(220 ILCS 5/16-126)

Sec. 16-126. Membership in an independent system operator.

(a) The General Assembly finds that the establishment of one or more independent system operators or their functional equivalents is required to facilitate the development of an open and efficient marketplace for electric power and energy to the benefit of Illinois consumers. Therefore, each Illinois electric utility owning or controlling transmission facilities or providing transmission services in Illinois and that is a member of the Mid-American Interconnected Network as of the effective date of this amendatory Act of 1997 shall submit for approval to the Federal Energy Regulatory Commission an application for establishing or joining an independent system operator that shall:

(1) independently manage and control transmission facilities of any electric utility;

(2) provide for nondiscriminatory access to and use of the transmission system for buyers and sellers of electricity;

(3) direct the transmission activities of the control area operators;

(4) coordinate, plan, and order the installation of new transmission facilities;

(5) adopt inspection, maintenance, repair, and replacement standards for the transmission facilities under its control and direct maintenance, repair, and replacement of all facilities under its control; and

(6) implement procedures and act to assure the provision of adequate and reliable service.

These standards shall be consistent with reliability criteria no less stringent than those established by the Mid-American Interconnected Network and the North American Electric Reliability Council or their successors.

(b) The requirements of this Section may be met by joining or establishing a regional independent system operator that meets the criteria enumerated in subsections (a), (c), and (d) of this Section, as determined by the Commission. To achieve the objectives set forth in subsection (a), the State of Illinois, through the appropriate officers, departments, and agencies, shall work cooperatively with the appropriate officials and agencies of those States contiguous to this State and the Federal Energy Regulatory Commission towards the formation of one or more regional independent system operators.

(c) The independent system operator's governance structure must be fair and nondiscriminatory, and the independent system operator must be independent of any one market participant or class of participants. The independent system operator's rules of governance must prevent control, or the appearance of control, of decision-making by any class of participants.

(d) Participants in the independent system operator shall make available to the independent system operator all information required by the independent system operator in performance of its functions described herein. The independent system operator and the electric utilities participating in the independent system operator shall make all filings required by the Federal Energy Regulatory Commission. The independent system operator shall ensure that additional filings at the Federal Energy Regulatory Commission request confirmation of the relevant provisions of this amendatory Act of 1997.

(e) If a spot market, exchange market, or other market-based mechanism providing transparent real-time market prices for electric power has not been developed, the independent system operator or a closely cooperating agent of the independent system operator may provide an efficient competitive power exchange auction for electric power and energy, open on a nondiscriminatory basis to all suppliers, which meets the loads of all auction customers at efficient prices.

(f) For those electric utilities referred to in subsection (a) which have not filed with the Federal Energy Regulatory Commission by June 30, 1998 an application for establishment or participation in an independent system operator or if such application has not been approved by the Federal Energy Regulatory Commission by March 31, 1999, a 5 member Oversight Board shall be formed. The Oversight Board shall (1) oversee the creation of an Illinois independent system operator and (2) determine the composition and initial terms of service of, and appoint the initial members of, the Illinois independent system operator board of directors. The Oversight Board shall consist of the following: (1) 3 persons appointed by the Governor; (2) one person appointed by the Speaker of the House of Representatives; and (3) one person appointed by the President of the Senate. The Oversight Board shall take the steps that are necessary to ensure the earliest possible incorporation of an Illinois independent system operator under the Business Corporation Act of 1983, and shall serve until the Illinois independent system operator is incorporated.

(g) After notice and hearing, the Commission shall require each electric utility referred to in subsection (a), that is not participating in an independent system operator meeting the requirements of subsections (a) and (c), to seek authority from the Federal Energy Regulatory Commission to transfer functional control of transmission facilities to the Illinois independent system operator for control by the Illinois independent system operator consistent with the requirements of subsection (a). Upon approval by the Federal Energy Regulatory Commission, electric utilities may also elect to transfer ownership of transmission facilities to the Illinois independent system operator. Nothing in this Act shall be deemed to preclude the Illinois independent system operator from (1) seeking authority, as necessary, to merge with or otherwise combine its operations with those of one or more other entities authorized to provide transmission services, (2) purchasing or leasing transmission assets from transmission-owning entities not required by this Section to lease transmission facilities to the Illinois independent system operator, or (3) operating as a transmission public utility under the Federal Power Act.

(h) Any other owner of transmission facilities in Illinois not required by this Section to participate in an independent system operator shall be permitted, but not required, to become a member of the Illinois independent system operator.

(i) The Illinois independent system operator created under this Section, and any other independent system operator authorized by the Federal Energy Regulatory Commission to provide transmission services as a public utility under the Federal Power Act within the State of Illinois, shall be deemed to be a public utility for purposes of Section 8-503 and 8-509 of this Act. An independent system operator or regional transmission organization that is the subject of an order entered by the Commission under Section 8-503 need not possess a certificate of service authority under Section 8-406 in order to be authorized to take the actions set forth in Section 8-509.

(j) Electric utilities referred to in subsection (a) may withdraw from the Illinois independent system operator upon becoming a member of an independent system operator or operators conforming with the criteria in subsections (a) and (c) and whose formation and operation has been approved by the Federal Energy Regulatory Commission. This subsection does not relieve any electric utility of any obligations under Federal law.

(k) Nothing in this Section shall be construed as imposing any requirements or obligations that are in conflict with federal law.

(l) A regional transmission organization created under the rules of the Federal Energy Regulatory Commission shall be considered to be the functional equivalent of an independent system operator for purposes of this Section, and an electric utility shall be deemed to meet its obligations under this Section through membership in a regional transmission organization that fulfills the requirements of an independent system operator under this Section.

(Source: P.A. 92-12, eff. 7-1-01.)