HB1473ham001 102ND GENERAL ASSEMBLY

Rep. Lawrence Walsh, Jr.

Filed: 4/9/2021

10200HB1473ham001 LRB102 03489 SPS 24766 a

AMENDMENT TO HOUSE BILL 1473

AMENDMENT NO. ______. Amend House Bill 1473 by replacing everything after the enacting clause with the following:

"Section 5. The Public Utilities Act is amended by adding Section 9-254 as follows:

(220 ILCS 5/9-254 new)

Sec. 9-254. Greenhouse Gas Plan; multi-year rate structure, tariff, and protocols; annual reconciliations.

(a) Participating gas utility commitments.

(1) For purposes of this Section, "participating gas utility" means a public utility that provides natural gas distribution services to more than 150,000 retail customers in Illinois that voluntarily elects and commits to develop and implement a Greenhouse Gas Plan that significantly reduces, offsets, or avoids greenhouse gas emissions in the State of Illinois attributable to the utility's operations and customers' end use of gas delivered by the utility. A participating gas utility shall commit, at the time it elects to participate, that, by 2030, it will: (i) lower the overall carbon intensity of the fuel supply provided to its customers as set forth in subparagraph (A) of paragraph (2) of this subsection; (ii) make qualified investments as described in subparagraph (B) of paragraph (2) of this subsection designed to, among other things, measure, reduce, displace, or offset methane and other greenhouse gas emissions from utility operations; and (iii) implement and deploy customer programs and make qualified investments designed to reduce or offset greenhouse gas emissions in the State of Illinois as set forth in subparagraph (C) of paragraph (2) of this subsection. A participating gas utility is entitled to recover the expenditures made under the Greenhouse Gas Plan through its regulated rates, including, but not limited to, through the multi-year performance-based rate process set forth in subsection (b) of this Section.

(2) Each participating gas utility shall implement a Greenhouse Gas Plan that contains the following commitments to lower the overall carbon intensity of the fuel supply provided to its customers and reducing, offsetting, or avoiding greenhouse gas emissions in the State of Illinois attributable to the utility's operations and customers' end use by 2030:

(A) A participating gas utility shall commit to lowering the overall carbon intensity of the fuel supply delivered to its customers by incorporating sustainable gas into its gas supply portfolio by not less than 2% of the natural gas utility's total gas supply portfolio (by volume) by the year 2030 through activities that may include, but are not limited to:

(i) contracting with a producer of sustainable gas to purchase gas supply from a sustainable gas facility;

(ii) purchasing gas produced from a sustainable gas facility, whether or not the gas has environmental commodities;

(iii) incorporating the gas produced from a sustainable gas facility into the supply portfolio of the natural gas utility; and

(iv) selling the gas produced from a sustainable gas facility directly to the customers of the natural gas utility;

(B) The calculation of the share of the supply portfolio shall not include the volume of gas of any type delivered but not sold by the natural gas utility. For purposes of this subsection, sustainable gas shall include the following:

(i) renewable natural gas, which includes any of the following products processed to meet applicable utility pipeline quality standards or transportation fuel grade requirements that it may blend with, or substitute for, geologic natural gas:

(1) biogas, which is a mixture of carbon dioxide and hydrocarbons, primarily methane gas, released from the biological decomposition of organic materials, including, without limitation, biomass, manure, plant material, sewage, and landfill waste;

(2) hydrogen gas derived from renewable energy sources; and

(3) methane gas derived from any combination of: biogas; hydrogen gas or carbon oxides derived from renewable energy sources; or carbon dioxide;

(ii) other low-carbon fuels, which include:

(1) hydrogen or other fuels derived from zero-carbon or low-carbon energy sources or from other sources where the CO₂ produced is capture and stored;

(2) methane gas derived from hydrogen or other fuels derived from zero-carbon or low-carbon energy sources or from other sources where the CO₂ produced is capture and stored; and

(3) any additional fuel that has a lower lifecycle carbon emissions than traditionally derived geological natural gas; and

(iii) next generation natural gas, which is a geological natural gas supplied from a producer who has certified contractually or through a third party to a lower methane intensity from production and gathering operations that results in a lower lifecycle carbon dioxide equivalent emissions than an established baseline for geologic natural gas or otherwise has certified that the gas has been produced through operational practices to lower emissions.

Nothing in this Section shall be interpreted as preventing the gas utility from purchasing sustainable fuels without environmental commodities, although such purchases shall not be applicable to meeting the goals set forth in this Section if environmental commodities do apply to such fuels. As used in this paragraph, "sustainable fuels" includes renewable natural gas and other low-carbon fuels.

(C) A participating gas utility shall commit to making qualified investments in gas distribution system improvements designed to, among other things, support the measurement, reduction, displacement, or offset of greenhouse gas emissions from utility operations. The participating gas utility shall, except as provided in this subsection (a), make these qualified investments over a 9-year period beginning no later than 180 days after a participating gas utility files a multi-year performance-based rate tariff pursuant to subsection (b) of this Section or beginning no later than January 1, 2022. As used in this subparagraph (C), "qualified investments" includes, but is not limited to:

(i) investments in pipeline replacement, meter, and other infrastructure modernization targeted at lowering system leakage;

(ii) improvements in nonemergency operational programs for pipe maintenance to reduce venting;

(iii) advanced leak detection, response, and repair;

(iv) investments that improve direct measurement of emissions from operations;

(v) other operational investments targeted at developing sources of sustainable fuels in the State of Illinois for the purpose of providing environmental benefits and diversifying the supply of energy in the State or otherwise targeted at reducing greenhouse gas emissions from utility operations, including, without limitation, investments in research and development in emerging technologies;

(vi) investments in sustainable fuels facilities, including, but not limited to, owning, in whole or in part, and operating a sustainable fuels facility connected to the distribution system where the utility retains all or a majority of the environmental commodities unless otherwise determined by the natural gas utility;

(vii) extending the transmission or distribution system of the natural gas utility to interconnect with a sustainable fuels facility where the utility retains all or a majority of the environmental commodities unless otherwise determined by the natural gas utility unless otherwise determined by the natural gas utility;

(viii) sustainable fuels investments that reduce or avoid greenhouse gas emissions in the State of Illinois, where the utility retains all or a majority of the environmental commodities unless otherwise determined by the natural gas utility;

(ix) investments that reduce or offset methane and other greenhouse gas emissions from utility operations that the Commission finds are prudent and reasonable;

(x) investment in natural gas, compressed natural gas, and hydrogen infrastructure and vehicles to convert utility fleet vehicles and support customers looking to convert vehicles from gasoline and diesel fuel, including installation of vehicle refueling stations accessible to the public at each regional distribution center with both rapid fill and overnight fill stations;

(xi) investment in infrastructure and vehicles to convert certain fleet vehicles to electric vehicles; and

(xii) other prudently incurred investments made by the participating natural gas utility that contribute to the participating natural gas utility meeting a goal to be net-zero methane emissions by 2030.

(D) A participating gas public utility commits to implement and deploy customer programs and make qualified investments designed to reduce or offset greenhouse gas emissions in the State of Illinois in the residential, commercial, and other sectors. Examples of these programs and qualified investments may include, but are not limited to:

(i) investment in natural gas energy efficiency programs in addition to programs set forth in Section 8-104 of this Act with increased focus on greenhouse gas reductions and support for low-income customers;

(ii) programs to offer customers opportunities to reduce their carbon footprint, including, but not limited to, voluntary customer programs that provide carbon offsets or purchase of renewable natural gas; and

(iii) Investments into research and development and emerging technologies aimed at operational safety, greenhouse gas emission reductions, and energy savings, including energy and appliance efficiency, carbon capture, and use of future fuels like hydrogen as a substitute for or blending with geologic natural gas, or as a source for substitute natural gas.

(3) As part of the filing for the first triennial base rate case under the participating utility's multi-year rate tariff filed under subsection (b) of this Section, a participating utility shall submit to the Commission its Greenhouse Gas Plan, including a scope, schedule, and investment plan designed to satisfy commitments made pursuant to paragraph (2) of this subsection for the 9-year period following the filing of the plan. The plan need not allocate the work equally over the respective periods, but should allocate material increments throughout such periods commensurate with the work to be undertaken. Consistent with subsection (b) of this Section, the Greenhouse Gas Plan shall be updated with each successive triennial base rate case filing through the conclusion of the Greenhouse Gas Plan.

(4) For purposes of meeting the goals set forth in this Section, sustainable gas that is purchased by the natural gas utility or if the natural gas utility makes investments in a sustainable gas facility, the gas must, if applicable, include environmental commodities associated with the gas. In addition, if the natural gas utility makes investments in a sustainable gas facility, the natural gas utility may retain all or a majority of the environmental commodities, unless otherwise determined by the natural gas utility. For purposes of this subsection, "environmental commodities" means non-tangible energy credits, and any and all current and future rights, credits, benefits, air quality credits, methane capture credits, renewable energy credits, emission reductions, offsets, and allowances, howsoever referred to, associated with the capture, production, generation, transportation, use, and environmental characteristics of biogas and sustainable gas, the displacement of fossil-based natural gas for any use (including, without limitation, thermal use, electricity generation, and use as a transportation fuel), the reduction of air pollutants or the avoidance of the emission of any gas, chemical, or other substance, including, without limitation, any similar commodities, whether arising out of international, federal, state, or local laws or regulations.

(5) If the Commission finds that a participating utility is no longer eligible to update the multi-year rate pursuant to subsection (b) of this Section, or the multi-year rate tariff is otherwise terminated, then the participating utility's commitments and obligations under this subsection shall immediately terminate.

(6) In meeting the obligations of this subsection, to the extent feasible and consistent with State and federal law, the investments under the Greenhouse Gas Plan should provide employment opportunities for all segments of the population and workforce, including minority-owned and women-owned business enterprises, and shall not, consistent with State and federal law, discriminate based on race or socioeconomic status.

(7) Nothing in this Section shall prohibit the Commission from investigating the prudence and reasonableness of the expenditures made under the Greenhouse Gas Plan submitted in accordance with this Section during the triennial base rate cases or the annual reconciliations required by subsection (c) of this Section and shall, as part of the investigation, determine whether the utility's actual costs under the program are prudent and reasonable.

(b) Multi-year rate structure, tariff, and protocols.

(1) Notwithstanding any of the ratemaking provisions of this Article that are deemed to require rate of return regulation, a participating gas utility that meets the requirements of subsection (a) of this Section may implement a multi-year rate tariff, structure, and protocols approved by the Commission in order to establish just and reasonable rates for natural gas delivery services on a multi-year cycle. The multi-year rate tariff shall specify the cost components that form the basis of the rates to be charged to customers with sufficient specificity to operate in a standardized manner and be reconciled annually with transparent information that reflects the utility's actual costs to be recovered during each applicable rate year, which is the period beginning with the first billing day of January and extending through the last billing day of the following December.

(2) The multi-year rate tariff, structure, and protocols approved by the Commission shall:

(A) Provide for the recovery of the gas utility's actual costs of gas delivery services that are prudently incurred and reasonable in amount consistent with Commission practice and law. The sole fact that a cost differs from that incurred in a prior calendar year or that an investment is different from that made in a prior calendar year shall not imply the imprudence or unreasonableness of that cost or investment.

(B) Require a participating gas utility to file a base rate case every 3 years, which shall be known as the triennial base rate case, that contains a detailed investment plan for the 3 calendar years beginning the January 1 after the filing. The investment plan shall include the requisite information and detail, consistent with the Commission's future test year rules to establish 3 forward test years for the gas utility.

(C) Calculate revenue requirements for the calendar year following each base rate case, and, in addition, the second and third years following the base rate case.

(D) Provide that if the participating gas utility's earned rate of return on common equity related to the provision of natural gas delivery services for the prior rate year (calculated using costs of debt and actual year-end capital structure approved by the Commission in its most recent triennial base rate case subject to the Commission reviewing for reasonableness and prudence and difference between the actual capital structure and the capital structure approved in the previous triennial base rate case) consistent with this Section, in accordance with Commission rules and orders, including, but not limited to, adjustments for goodwill, and after any Commission-ordered disallowances and taxes, is higher than the rate of return on common equity calculated pursuant to subparagraph (G) of paragraph (2) of this subsection (b) for that same rate year, then the participating utility shall apply a credit through the annual reconciliation process described in subsection (c) of this Section that reflects an amount equal to the value of that portion of the earned rate of return on common equity that is higher than the rate of return on common equity calculated pursuant to subparagraph (G) of paragraph (2) of this subsection (b) for the prior rate year, adjusted for taxes. If the participating utility's earned rate of return on common equity related to the provision of natural gas delivery services for the prior rate year (calculated using costs and capital structure approved by the Commission as provided in subparagraphs (F) and (G) of paragraph (2) of this subsection, consistent with this Section in accordance with Commission rules and orders, including, but not limited to, adjustments for goodwill, and after any Commission-ordered disallowances and taxes) is less than the return on common equity calculated pursuant to subparagraph (G) of paragraph (2) of this subsection (b), then the participating utility shall apply a charge through the annual reconciliation process described in subsection (c) of this Section that reflects an amount equal to the value of that portion of the earned rate of return on common equity that is less than the rate of return on common equity calculated pursuant to subparagraph (G) of paragraph (2) of this subsection (b) for the prior rate year, adjusted for taxes.

(E) Provide for an annual reconciliation, as described in subsection (c) of this Section, with interest, of the revenue requirement reflected in rates for each calendar year, beginning with the first calendar year after the utility files its multi-year rate tariff pursuant to subsection (b) of this Section, with what the revenue requirement would have been had the actual cost information for the applicable calendar year been available at the filing date.

(F) Reflect the utility's actual capital structure for the applicable calendar years, excluding goodwill, subject to a determination of prudence and reasonableness consistent with Commission practice and law.

(G) Reflect the gas utility's cost of equity, which shall be determined in each triennial base rate case and shall be applied to calculate the participating gas utility's revenue requirement for each of the 3 test years filed with the base rate case.

(H) Follow the general protocols and procedures of the ratemaking provisions of this Article, including tariff filing, timing, and suspension requirements. Filing requirements, discovery, and proceeding protocols shall be similar to traditional rate proceedings under this Article, subject to Commission rulemakings to set forth the details of the proceedings.

The inputs to the rate for each applicable rate year shall reflect the year-end rate base based on projected data for that rate year consistent, insofar as applicable, with the Commission's existing future test year rules or the rules adopted for this Section, and shall include projected plant additions and correspondingly updated depreciation reserve and expense for the calendar year in which the inputs are filed.

The multi-year rate shall be applicable to all natural gas delivery services customers.

(3) A participating gas utility shall initiate the multi-year rate process by filing with the Commission its proposed multi-year rate tariff, structure, and protocols, and initial rates for the first 3 years. The Commission shall initiate a docket to review the filing and enter an order approving, or approving as modified, the multi-year rate tariff, structure, and protocols, the initial rates, and any conforming revisions to other tariffs as just and reasonable within 330 days after the date on which the tariff was filed. The Commission's review shall be based on the same evidentiary standards, including, but not limited to, those concerning the prudence and reasonableness of the costs incurred by the utility, the Commission applies in a hearing to review a filing for a general increase in rates under this Article. The multi-year rate tariff, structure, and protocols, initial rates, and any conforming revisions to other tariffs shall take effect no later than 30 days after the Commission's order approving them.

(4) The Commission may adopt rules specifying filing and information requirements for multi-year rate filings that generally contain the level of detail currently set forth in the Commission's rules for future test year rate case filings. If the Commission has not adopted such rules, the utility shall file information that generally contains the same level of detail as required by the information requirements applicable to forward test years under the Commission's current rules.

(5) If the participating gas utility recovers a portion of its costs through automatic adjustment clause tariffs other than those authorized by Section 9-220.3 of this Act on the effective date of this amendatory Act of the 102nd General Assembly, the participating gas utility may elect to continue to recover these costs through such tariffs, but such costs shall not be recovered through the multi-year rate. The applicability of an automatic adjustment clause tariff providing for the recovery of costs that the participating gas utility elects to be included in the multi-year rate is suspended by operation of law on the date on which costs that would have been otherwise recovered through the automatic adjustment clause begin being recovered through rates established under the multi-year rate tariff and structure, provided that neither the suspension nor the multi-year rate alters or affects reconciling charges or credits under such automatic adjustment clause tariff that arise from periods prior to the beginning of the first calendar year to be reconciled under subsection (c). Such suspended automatic adjustment clause tariff again becomes effective, by operation of law and without any further order of the Commission, on the date when a multi-year rate recovering such costs is no longer effective. If the participating gas utility, before the effective date of this amendatory Act of the 102nd General Assembly, filed natural gas delivery services tariffs with the Commission pursuant to Section 9-201 of this Act that are still pending on the effective date of this amendatory Act of the 102nd General Assembly, the participating gas utility shall, at the time it files its multi-year rate tariff with the Commission, also file a notice of withdrawal with the Commission to withdraw the natural gas delivery services tariffs previously filed pursuant to Section 9-201 of this Act. Upon receipt of the notice of withdrawal, the Commission shall dismiss with prejudice any docket that had been initiated to investigate the natural gas delivery services tariffs filed pursuant to Section 9-201 of this Act, and the tariffs and the record related to the tariffs shall not be the subject of any further hearing, investigation, or proceeding of any kind related to rates for natural gas delivery services. The participating gas utility may also file revisions to other tariffs then in effect that refer to a base rate or base rate case to conform those references to the applicable multi-year rate tariff, structure, protocols, or process.

(6) Subsequent changes to the multi-year rate structure or protocols shall be made as set forth in Section 9-201 of this Act, but nothing in this subsection (b) is intended to limit the Commission's authority under this Article and other provisions of this Act to initiate an investigation of a participating utility's multi-year rate tariff, provided that any such changes shall be consistent with this subsection (b) and subsection (c). Any change ordered by the Commission shall be made at the same time new rates take effect following the Commission's next triennial base rate case order pursuant to subsections (b) and (c) of this Section, provided that the new rates take effect no less than 30 days after the date on which the Commission issues an order adopting the change.

(7) The multi-year rate tariff, structure, and protocols shall remain in effect at the discretion of the utility. The participating gas utility is not precluded from filing a rate case under the provisions of this Article at any time. If the participating utility chooses to terminate the multi-year rate structure, or in the event the multi-year rate structure is terminated by the Commission, the then current rates shall remain in effect until new rates are set pursuant to this Article, subject to retroactive rate adjustment, with interest, to reconcile rates charged with actual costs. At the time the multi-year rate structure is terminated, the participating utility's voluntary commitments and obligations under subsection (a) of this Section shall immediately terminate and any investments made pursuant to the most recent Greenhouse Gas Plan shall be included as rate base in the following rate proceeding filed pursuant to this Article.

(c) Annual reconciliations.

(1) On or before June 1 of the year immediately following year one, the participating gas utility shall file with the Chief Clerk of the Commission updated actual cost inputs to the rates established under the multi-year rate plan for year one, the resulting updated charges applicable to year one, and a request for reconciliation of year one rates in accordance with the provisions of this subsection. This reconciliation, which shall be known as the initial annual reconciliation, shall reconcile the revenue requirement initially established for year one by Commission's initial triennial base rate case order (if not in effect for the entirety of year one, weighted, as applicable, with any prior rates in effect that year) and the amount collected by the participating gas utility via a surcharge tariff pursuant to Section 9-220.3 of this Act during year one on account of qualifying infrastructure investment, as that term is defined in subsection (b) of 9-220.3, that occurred during year one, with the revenue requirement determined in the same manner, including the utility's capital structure and cost of equity as determined in the most recent triennial base rate case, as the revenue requirement initially established for year one by Commission's initial triennial base rate case order, except using the actual costs for year one, and a year-end rate base for year one. The first such reconciliation is not intended to provide for the recovery of costs previously excluded from rates based on a prior Commission order finding of imprudence or unreasonableness. Any over-collection or under-collection indicated by such reconciliation shall be reflected as a credit against, or recovered as an additional charge to, respectively, with interest calculated at a rate equal to the utility's weighted average cost of capital approved by the Commission in the initial triennial base rate case, the rates applicable in the following applicable rate year. As used in this subsection, "year one" means the calendar year in which rates established the participating gas utility's initial triennial base rate case and multi-year rate structure and protocols first go into effect.

(2) On or before June 1 of each subsequent year in which rates established under any triennial base rate case and the multi-year rate tariff, structure, and protocols are in effect, the participating gas utility shall file with the Chief Clerk of the Commission its updated actual cost inputs to the rates established under the multi-year rate tariff for the previous calendar year and a request for reconciliation of rates in accordance with the provisions of this subsection. Each such reconciliation shall address the prior calendar year in which rates established under the multi-year tariff and structure were in effect and shall reconcile the revenue requirements established by Commission's previous triennial base rate case order in effect for that year with the revenue requirement determined in the same manner, including the utility's capital structure and cost of equity, as in the most recent triennial base rate case, using actual costs for that year, and the year-end rate base for that year subject to metric performance adjustments set forth in subsection (e) of this Section. Any over-collection or under-collection indicated by such reconciliation of the rate period shall be reflected as a credit against, or recovered as an additional charge to, respectively, with interest calculated at a rate equal to the utility's weighted average cost of capital approved by the Commission in the most recent triennial base rate case, the charges for the following applicable rate year.

(3) Notwithstanding anything to the contrary, the intent of the reconciliation is to ultimately reconcile the revenue requirement reflected in rates for each calendar year, beginning with the calendar year following year one pursuant to this subsection (c), with what the revenue requirement determined using a year-end rate base for the applicable calendar year would have been had the actual cost information for the applicable calendar year been available at the filing date, considering any charge or credit required by subparagraph (D) of paragraph (2) of subsection (d) of this Section.

(4) The new charge or credit resulting from the initial and subsequent annual reconciliation, if any, resulting from the calculation required by this subsection (c) shall take effect beginning on the first billing day of the following January billing period and remain in effect through the last billing day of the December billing period.

(5) The initial and each annual reconciliation filing shall include relevant and necessary data and documentation for the applicable rate year that is consistent with the Commission's rules applicable to a filing for a general increase in rates or any rules adopted by the Commission to implement this Section. Normalization adjustments shall not be required.

(6) Within 45 days after the utility makes its initial or subsequent annual reconciliation filing, the Commission shall have the authority, either upon complaint or its own initiative, but with reasonable notice, to enter upon a hearing concerning the prudence and reasonableness of the costs incurred by the utility to be recovered during the applicable rate year that are reflected in the inputs to the multi-year rate. During the course of the hearing, each objection shall be stated with particularity and evidence provided in support thereof, after which the utility shall have the opportunity to rebut the evidence. Discovery shall be allowed consistent with the Commission's Rules of Practice, which Rules shall be enforced by the Commission or the assigned administrative law judge. The Commission shall apply the same evidentiary standards, including, but not limited to, those concerning the prudence and reasonableness of the costs incurred by the utility, in the hearing as it would apply in a hearing to review a filing for a general increase in rates under this Article. The Commission shall not, however, have the authority in a proceeding under this subsection (c) to consider or order any changes to the structure or protocols of the multi-year rate approved pursuant to subsection (b) of this Section. Nor shall the Commission have the authority to reconsider any determinations of the prudence and reasonableness of plans made as part of its approval of a multi-year rate plan, provided that the Commission may consider the prudence of utility actions and reasonableness of utilities costs incurred in executing those plans. In a proceeding under this subsection (c), the Commission shall enter its order no later than the earlier of 240 days after the utility's filing of its annual reconciliation and update of cost inputs to the multi-year rate or December 31. The Commission's determinations of the prudence and reasonableness of the costs incurred for the applicable calendar year shall be final upon entry of the Commission's order and shall not be subject to reopening, reexamination, or collateral attack in any other Commission proceeding, case, docket, order, or rule; however, nothing in this subsection (c) shall prohibit a party from petitioning the Commission to rehear or appeal to the courts the order pursuant to the provisions of this Act.

(7) If the Commission does not, either upon complaint or its own initiative, enter upon a hearing within 45 days after the utility files the annual reconciliation and update of cost inputs, then the costs incurred for the applicable calendar year shall be deemed prudent and reasonable, and the filed charges shall not be subject to reopening, reexamination, or collateral attack in any other proceeding, case, docket, order, or rule.

(d) Rate design. Nothing in subsection (b) or (c) of this Section shall prohibit the Commission from investigating, or a participating utility from filing, revenue-neutral tariff changes related to rate design of a multi-year rate that has been placed into effect for the utility. Following approval of a participating utility's multi-year rate tariff pursuant to subsection (b) of this Section, the utility shall make a filing with the Commission within one year after the effective date of a multi-year rate tariff that proposes changes to the tariff to incorporate the findings of any final rate design orders of the Commission applicable to the participating utility and entered subsequent to the Commission's approval of the tariff. The Commission shall, after notice and hearing, enter its order approving, or approving with modification, the proposed changes to the multi-year rate tariff within 240 days after the utility's filing. Following such approval, the utility shall make a filing with the Commission during each subsequent 3-year period that either proposes revenue-neutral tariff changes or re-files the existing tariffs without change, which shall present the Commission with an opportunity to suspend the tariffs and consider revenue-neutral tariff changes related to rate design.

(e) Performance-based metrics.

(1) Within 30 days after the filing of a tariff pursuant to subsection (b) of this Section, each participating gas utility shall develop and file with the Commission a plan designed to achieve, over a 9-year period, the following:

(A) incorporation of sustainable gas into its gas supply portfolio by not less than 2% of the natural gas utility's total gas supply portfolio (by volume) by the year 2030 as set forth in subsection (a) of this Section;

(B) implementation of the proposed qualified investments, as set forth in subparagraph (B) of paragraph (2) of subsection (a) of this Section, in support of the measurement, reduction, displacement, or offset of greenhouse gas emissions from utility operations by the participating gas utility;

(C) implementation of the proposed customer programs and qualified investments, as set forth in subparagraph (B) of paragraph (2) of subsection (a) of this Section, in support of a pathway to reduce, offset, or avoid other greenhouse gas in metric tons of carbon dioxide equivalent in the State of Illinois attributable to residential, commercial, and industrial customer use of energy and opportunities to reduce emissions in other sectors of the State's economy; and

(D) opportunities for minority-owned, women-owned, and veteran-owned business enterprises: design a performance metric regarding the creation of opportunities for minority-owned, women-owned, and veteran-owned business enterprises consistent with State and federal law using a base performance value of the percentage of the participating gas utility's capital expenditures that were paid to minority-owned, women-owned, and veteran-owned business enterprises in the years 2018, 2019, and 2020.

(2) The metrics plan shall include information about the potential greenhouse gas emission benefits of the investments and programs that are proposed as part of the plan. The natural gas utility shall utilize Environmental Protection Agency and other industry recognized greenhouse gas reporting protocols, subject to adjustments over time by the gas utility as governed by documented changes in industry recognized protocols, governmental and regulatory requirements and changes.

(3) The metrics shall include incremental performance goals for every 3-year period in alignment with the Greenhouse Gas Plan filed with each triennial base rate case filed in accordance with subsection (b) of this Section that shall be designed to demonstrate that the gas utility is on track to achieve the performance goal in each category at the end of the 9-year period.

(4) With respect to each of the performance goals established pursuant to paragraphs (1) and (2) of this subsection (e), as applicable, which together measure the participating gas utilities progress relating to the implementation of its commitments set forth in subsection (a) of this Section, the performance under each such 3-year goal shall be calculated in terms of the percentage of the goal achieved or missed. The percentage of goal achieved or missed for each of the goals shall be aggregated and an average percentage value calculated, for each year of the 10-year period. If the utility exceeds an average percentage value in a given year of at least 5%, the participating utility's return on equity approved in the triennial base rate case shall be increased by 25 basis points when the revenue requirement is recalculated for purposes of the following 3 annual reconciliations filed pursuant to subsection (c) of this Section. If the utility does not achieve an average percentage value in a given year of at least 95%, the participating utility's return on equity approved in the triennial base rate case shall be decreased by 25 basis points when the revenue requirement is recalculated for purposes of the following 3 annual reconciliations filed pursuant to subsection (c) of this Section.

(5) The Commission shall, after notice and hearing, enter an order within 120 days after the metrics are filed approving, or approving with modification, a participating utility's proposed metrics set forth in this subsection.

(6) Along with each triennial base rate case filing (after the initial triennial base rate case) made pursuant to subsection (b), each participating utility shall file a report with the Commission that includes, among other things, a description of how the participating gas utility performed under each metric and an identification of any extraordinary events that adversely or positively impacted the utility's performance. The first report filed with the triennial base rate case filing (after the initial triennial base rate case) shall provide data with respect to the utility's performance under the metrics during the 2 rate years preceding the filing and subsequent reports shall address the utility's performance under the metrics for the previous 3-year period. Whenever a participating utility satisfies or does not satisfy the metrics required pursuant to this subsection (e), the Commission shall approve financial incentives or penalties, as appropriate, in accordance with this subsection (e). The Commission-approved incentives or financial penalties shall be applied to the return on equity that is determined in the triennial base rate case. Nothing in this Section shall authorize the Commission to increase or reduce or otherwise obviate the imposition of financial incentives or penalties for achieving or failing to achieve one or more of the metrics established pursuant to subparagraphs (1) through (3) of this subsection (e).

(7) If the multi-year rate tariff established pursuant to subsection (b) of this Section terminates, the utility's obligations under this subsection (e) shall also terminate; however, any penalties due and owing at the time of such termination shall be applied in the participating utilities following rate proceedings under this Article.

(f) Relationship to pre-existing automatic adjustment clause tariffs authorized by Section 9-220.3. Any surcharge tariff of a participating gas utility authorized by paragraph (3) of subsection (a) of Section 9-220.3 of this Act that is in effect on the effective date of the multi-year rate tariff approved by the Commission for that utility pursuant to the provisions of this Section shall be suspended by operation of law on the effective date of that multi-year rate tariff. Notwithstanding anything in paragraph (4) of subsection (a) and paragraph (2) of subsection (e) of Section 9-220.3 of this Act, a participating gas utility shall not file a petition to initiate a final reconciliation of amounts collected under such a surcharge tariff on account of qualifying infrastructure investment, as that term is defined in subsection (b) of Section 9-220.3, that occurred during any calendar year for which a reconciliation will be made under subsection (c), and no adjustment to the initial rates set in the participating gas utility's initial triennial base rate case shall be made based on the fact that the utility had such a tariff in effect or recovered any portion of its revenue requirement through such a tariff.

Section 99. Effective date. This Act takes effect upon becoming law.".