(220 ILCS 5/9-244) (from Ch. 111 2/3, par. 9-244)

Sec. 9-244. Alternative rate regulation.

(a) Notwithstanding any of the ratemaking provisions of this Article IX or other Sections of this Act, or the Commission's rules that are deemed to require rate of return regulation, and except as provided in Article XVI, the Commission, upon petition by an electric or gas public utility, and after notice and hearing, may authorize for some or all of the regulated services of that utility, the implementation of one or more programs consisting of (i) alternatives to rate of return regulation, including but not limited to earnings sharing, rate moratoria, price caps or flexible rate options, or (ii) other regulatory mechanisms that reward or penalize the utility through the adjustment of rates based on utility performance. In the case of other regulatory mechanisms that reward or penalize utilities through the adjustment of rates based on utility performance, the utility's performance shall be compared to standards established in the Commission order authorizing the implementation of other regulatory mechanisms. The Commission is specifically authorized to approve in response to such petitions different forms of alternatives to rate of return regulation or other regulatory mechanisms to fit the particular characteristics and requirements of different utilities and their service territories.

(b) The Commission shall approve the program if it finds, based on the record, that:

(1) the program is likely to result in rates lower than otherwise would have been in effect under traditional rate of return regulation for the services covered by the program and that are consistent with the provisions of Section 9-241 of the Act; and

(2) the program is likely to result in other substantial and identifiable benefits that would be realized by customers served under the program and that would not be realized in the absence of the program; and

(3) the utility is in compliance with applicable Commission standards for reliability and implementation of the program is not likely to adversely affect service reliability; and

(4) implementation of the program is not likely to result in deterioration of the utility's financial condition; and

(5) implementation of the program is not likely to adversely affect the development of competitive markets; and

(6) the electric utility is in compliance with its obligation to offer delivery services pursuant to Article XVI; and

(7) the program includes annual reporting requirements and other provisions that will enable the Commission to adequately monitor its implementation of the program; and

(8) the program includes provisions for an equitable sharing of any net economic benefits between the utility and its customers to the extent the program is likely to result in such benefits.

The Commission shall issue its order approving or denying the program no later than 270 days from the date of filing of the petition. Any program approved under this Section shall continue in effect until revised, modified or terminated by order of the Commission as provided in this Section. If the Commission cannot make the above findings, it shall specifically identify in its order the reason or reasons why the proposed program does not meet the above criteria, and shall identify any modifications supported in the record, if any, that would cause the program to satisfy the above criteria. In the event the order identifies any such modifications it shall not become a final order subject to petitions for rehearing until 15 days after service of same by the Commission. The utility shall have 14 days following the date of service of the order to notify the Commission in writing whether it will accept any modifications so identified in the order or whether it has elected not to proceed with the program. If the utility notifies the Commission that it will accept such modifications, the Commission shall issue an amended order, without further hearing, within 14 days following such notification, approving the program as modified and such order shall be considered to be a final order of the Commission subject to petitions for rehearing and appellate procedures.

(c) The Commission shall open a proceeding to review any program approved under subsection (b) 2 years after the program is first implemented to determine whether the program is meeting its objectives, and may make such revisions, no later than 270 days after the proceeding is opened, as are necessary to result in the program meeting its objectives. A utility may elect to discontinue any program so revised. The Commission shall not otherwise direct a utility to revise, modify or cancel a program during its term of operation, except as found necessary, after notice and hearing, to ensure system reliability.

(d) Upon its own motion or complaint, the Commission may investigate whether the utility is implementing an approved program in accordance with the Commission order approving the program. If the Commission finds after notice and hearing, that the utility is not implementing the program in accordance with such order, the Commission shall order the utility to comply with the terms of the order. Complaints relating to the program filed under Section 9-250 of this Act, alleging that the program does not comply with that Section or the requirements of subsection (b) shall not be filed sooner than one year after the review provided for in subsection (c). The complainant shall bear the burden of proving the allegations in the complaint.

(e) The Commission shall not be authorized to allow or order an electric utility to place a program into effect, pursuant to this Section, applicable to delivery services provided by a utility, unless the utility already has in effect a delivery services tariff conforming to the requirements of Section 16-108 of this Act.

(f) The Commission may, upon subsequent petition by the utility, after notice and hearing, authorize the extension of a program that was previously approved pursuant to this Section or approve revisions or modifications of such a program to be effective, after the initially approved program has been in effect. Any such petition seeking an extension, revision, or modification of such a program must be accompanied by an evaluation of the program addressing the criteria set forth in subsection (b) hereof. The utility's petition may, but is not required to, specify a termination date for the extended, revised or modified program. The Commission may require a review of the extended, revised, or modified program at such intervals as may be ordered by the Commission, for the purpose of determining whether the program should be revised, modified, or terminated.

(Source: P.A. 89-194, eff. 1-1-96; 90-561, eff. 12-16-97.)