting period. No
7later than September 1, 2013, the Commission shall review the
8limitation on the amount of energy efficiency measures
9implemented pursuant to this Section and report to the General
10Assembly, in the report required by subsection (k) of this
11Section, its findings as to whether that limitation unduly
12constrains the procurement of energy efficiency measures.
13    (e) Natural gas utilities shall be responsible for
14overseeing the design, development, and filing of their
15efficiency plans with the Commission. The utility shall utilize
1675% of the available funding associated with energy efficiency
17programs approved by the Commission, and may outsource various
18aspects of program development and implementation. The
19remaining 25% of available funding shall be used by the
20Department of Commerce and Economic Opportunity to implement
21energy efficiency measures that achieve no less than 20% of the
22requirements of subsection (c) of this Section. Such measures
23shall be designed in conjunction with the utility and approved
24by the Commission. The Department may outsource development and
25implementation of energy efficiency measures. A minimum of 10%
26of the entire portfolio of cost-effective energy efficiency

 

 

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1measures shall be procured from local government, municipal
2corporations, school districts, and community college
3districts. Five percent of the entire portfolio of
4cost-effective energy efficiency measures may be granted to
5local government and municipal corporations for market
6transformation initiatives. The Department shall coordinate
7the implementation of these measures and shall integrate
8delivery of natural gas efficiency programs with electric
9efficiency programs delivered pursuant to Section 8-103 of this
10Act, unless the Department can show that integration is not
11feasible.
12    The apportionment of the dollars to cover the costs to
13implement the Department's share of the portfolio of energy
14efficiency measures shall be made to the Department once the
15Department has executed rebate agreements, grants, or
16contracts for energy efficiency measures and provided
17supporting documentation for those rebate agreements, grants,
18and contracts to the utility. The Department is authorized to
19adopt any rules necessary and prescribe procedures in order to
20ensure compliance by applicants in carrying out the purposes of
21rebate agreements for energy efficiency measures implemented
22by the Department made under this Section.
23    The details of the measures implemented by the Department
24shall be submitted by the Department to the Commission in
25connection with the utility's filing regarding the energy
26efficiency measures that the utility implements.

 

 

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1    A utility providing approved energy efficiency measures in
2this State shall be permitted to recover costs of those
3measures through an automatic adjustment clause tariff filed
4with and approved by the Commission. The tariff shall be
5established outside the context of a general rate case and
6shall be applicable to the utility's customers other than the
7customers described in subsection (m) of this Section. Each
8year the Commission shall initiate a review to reconcile any
9amounts collected with the actual costs and to determine the
10required adjustment to the annual tariff factor to match annual
11expenditures.
12    Each utility shall include, in its recovery of costs, the
13costs estimated for both the utility's and the Department's
14implementation of energy efficiency measures. Costs collected
15by the utility for measures implemented by the Department shall
16be submitted to the Department pursuant to Section 605-323 of
17the Civil Administrative Code of Illinois, shall be deposited
18into the Energy Efficiency Portfolio Standards Fund, and shall
19be used by the Department solely for the purpose of
20implementing these measures. A utility shall not be required to
21advance any moneys to the Department but only to forward such
22funds as it has collected. The Department shall report to the
23Commission on an annual basis regarding the costs actually
24incurred by the Department in the implementation of the
25measures. Any changes to the costs of energy efficiency
26measures as a result of plan modifications shall be

 

 

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1appropriately reflected in amounts recovered by the utility and
2turned over to the Department.
3    The portfolio of measures, administered by both the
4utilities and the Department, shall, in combination, be
5designed to achieve the annual energy savings requirements set
6forth in subsection (c) of this Section, as modified by
7subsection (d) of this Section.
8    The utility and the Department shall agree upon a
9reasonable portfolio of measures and determine the measurable
10corresponding percentage of the savings goals associated with
11measures implemented by the Department.
12    No utility shall be assessed a penalty under subsection (f)
13of this Section for failure to make a timely filing if that
14failure is the result of a lack of agreement with the
15Department with respect to the allocation of responsibilities
16or related costs or target assignments. In that case, the
17Department and the utility shall file their respective plans
18with the Commission and the Commission shall determine an
19appropriate division of measures and programs that meets the
20requirements of this Section.
21    If the Department is unable to meet performance
22requirements for the portion of the portfolio implemented by
23the Department, then the utility and the Department shall
24jointly submit a modified filing to the Commission explaining
25the performance shortfall and recommending an appropriate
26course going forward, including any program modifications that

 

 

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1may be appropriate in light of the evaluations conducted under
2item (8) of subsection (f) of this Section. In this case, the
3utility obligation to collect the Department's costs and turn
4over those funds to the Department under this subsection (e)
5shall continue only if the Commission approves the
6modifications to the plan proposed by the Department.
7    (f) No later than October 1, 2010, each gas utility shall
8file an energy efficiency plan with the Commission to meet the
9energy efficiency standards through May 31, 2014. Every 3 years
10thereafter, each utility shall file, no later than October 1,
11an energy efficiency plan with the Commission. If a utility
12does not file such a plan by October 1 of the applicable year,
13then it shall face a penalty of $100,000 per day until the plan
14is filed. Each utility's plan shall set forth the utility's
15proposals to meet the utility's portion of the energy
16efficiency standards identified in subsection (c) of this
17Section, as modified by subsection (d) of this Section, taking
18into account the unique circumstances of the utility's service
19territory. The Commission shall seek public comment on the
20utility's plan and shall issue an order approving or
21disapproving each plan. If the Commission disapproves a plan,
22the Commission shall, within 30 days, describe in detail the
23reasons for the disapproval and describe a path by which the
24utility may file a revised draft of the plan to address the
25Commission's concerns satisfactorily. If the utility does not
26refile with the Commission within 60 days after the

 

 

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1disapproval, the utility shall be subject to penalties at a
2rate of $100,000 per day until the plan is filed. This process
3shall continue, and penalties shall accrue, until the utility
4has successfully filed a portfolio of energy efficiency
5measures. Penalties shall be deposited into the Energy
6Efficiency Trust Fund and the cost of any such penalties may
7not be recovered from ratepayers. In submitting proposed energy
8efficiency plans and funding levels to meet the savings goals
9adopted by this Act the utility shall:
10        (1) Demonstrate that its proposed energy efficiency
11    measures will achieve the requirements that are identified
12    in subsection (c) of this Section, as modified by
13    subsection (d) of this Section.
14        (2) Present specific proposals to implement new
15    building and appliance standards that have been placed into
16    effect.
17        (3) Present estimates of the total amount paid for gas
18    service expressed on a per therm basis associated with the
19    proposed portfolio of measures designed to meet the
20    requirements that are identified in subsection (c) of this
21    Section, as modified by subsection (d) of this Section.
22        (4) Coordinate with the Department to present a
23    portfolio of energy efficiency measures proportionate to
24    the share of total annual utility revenues in Illinois from
25    households at or below 150% of the poverty level. Such
26    programs shall be targeted to households with incomes at or

 

 

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1    below 80% of area median income.
2        (5) Demonstrate that its overall portfolio of energy
3    efficiency measures, not including programs covered by
4    item (4) of this subsection (f), are cost-effective using
5    the total resource cost test and represent a diverse cross
6    section of opportunities for customers of all rate classes
7    to participate in the programs.
8        (6) Demonstrate that a gas utility affiliated with an
9    electric utility that is required to comply with Section
10    8-103 of this Act has integrated gas and electric
11    efficiency measures into a single program that reduces
12    program or participant costs and appropriately allocates
13    costs to gas and electric ratepayers. The Department shall
14    integrate all gas and electric programs it delivers in any
15    such utilities' service territories, unless the Department
16    can show that integration is not feasible or appropriate.
17        (7) Include a proposed cost recovery tariff mechanism
18    to fund the proposed energy efficiency measures and to
19    ensure the recovery of the prudently and reasonably
20    incurred costs of Commission-approved programs.
21        (8) Provide for quarterly status reports tracking
22    implementation of and expenditures for the utility's
23    portfolio of measures and the Department's portfolio of
24    measures, an annual independent review, and a full
25    independent evaluation of the 3-year results of the
26    performance and the cost-effectiveness of the utility's

 

 

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1    and Department's portfolios of measures and broader net
2    program impacts and, to the extent practical, for
3    adjustment of the measures on a going forward basis as a
4    result of the evaluations. The resources dedicated to
5    evaluation shall not exceed 3% of portfolio resources in
6    any given 3-year period.
7    (g) No more than 3% of expenditures on energy efficiency
8measures may be allocated for demonstration of breakthrough
9equipment and devices.
10    (h) Illinois natural gas utilities that are affiliated by
11virtue of a common parent company may, at the utilities'
12request, be considered a single natural gas utility for
13purposes of complying with this Section.
14    (i) If, after 3 years, a gas utility fails to meet the
15efficiency standard specified in subsection (c) of this Section
16as modified by subsection (d), then it shall make a
17contribution to the Low-Income Home Energy Assistance Program.
18The total liability for failure to meet the goal shall be
19assessed as follows:
20        (1) a large gas utility shall pay $600,000;
21        (2) a medium gas utility shall pay $400,000; and
22        (3) a small gas utility shall pay $200,000.
23    For purposes of this Section, (i) a "large gas utility" is
24a gas utility that on December 31, 2008, served more than
251,500,000 gas customers in Illinois; (ii) a "medium gas
26utility" is a gas utility that on December 31, 2008, served

 

 

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1fewer than 1,500,000, but more than 500,000 gas customers in
2Illinois; and (iii) a "small gas utility" is a gas utility that
3on December 31, 2008, served fewer than 500,000 and more than
4100,000 gas customers in Illinois. The costs of this
5contribution may not be recovered from ratepayers.
6    If a gas utility fails to meet the efficiency standard
7specified in subsection (c) of this Section, as modified by
8subsection (d) of this Section, in any 2 consecutive 3-year
9planning periods, then the responsibility for implementing the
10utility's energy efficiency measures shall be transferred to an
11independent program administrator selected by the Commission.
12Reasonable and prudent costs incurred by the independent
13program administrator to meet the efficiency standard
14specified in subsection (c) of this Section, as modified by
15subsection (d) of this Section, may be recovered from the
16customers of the affected gas utilities, other than customers
17described in subsection (m) of this Section. The utility shall
18provide the independent program administrator with all
19information and assistance necessary to perform the program
20administrator's duties including but not limited to customer,
21account, and energy usage data, and shall allow the program
22administrator to include inserts in customer bills. The utility
23may recover reasonable costs associated with any such
24assistance.
25    (j) No utility shall be deemed to have failed to meet the
26energy efficiency standards to the extent any such failure is

 

 

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1due to a failure of the Department.
2    (k) Not later than January 1, 2012, the Commission shall
3develop and solicit public comment on a plan to foster
4statewide coordination and consistency between statutorily
5mandated natural gas and electric energy efficiency programs to
6reduce program or participant costs or to improve program
7performance. Not later than September 1, 2013, the Commission
8shall issue a report to the General Assembly containing its
9findings and recommendations.
10    (l) This Section does not apply to a gas utility that on
11January 1, 2009, provided gas service to fewer than 100,000
12customers in Illinois.
13    (m) Subsections (a) through (k) of this Section do not
14apply to customers of a natural gas utility that have a North
15American Industry Classification System code number that is
1622111 or any such code number beginning with the digits 31, 32,
17or 33 and (i) annual usage in the aggregate of 4 million therms
18or more within the service territory of the affected gas
19utility or with aggregate usage of 8 million therms or more in
20this State and complying with the provisions of item (l) of
21this subsection (m); or (ii) using natural gas as feedstock and
22meeting the usage requirements described in item (i) of this
23subsection (m), to the extent such annual feedstock usage is
24greater than 60% of the customer's total annual usage of
25natural gas.
26        (1) Customers described in this subsection (m) of this

 

 

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1    Section shall apply, on a form approved on or before
2    October 1, 2009 by the Department, to the Department to be
3    designated as a self-directing customer ("SDC") or as an
4    exempt customer using natural gas as a feedstock from which
5    other products are made, including, but not limited to,
6    feedstock for a hydrogen plant, on or before the 1st day of
7    February, 2010. Thereafter, application may be made not
8    less than 6 months before the filing date of the gas
9    utility energy efficiency plan described in subsection (f)
10    of this Section; however, a new customer that commences
11    taking service from a natural gas utility after February 1,
12    2010 may apply to become a SDC or exempt customer up to 30
13    days after beginning service. Customers described in this
14    subsection (m) that have not already been approved by the
15    Department may apply to be designated a self-directing
16    customer or exempt customer, on a form approved by the
17    Department, between September 1, 2013 and September 30,
18    2013. Customer applications that are approved by the
19    Department under this amendatory Act of the 98th General
20    Assembly shall be considered to be a self-directing
21    customer or exempt customer, as applicable, for the current
22    3-year planning period effective December 1, 2013. Such
23    application shall contain the following:
24            (A) the customer's certification that, at the time
25        of its application, it qualifies to be a SDC or exempt
26        customer described in this subsection (m) of this

 

 

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1        Section;
2            (B) in the case of a SDC, the customer's
3        certification that it has established or will
4        establish by the beginning of the utility's 3-year
5        planning period commencing subsequent to the
6        application, and will maintain for accounting
7        purposes, an energy efficiency reserve account and
8        that the customer will accrue funds in said account to
9        be held for the purpose of funding, in whole or in
10        part, energy efficiency measures of the customer's
11        choosing, which may include, but are not limited to,
12        projects involving combined heat and power systems
13        that use the same energy source both for the generation
14        of electrical or mechanical power and the production of
15        steam or another form of useful thermal energy or the
16        use of combustible gas produced from biomass, or both;
17            (C) in the case of a SDC, the customer's
18        certification that annual funding levels for the
19        energy efficiency reserve account will be equal to 2%
20        of the customer's cost of natural gas, composed of the
21        customer's commodity cost and the delivery service
22        charges paid to the gas utility, or $150,000, whichever
23        is less;
24            (D) in the case of a SDC, the customer's
25        certification that the required reserve account
26        balance will be capped at 3 years' worth of accruals

 

 

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1        and that the customer may, at its option, make further
2        deposits to the account to the extent such deposit
3        would increase the reserve account balance above the
4        designated cap level;
5            (E) in the case of a SDC, the customer's
6        certification that by October 1 of each year, beginning
7        no sooner than October 1, 2012, the customer will
8        report to the Department information, for the 12-month
9        period ending May 31 of the same year, on all deposits
10        and reductions, if any, to the reserve account during
11        the reporting year, and to the extent deposits to the
12        reserve account in any year are in an amount less than
13        $150,000, the basis for such reduced deposits; reserve
14        account balances by month; a description of energy
15        efficiency measures undertaken by the customer and
16        paid for in whole or in part with funds from the
17        reserve account; an estimate of the energy saved, or to
18        be saved, by the measure; and that the report shall
19        include a verification by an officer or plant manager
20        of the customer or by a registered professional
21        engineer or certified energy efficiency trade
22        professional that the funds withdrawn from the reserve
23        account were used for the energy efficiency measures;
24            (F) in the case of an exempt customer, the
25        customer's certification of the level of gas usage as
26        feedstock in the customer's operation in a typical year

 

 

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1        and that it will provide information establishing this
2        level, upon request of the Department;
3            (G) in the case of either an exempt customer or a
4        SDC, the customer's certification that it has provided
5        the gas utility or utilities serving the customer with
6        a copy of the application as filed with the Department;
7            (H) in the case of either an exempt customer or a
8        SDC, certification of the natural gas utility or
9        utilities serving the customer in Illinois including
10        the natural gas utility accounts that are the subject
11        of the application; and
12            (I) in the case of either an exempt customer or a
13        SDC, a verification signed by a plant manager or an
14        authorized corporate officer attesting to the
15        truthfulness and accuracy of the information contained
16        in the application.
17        (2) The Department shall review the application to
18    determine that it contains the information described in
19    provisions (A) through (I) of item (1) of this subsection
20    (m), as applicable. The review shall be completed within 30
21    days after the date the application is filed with the
22    Department. Absent a determination by the Department
23    within the 30-day period, the applicant shall be considered
24    to be a SDC or exempt customer, as applicable, for all
25    subsequent 3-year planning periods, as of the date of
26    filing the application described in this subsection (m). If

 

 

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1    the Department determines that the application does not
2    contain the applicable information described in provisions
3    (A) through (I) of item (1) of this subsection (m), it
4    shall notify the customer, in writing, of its determination
5    that the application does not contain the required
6    information and identify the information that is missing,
7    and the customer shall provide the missing information
8    within 15 working days after the date of receipt of the
9    Department's notification.
10        (3) The Department shall have the right to audit the
11    information provided in the customer's application and
12    annual reports to ensure continued compliance with the
13    requirements of this subsection. Based on the audit, if the
14    Department determines the customer is no longer in
15    compliance with the requirements of items (A) through (I)
16    of item (1) of this subsection (m), as applicable, the
17    Department shall notify the customer in writing of the
18    noncompliance. The customer shall have 30 days to establish
19    its compliance, and failing to do so, may have its status
20    as a SDC or exempt customer revoked by the Department. The
21    Department shall treat all information provided by any
22    customer seeking SDC status or exemption from the
23    provisions of this Section as strictly confidential.
24        (4) Upon request, or on its own motion, the Commission
25    may open an investigation, no more than once every 3 years
26    and not before October 1, 2014, to evaluate the

 

 

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1    effectiveness of the self-directing program described in
2    this subsection (m).
3    (n) The applicability of this Section to customers
4described in subsection (m) of this Section is conditioned on
5the existence of the SDC program. In no event will any
6provision of this Section apply to such customers after January
71, 2020.
8(Source: P.A. 96-33, eff. 7-10-09; 97-813, eff. 7-13-12;
997-841, eff. 7-20-12.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.