(220 ILCS 5/7-106)

Sec. 7-106. (a) Subject to the limitations contained in this Section 7-106, and notwithstanding anything to the contrary in Section 6-103 and items (f), (g), and (h) of subsection (A) of Section 7-102 of this Act or any rule or regulation promulgated by the Commission under this Act, a public utility that has filed, pursuant to Section 7-105(d) of this Act, the information described in Section 7-204A(a) of this Act, may, without the approval or consent of, or other prior filing with, the Commission, form, invest moneys denominated in United States dollars in, and guarantee contractual obligations of a subsidiary which engages in any business that provides to persons, corporations, municipal corporations, or other entities that are customers or potential customers of the public utility (i) heating, cooling, or lighting services; (ii) energy management services; or (iii) design, development, construction, engineering, financial, maintenance, management, or consulting services for owners, lessees, managers, or operators of facilities for the generation, transmission, or distribution of electricity; each such subsidiary is referred to in this Act as a "Section 7-106 subsidiary".

(b) Prior to investing in or guaranteeing any contractual obligations of a Section 7-106 subsidiary, the utility shall file with the Commission a statement identifying all public utility assets or information in existence, such as customer lists, which the utility plans to transfer to or permit the Section 7-106 subsidiary or any associate or affiliate of the subsidiary to use, which statement shall include a description of the proposed terms and conditions under which the assets or information will be transferred or used.

(c) In any proceeding pending before the Commission to determine the rates to be charged for electric service by a public utility which has a Section 7-106 subsidiary, or which is a subsidiary of a holding company formed under Section 7-105 of this Act, the Commission shall reduce the public utility's rates to reflect the additional amount of revenue it would have earned during the test year if the Section 7-106 subsidiary, such holding company, or any other subsidiary company of such holding company had not provided the customer with the services described in items (i), (ii), and (iii) of subsection (a) of this Section. The Commission shall not reduce the revenues of the public utility unless it finds that there was no reasonable probability that the customer would have obtained the services described in items (i), (ii), and (iii) of subsection (a) of this Section from another source (including the customer), if such subsidiary, holding company, or other subsidiary company had not entered into a contract or arrangement with the customer. A written statement by an employee or authorized agent of the customer that such services are available from other sources (including the customer) and that such agent or employee believes that there was a reasonable probability that the customer would have so obtained such services from another source (including the customer) shall constitute prima facie evidence of such reasonable probability. The provisions of this subsection shall not be construed as limiting the authority of the Commission with respect to rates under any other Section of this Act.

(d) The aggregate amount of a public utility's investments in, and guarantees of, the contractual obligations of Section 7-106 subsidiaries without the approval or consent of, or prior filing with, the Commission, outstanding at the time of and after giving effect to any such investment or guarantee, shall not exceed as of the date of such investment or guarantee an amount equal to the lesser of $170,000,000 or 20% of the retained earnings of the public utility as reported on its most recent annual report to the Commission. The amount of each such guarantee shall be limited to a maximum dollar amount which shall be specified in such guarantee. The terms of each such guarantee shall provide that it shall terminate, and it shall terminate, at the time that the public utility liquidates or transfers to any entity or person, the interest and investment of such public utility in the Section 7-106 subsidiary whose obligations are subject to such guarantee. The authority of a public utility to invest in and guarantee the contractual obligations of a Section 7-106 subsidiary without the approval or consent of, or prior filing with, the Commission, as permitted by this Section 7-106, shall expire on the date such public utility liquidates or transfers its interest and investment in such Section 7-106 subsidiary.

(e) The Commission shall not consider the investment of a public utility in or its obligation to make an investment in a Section 7-106 subsidiary, or the guarantee by a public utility of contractual obligations of its Section 7-106 subsidiaries, in considering the amount or terms of any reparations or refunds to be made by such public utility to its customers.

(f) On the date that a public utility becomes a subsidiary company of a holding company pursuant to Section 7-105 of this Act, such public utility shall either:

(i) liquidate or transfer its interest and investment in its Section 7-106 subsidiaries to such holding company or to any other entity or person in a transaction which does not require the prior approval or consent of the Commission under Section 7-101 or Section 7-102 of this Act, or

(ii) file with the Commission for its approval under Section 7-101 or Section 7-102 of this Act, a plan for such public utility to liquidate or transfer its interest and investment in its Section 7-106 subsidiaries.

(g) If on the 550th day after the effective date of this amendatory Act of 1993 such public utility is not a subsidiary company of a holding company, such public utility shall on such 550th day either:

(i) liquidate or transfer its interest and investment in its Section 7-106 subsidiaries to any entity or person in a transaction which does not require the prior approval or consent of the Commission under Section 7-101 or Section 7-102 of this Act, or

(ii) file with the Commission for its approval under Section 7-101 or Section 7-102 of this Act, a plan for such public utility to liquidate or transfer its interest and investment in its Section 7-106 subsidiaries, or

(iii) file with the Commission a petition for an extension of time within which: (A) to become a subsidiary company of a holding company and to take action pursuant to subsection (f) of this Section 7-106; or (B) to take action pursuant to either subparagraph (i) or subparagraph (ii) of subsection (g) of this Section 7-106. The Commission shall grant such extension to an appropriate date unless it finds that the public utility has not taken action in a timely and appropriate manner to seek all regulatory, shareholder, and other authority for or, after obtaining all such authority, has not taken action in a timely and appropriate manner to effect a transaction in which such public utility would become a subsidiary company of a holding company. If the Commission finds that the public utility has not taken action in a timely and appropriate manner to seek all regulatory, shareholder, and other authority for or, after obtaining all such authority, has not taken action in a timely and appropriate manner to effect a transaction in which such public utility would become a subsidiary company of a holding company, the Commission shall deny the public utility's petition and shall approve a plan for such public utility to liquidate or transfer its interests and investments in its Section 7-106 subsidiaries. During the pendency of the proceeding before the Commission initiated by the petition filed by the public utility, the utility may continue to engage in activities described in Sections 7-105 and 7-106, as provided therein.

(h) Contracts or arrangements between a public utility and its Section 7-106 subsidiaries, including contracts or arrangements for any services described in Section 7-106 (a)(i), (ii), and (iii), but excluding investments and guarantees permitted by this Section 7-106, shall be subject to the jurisdiction of the Commission under Sections 7-101, 7-102, 7-204A(b), and other applicable provisions, if any, of this Act, except that such public utility may, pursuant to contracts or arrangements filed with the Commission, provide its Section 7-106 subsidiaries with office facilities or administrative and management services which are reasonably necessary for the management of the business of its Section 7-106 subsidiaries, which contracts or arrangements shall become effective upon such public utility filing with the Commission a petition seeking Commission approval thereof, and such contracts and arrangements shall remain in effect unless modified by the Commission after a hearing on such petition in which such public utility shall have the burden of proving the reasonable necessity of the provision of such facilities and services. Such contracts or arrangements shall require each Section 7-106 subsidiary to pay to the public utility the fair market value for the use of such facilities and services. The public utility shall keep its books of account and other records in a manner that will enable the Commission to determine the propriety of any allocation of costs between the public utility and its Section 7-106 subsidiaries. The burden of proving the propriety of any such allocation shall be on the public utility. The public utility shall also have the burden of proving that it has received or will receive fair market value for all facilities or services provided to its Section 7-106 subsidiaries under this Section 7-106.

(i) The costs of any public utility investment in or guarantee of the contractual obligations of its Section 7-106 subsidiaries shall not be included in rate base or treated as allowable expenses for purposes of determining the rates to be charged by the public utility.

(j) No public utility shall have any liability to any of its Section 7-106 subsidiaries, except any obligation it may have to make investments in such Section 7-106 subsidiaries in accordance with this Section 7-106. No public utility shall have any liability for any obligation or liability of any of its Section 7-106 subsidiaries, except under any guarantee of contractual obligations of such Section 7-106 subsidiaries made in accordance with this Section 7-106.

(k) No Section 7-106 subsidiary shall engage in the repair or servicing of home or other consumer appliances except in emergencies posing a threat to life or property.

(Source: P.A. 91-357, eff. 7-29-99.)