SB0877eng 95TH GENERAL ASSEMBLY

SB0877 Engrossed LRB095 05640 MJR 25730 b

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Public Utilities Act is amended by adding Section 9-220.3 as follows:

(220 ILCS 5/9-220.3 new)

Sec. 9-220.3. Renewable energy portfolio standard and energy efficiency portfolio standard.

(a) The General Assembly finds and declares that it is desirable to obtain the environmental quality, public health, employment, economic development, rate stabilization, and fuel diversity benefits of developing new renewable energy resources for use in Illinois. The General Assembly has previously found and declared that the benefits of electricity from renewable energy resources accrue to the public at large, thus consumers and electric utilities and alternative retail electric suppliers share an interest in developing and using a significant level of these environmentally preferable resources in the State's electricity supply portfolio. The General Assembly has previously found and declared that renewable forms of energy should be promoted as an important element of the energy and environmental policies of the State.

(b) For purposes of this Section:

"Renewable energy credit" means a tradable credit that represents the environmental attributes of a certain amount of energy produced from a renewable energy resource.

"Renewable energy resources" includes energy or renewable energy credits from wind, solar thermal energy, photovoltaic cells and panels, dedicated crops grown for energy production and organic waste biomass, hydropower that does not involve new construction or significant expansion of hydropower dams, and other such alternative sources of environmentally preferable energy. For purposes of this Section, "renewable energy resources" includes landfill gas from landfills located in the State. "Renewable energy resources" does not include, however, energy from the incineration, burning or heating of waste wood, tires, garbage, general household, institutional and commercial waste, industrial lunchroom or office waste, landscape waste, or construction or demolition debris.

(c) The following renewable energy portfolio standards shall apply:

(1) An electric utility shall procure or obtain renewable energy resources in amounts that equal or exceed the following percentages of the total electricity that such electric utility supplies to its retail Illinois customers: 2% by December 31, 2008; 4% by December 31, 2009; 5% by December 31, 2010; 6% by December 31, 2011; 7% by December 31, 2012; 8% by December 31, 2013; 9% by December 31, 2014; and 10% by December 31, 2015. It shall be the goal of the State that cost-effective renewable energy resources be available to supply an amount of the total electricity that electric utilities supply to their retail customers that will continue to increase after 2015 by 1.5% per year to 25% by 2025. Provided, however, that if the Commission's promulgation of rules pursuant to item (7) is delayed beyond March 31, 2008, but occurs prior to April 1, 2009, the initial target year and each subsequent target year shall be delayed by one year; the targets shall be delayed by an additional year for each additional year or fraction thereof that the Commission's promulgation of rules is delayed. In the event that the Commission's promulgation of rules is delayed after March 31, 2008, but occurs before July 1, 2008, the utility shall nonetheless meet one-quarter of the target for 2008 of electricity supplied to retail Illinois customers by December 31, 2008. To the extent that it is available, at least 75% of the renewable energy resources used to meet these standards shall come from wind generation. For purposes of this subsection (c), "cost-effective" shall mean that the costs of procuring renewable energy resources do not cause the limit stated in item (3) to be exceeded.

(2) For the purposes of this subsection (c), the required procurement of renewable energy resources for a particular year shall be measured as a percentage of the actual amount of electricity (megawatt-hours) supplied by the electric utility in the calendar year ending immediately prior to the procurement.

(3) Notwithstanding the requirements of item (1) of this subsection (c), an electric utility may reduce the amount of renewable energy resources procured under new contracts in any single year by an amount necessary to limit the estimated average increase due to the cost of these resources included in the amounts paid by retail customers in connection with electric service to no more than 0.5% of the amount paid by such customers during the preceding calendar year, with such limit increasing by 0.5% in each of the 3 years 2009 through 2011, for a maximum cap on the allowed estimated average increase due to the cost of these resources of 2.0%. The maximum cap on the allowed estimated average increase due to the cost of these resources is 2%. No later than June 30, 2011, the Commission shall review the rate limitation and report to the General Assembly its findings as to whether the rate cap unduly constrains the procurement of renewable energy resources that are cost effective.

(4) Renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in item (1) of this subsection (c) only if they are generated from facilities located in the State, provided that cost-effective renewable resources are available from such facilities. After December 31, 2011, renewable energy resources located in states that adjoin Illinois may be counted towards compliance with the standards set forth in item (1) of this subsection (c) so long as such resources are generated from resources that meet the definition of renewable energy resources as defined by this statute. Any electric utility with fewer than 100,000 but more than 50,000 customers in Illinois as of January 1, 2007 shall be allowed to count renewable energy resources generated in a state adjoining Illinois for the purpose of meeting the renewable energy standard set forth in item (1) of this subsection (c) if such resources are generated from a facility constructed in the year 2006.

(5) Each electric utility shall report to the Commission on compliance with these standards by April 1 of each year, beginning in 2009.

(6) If an electric utility does not, during a calendar year, procure or obtain the full amount of renewable energy resources specified by the standards in item (1) of this subsection (c), as modified by the limitations of item (3) of this subsection (c), then the electric utility shall pay a penalty of $40 per megawatt-hour for any shortfall during such year unless and until the utility makes sufficient additional purchases in the following year to offset the shortfall. Provided, however, that, if the electric utility proves to the Commission that cost-effective renewable energy resources are not available in sufficient quantities to meet the renewable energy standards set forth in item (1) of this subsection (c), as modified by the limitations of item (3) of this subsection (c), and, if the Commission finds that the electric utility has, in fact, proved that the cost-effective renewable energy resources are not available in sufficient quantities, after notice and a hearing conducted in accordance with the Commission's rules of practice, then the Commission shall waive the penalty. Any penalty payment shall be deposited into the Renewable Energy Resources Trust Fund to be used by the Department of Commerce and Economic Opportunity for the sole purposes of supporting the actual development, construction, and utilization of renewable energy projects in the State.

(7) The Commission shall promulgate rules as necessary within 9 months after the effective date of this Act to assist in implementing this subsection (c) including, but not limited to, methods of procurement, accounting, tracking, and reporting in order to achieve the full objectives of this subsection (c). The rules shall also provide for recovery of costs incurred and the pass-through to customers of any savings achieved by electric utilities as a result of procuring or obtaining the renewable energy resources specified under item (1) of this subsection (c). The rate elements and rates used for such cost recovery may be established by the electric utility, subject to the Commission's review and approval, outside the context of a general rate case.

(8) In connection with their compliance with the requirements of item (1) of this subsection (c), electric utilities may enter into long-term contracts of up to 20 years in length with providers of renewable energy resources, and the costs or savings associated with those contracts shall be reflected in tariffed rates for the duration of those contracts.

(9) Nothing shall prohibit an electric utility from issuing a competitive solicitation for renewable energy resources in order to meet the standards of item (1) of this subsection (c) and from beginning to recover the associated costs in advance of the conclusion of the rulemaking referenced in item (7) of this subsection (c), provided that such electric utility shall have first requested and received Commission approval for the design and conduct of such solicitation and the associated cost recovery methodology and tariff, which the Commission shall review and consider.

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