SB1184 95TH GENERAL ASSEMBLY

LRB095 10949 MJR 31247 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB1184

Introduced 2/8/2007, by Sen. Don Harmon

SYNOPSIS AS INTRODUCED:

New Act

Creates the Affordable and Clean Energy Standards (ACES) Act. Provides the findings of the General Assembly. Provides that electric utilities shall utilize cost-effective energy efficiency and load management investment in their energy resource portfolios according to specified guidelines. Provides that the Capital Development Board shall adopt the 2006 International Energy Conservation Code, without amendment, as the statewide residential building code for new home construction and significant additions or remodels of existing homes. Includes a severability clause. Preempts home rule. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

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

Section 1. Short title. This Act may be cited as the Affordable and Clean Energy Standards (ACES) Act.

Section 5. Findings. The General Assembly finds the following:

(1) Energy efficiency is a cost-effective resource that ensures affordable and reliable energy to Illinois consumers.

(2) 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.

(3) 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.

(4) Energy efficiency and renewable energy in Illinois are resources that are currently underutilized.

(5) Investment in energy efficiency and load management, combined with energy efficiency codes and standards, present important opportunities to increase Illinois' energy security, protect Illinois energy consumers from price volatility, preserve the State's natural resources and pursue an improved environment in Illinois.

(6) It serves the public interest to support public utility investments in cost-effective energy efficiency and load management by allowing recovery of costs for reasonable and prudently incurred expenses of energy efficiency, renewable energy, and load management programs.

(7) Investments in energy efficiency and implementation of utility energy efficiency programs dedicated to economically-disadvantaged Illinois residents, in addition to existing low-income weatherization programs managed by the State of Illinois, will reduce the burden of utility costs on low-income customers.

(8) Public utility investments in cost-effective energy efficiency, renewable energy, and load management, combined with the adoption of efficiency codes and standards, can provide significant reductions in greenhouse gas emissions, regulated air emissions, water consumption, and natural resource depletion and can avoid or delay the need for more expensive generation, transmission, and distribution infrastructure.

Section 10. Definitions.

"Board" means the Capital Development Board.

"Code" means the 2006 International Energy Conservation Code.

"Commission" means the Illinois Commerce Commission.

"Cost-effective" means that the program being evaluated satisfies the total resource cost test as defined in this Section.

"Department" means the Department of Commerce and Economic Opportunity.

"Distribution cooperative utility" means a utility with distribution facilities organized as a rural electric cooperative.

"Energy conservation" is any reduction in electric power consumption or natural gas consumption resulting from: (i) increased energy efficiency in the production, transmission, distribution, and customer end-use applications of electricity and natural gas and (ii) increased customer knowledge concerning the societal impacts of consumption. Such knowledge may be the result of economically efficient energy prices or other means of communication when prices are of the second best nature.

"Energy efficiency" means measures, including energy conservation measures, or programs that target consumer behavior, equipment, or devices to result in a decrease in consumption of electricity and natural gas without reducing the amount or quality of energy services.

"External costs" or "negative externalities" are costs imposed on society that are not directly borne by the producer in production and delivery activities. Due to imperfections in, or the absence of, markets, the producer's production, and pricing decisions do not account for these costs.

"Large customer" means a utility customer at a single, contiguous field, location, or facility, regardless of the number of meters at that field, location, or facility, with electricity consumption greater than 7,000 megawatt-hours per year or natural gas use greater than 5,000 therms per year.

"Load management" means measures or programs that target equipment or devices to result in decrease peak electricity demand or shift demand from peak to off-peak periods

"Municipality" means any city, village, or incorporated town.

"Planning costs" are the costs of evaluating the future demand for energy services and of evaluating alternative methods of satisfying that demand. Planning costs include, but are not be limited to, costs associated with: (i) econometric and end-use forecasting, (ii) identification and evaluation of alternative demand-side and supply-side resource options, and (iii) evaluation of externalities associated with alternative resources.

"Portfolio development costs" are costs of preparing a resource in a portfolio for prompt and timely acquisition. Portfolio development costs include, but are not be limited to, costs associated with: (i) negotiating contracts with competitively acquired resources, (ii) acquiring and holding resource options; and (iii) developing and maintaining the capability to rapidly acquire demand-side resources.

"Residential building" means a detached one-family or 2-family dwelling or any building that is 3 stories or less in height above grade that contains multiple dwelling units, in which the occupants reside on a primarily permanent basis such as a townhouse, a row house, an apartment house, a convent, a monastery, a rectory, a fraternity or sorority house, a dormitory, and a rooming house.

"Renewable energy resources" includes energy and 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. "Renewable energy resources" does not include 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.

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

"Energy efficiency resources" means energy efficiency programs designed to assist customers to use energy more efficiently, reduce or control their consumption of energy, as measured in kilowatts, kilowatthours or therms, or otherwise control the level of their electric utility bills.

"Total resource cost test" means a standard that is met if, for an investment in energy efficiency or load management, on a life-cycle basis the avoided supply-side monetary costs are greater than the monetary costs of the demand-side programs borne by both the utility and the participants. A total resource cost test:

(1) explicitly manages the consequences of uncertainty and risk associated with a utility's market characteristics and supply alternatives;

(2) integrates the demand-side and supply-side resources that represent the least cost to society over the long-term;

(3) explicitly weighs a broad range of resource attributes (e.g., environmental externalities) in the evaluation of alternative resources;

(4) is reasonably understandable to interested persons (including members of the general public) and the commission;

(5) involves stakeholders and non-utility expertise in utility resource planning;

(6) results from a planning process within the utility that facilitates communication and coordination among the entities dealing with utility finances, demand forecasts, and demand-side and supply-side resource evaluations, as well as other relevant entities; and

(7) continually monitors and develops data on the cost effectiveness and actual productivity of conservation programs.

Section 15. Utility energy efficiency programs.

(a) It is the policy of the State that electric utilities utilize cost-effective energy efficiency and load management investments in their energy resource portfolios.

(b) Electric utilities shall use energy efficiency resources to meet the following energy savings goals:

(1) 10% of projected load growth shall be met through energy efficiency by 2008.

(2) 20% of projected load growth shall be met through energy efficiency by 2009.

(3) 30% of projected load growth shall be met through energy efficiency by 2010.

(4) 40% of projected load growth shall be met through energy efficiency by 2011.

(5) 50% of projected load growth shall be met through energy efficiency by 2012.

(6) 100% of projected load growth shall be met through energy efficiency by 2015.

(7) If load growth is static, 1% of load shall be met through energy efficiency.

(c) Within 3 months after the effective date of this Act, the Commission shall adopt rules specifying the procedure for electric utilities to develop and submit an energy efficiency plan and, within 3 months after adoption of the rules and biennially thereafter, Illinois electric utilities must file an energy efficiency plan with the Commission.

In submitting proposed energy efficiency program plans and funding levels to meet the savings goals adopted by this Act, a utility must do all of the following:

(1) Demonstrate that its proposed level of electric and natural gas energy efficiency program activities and funding is consistent with the adopted electric and natural gas savings goals.

(2) Present specific proposals for programs that support new building and appliance standards.

(3) Present estimates of the net rate impacts and bill impacts associated with the proposed portfolio of programs designed to meet the adopted energy savings goals. The utilities shall work with Commission to develop a consistent format for presenting these estimates in their filings.

(4) Present a suite of energy efficiency programs targeted to households at or below 150% of the poverty level at a level proportionate to those households' share of total annual utility expenditures in Illinois.

(5) Demonstrate that their investments in energy efficiency are cost effective, using the total resource cost test.

Within 120 days of receiving an energy efficiency plan from an electric or natural gas utility, the Commission shall approve, reject, or modify the submitted plan.

(d) The Commission shall allow electric utilities to recover the costs of investments in energy efficiency under the following conditions:

(1) A public utility that undertakes energy efficiency programs shall recover the costs of all the cost-effective programs implemented after the effective date of this Act.

(2) A public utility that undertakes additional energy efficiency programs beyond the requirements of this Act shall recover the costs of all the cost-effective programs implemented after the effective date through an approved tariff rider.

(3) The tariff rider shall provide for the recovery on a monthly basis or otherwise of all reasonable costs of approved energy efficiency programs.

(e) The implementation of energy efficiency programs under this plan shall be split between the utilities and the Department of Commerce and Economic Opportunity as follows:

(1) Electric and natural gas utilities shall implement 75% of the energy efficiency programs.

Electric and natural gas utilities shall administer energy savings incentive programs in a market-neutral, nondiscriminatory manner.

Each electric and natural gas utility shall provide, through market-based standard offer programs, incentives sufficient for retail electric and natural gas providers and competitive energy service providers to acquire additional cost-effective energy efficiency according to the goals set forth in the plan.

The guidelines provide the utilities with policy and planning guidance. The guidelines do not specify the outcome of the planning process nor mandate particular investment decisions. Each utility's plan should be the result of that utility's unique planning process and judgment.

(2) The Department shall implement 25% of energy efficiency programs by focusing on limited, targeted, market-transformation and educational programs that shall provide incentives sufficient for retail electric and natural gas providers and competitive energy service providers to acquire additional cost-effective energy efficiency according to the goals set forth in the plan.

Section 20. Renewable portfolio standard.

(a) An electric utility shall procure or obtain renewable energy resources in amounts equal to at least the following percentages of the total electricity that it supplies to its Illinois customers: 3% 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; 10% by December 31, 2015, and 25% by 2025. 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.

(b) For the purpose of this Section, the required procurement of renewable energy resources for a particular year shall be measured as a percentage of the actual amount of electricity (megawatthours) supplied by the electric utility in the calendar year ending immediately prior to the procurement.

(c) Notwithstanding the requirements of subsection (a), an electric utility may reduce the amount of electric energy procured under new contracts from renewable energy resources in any single year by an amount necessary to limit the estimated average net increase to customers, due to these contracts, to be no more than 1.5% of customers' total electricity bills for the calendar year ending immediately prior to the procurement, subject to adjustments for any known subsequent rate increases. Any reductions in one year shall be offset by additional procurement in the following years subject to the annual limitation set forth above.

(d) In order to achieve improved air and water quality, additional environmental benefits, better public health, and economic development for Illinois, renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in subsection (a) of this Section only if they are generated from facilities located in the State or in a serious or severe ozone non-attainment area, as designated by the United States Environmental Protection Agency, in another directly adjacent state. Renewable energy resources may be counted for purposes of the renewable energy standards set forth in subsection (a) of this Section after December 31, 2010 if they are generated from a facility anywhere in a directly adjacent state or in any state that is currently in the United States Environmental Protection Agency Region V, and if that state has entered into an agreement with the State as provided in subsection (e), and if the renewable energy resources procured meet the formula set forth in subsection (b) of this Section.

(e) The Department of Commerce and Economic Opportunity and other state officials shall attempt to work with public officials in directly adjacent states and other states currently in United States Environmental Protection Agency Region V to develop an agreement in which electric utilities in the State shall be allowed, after December 31, 2010, to count for the purpose of meeting the designated renewable energy standards set forth in subsection (a) of this Section some renewable energy resources generated in a directly adjacent state or in any state that is currently in United States Environmental Protection Agency Region V if that state has enacted renewable energy portfolio standards and that other state also allows renewable energy resources generated in the State to be counted towards meeting its statutory renewable energy standards on substantially the same basis. For the purposes of such an agreement, all renewable energy resources procured must meet the method of calculation set forth in this Act.

(f) Each electric utility shall report to the Commission on compliance with these standards by April 1 of each year, beginning in 2008.

(g) If an electric utility does not procure or obtain the full amount of renewable energy resources specified by the standards in subsection (a) of this Section, as modified by the limitations of subsection (c) of this Section, then the electric utility shall pay a penalty of $40 per megawatthour each year for any shortfall unless and until the utility makes sufficient purchases to meet the requirement. Provided, however, that, if the electric utility proves to the Commission that renewable energy resources are not available in sufficient quantities to meet the renewable energy standards set forth in subsection (a) of this Section, as modified by the limitations of subsection (c) of this Section, and, if the Commission finds that the electric utility has, in fact, proved that the 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.

(h) The Commission shall promulgate rules as necessary within 12 months after the effective date of this Act to assist in implementing this Section including, but not limited to, methods of procurement, accounting, tracking, and reporting in order to achieve the full objectives of this Section. 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 subsection (a) of this Section. 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.

(i) In connection with their compliance with the requirements of subsection (a) of this Section, 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.

(j) Nothing shall prohibit an electric utility from issuing a competitive solicitation for renewable energy resources in order to meet the standards of subsection (a) of this Section and from beginning to recover the associated costs in advance of the conclusion of the rulemaking referenced in subsection (h) of this Section, 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 25. Residential building energy code; home rule.

(a) The Board shall adopt the 2006 International Energy Conservation Code (IECC), without amendment, as the statewide residential building code for new home construction and significant additions or remodels of existing homes.

(b) Except as otherwise provided by this Act, the Code shall apply to any residential building or structure in this State for which a building permit application is received by a municipality or county on or after the effective date of this Act.

The following buildings shall be exempt from the Energy Efficient Building Code:

(1) Buildings otherwise exempt from the provisions of a locally adopted building code and buildings that do not contain a conditioned space.

(2) Buildings that do not use either electricity or fossil fuel for comfort conditioning. For purposes of determining whether this exemption applies, a building will be presumed to be heated by electricity, even in the absence of equipment used for electric comfort heating, whenever the building is provided with electrical service in excess of 100 amps, unless the code enforcement official determines that this electrical service is necessary for purposes other than providing electric comfort heating.

(3) Buildings that are listed on the National Register of Historic Places or the Illinois Register of Historic Places and buildings that have been designated as historically significant by a local governing body that is authorized to make such designations.

(c) The Board, or the Illinois Building Commission as directed by the Board, shall make available implementation materials that explain the requirements of the Code and describe methods of compliance acceptable to Code enforcement officials. The materials shall include software tools, simplified prescriptive options, and other materials as appropriate. The simplified materials shall be designed for projects in which a design professional may not be involved. The Board shall provide local jurisdictions with technical assistance concerning implementation and enforcement of the Code.

(d) The Board shall determine procedures for compliance with the Code. These procedures may include but need not be limited to certification by a national, State, or local accredited energy conservation program or inspections from private Code-certified inspectors using the Code.

(e) The Board may adopt any rules that are necessary for the enforcement of this Act.

(f) In the development of Code adaptations, rules, and procedures for compliance with the Code, the Capital Development Board, or the Illinois Building Commission as directed by the Board, shall seek input from representatives from the building trades, design professionals, construction professionals, code administrators, and other interested entities affected.

(g) No unit of local government, including any home rule unit, shall have the authority to regulate energy efficient building standards in a manner that is less stringent than the provisions contained in this Act. This subsection (g) is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

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