SB0678ham002 97TH GENERAL ASSEMBLY

Rep. John E. Bradley

Filed: 5/23/2012

09700SB0678ham002 LRB097 04938 CEL 69975 a

AMENDMENT TO SENATE BILL 678

AMENDMENT NO. ______. Amend Senate Bill 678 as follows:

on page 4, immediately below line 21, by inserting the following:

""Coal gasification unit" means equipment that is designed to process coal and convert the energy content of coal into SNG."; and

on page 8, by replacing lines 3 through 13 with "facility using gasification technology or an SNG-ready generating facility that: (1) has a nameplate capacity of at least 500 MW; (2) irrevocably commits in its proposed sourcing agreement to use coal for at least 50% of the total feedstock over the term of a sourcing agreement, with all coal having high volatile bituminous rank and greater than 1.7 pounds of sulfur per million btu content, but this clause (2) shall not apply if the facility is an SNG-ready generating facility; (3) is designed to capture and sequester at least 90% of the carbon dioxide emissions that the portion of the facility, if any, that produces SNG would otherwise emit and at least 50% of the total carbon dioxide emissions that the facility as a whole would otherwise emit, but this clause (3) shall not apply if the facility is an SNG-ready generating facility; (4) absent an appeal of a permit or"; and

on page 11, immediately below line 25, by inserting the following:

""SNG-ready capital costs" means the portion of the capital costs of an SNG-ready generating facility that are necessary to accommodate future integrated operation of such generating facility with one or more coal gasification units, but only to the extent such capital costs would not have been part of the capital costs of a similar electric generating facility that is not designed to accommodate future integrated operation with one or more coal gasification units.

"SNG-ready capital rate component" means, for any year, the portion of the amounts paid under sourcing agreements with the initial clean coal facility that is attributable to SNG-ready capital costs being included in the return of capital and return on capital components of the formula rate.

"SNG-ready generating facility" means an electric generating facility that is capable of using SNG as a fuel and is designed to accommodate future integrated operation with one or more coal gasification units located on or adjacent to the generating facility site, but with no gasification units constructed as part of the initial construction of such facility. An SNG-ready generating facility shall be designed to accommodate such future integrated operation if its steam turbine, steam piping, air cooled condenser, condensate and feedwater systems, and certain heat recovery steam generator sections (high pressure superheater, low pressure superheater and reheater) are designed to accommodate the steam and water flows expected from the coal gasification units and if the overall plant layout includes reservation of an adjacent plot space (over which such generating facility holds and shall maintain site control) for efficient installation of the future coal gasification units and related equipment, including fuel handling equipment."; and

on page 28, lines 8 and 13, by replacing "2012" each time it appears with "2014"; and

on page 29, line 13, by replacing "2012" with "2014"; and

on page 32, immediately below line 15, by inserting the following:

"(7) If and for so long as the initial clean coal facility is an SNG-ready generating facility, the expert or consultant that shall develop the feedstock procurement plan and the feedstock procurement administrator, each as selected pursuant to this subsection (a-5), shall not be required to have experience in coal procurement."; and

by replacing line 17 on page 46 through line 2 on page 53 with the following:

"Notwithstanding the requirements of this subsection (d), the total amount paid under sourcing agreements with clean coal facilities pursuant to the procurement plan for any given year shall be reduced by an amount necessary to limit the annual estimated average net increase due to the costs of these resources included in the amounts paid by eligible retail customers in connection with electric service to:

(A) in 2010, no more than 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(B) in 2011, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2010 or 1% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(C) in 2012, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2011 or 1.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(D) in 2013, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2012 or 2% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009; and

(E) thereafter, the total amount paid under sourcing agreements with clean coal facilities pursuant to the procurement plan for any single year shall be reduced by an amount necessary to limit the estimated average net increase due to the cost of these resources included in the amounts paid by eligible retail customers in connection with electric service to no more than the greater of (i) 2.015% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009 or (ii) the incremental amount per kilowatthour paid for these resources in 2013. These requirements may be altered only as provided by statute.

No later than June 30, 2015, the Commission shall review the limitation on the total amount paid under sourcing agreements, if any, with clean coal facilities pursuant to this subsection (d) and report to the General Assembly its findings as to whether that limitation unduly constrains the amount of electricity generated by cost-effective clean coal facilities that is covered by sourcing agreements.

Notwithstanding the requirements of this subsection (d), the total amount purchased under sourcing agreements with the initial clean coal facility pursuant to the procurement plan for any given year shall be reduced by an amount necessary to limit the annual estimated average net increase due to the costs of these resources included in the amounts paid by eligible retail customers in connection with electric service to:

(A) in 2010, no more than 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(B) in 2011, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2010 or 1% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(C) in 2012, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2011 or 1.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009;

(D) in 2013, the greater of an additional 0.5% of the amount paid per kilowatthour by those customers during the year ending May 31, 2012 or 2% of the amount paid per kilowatthour by those customers during the year ending May 31, 2009; and

(E) thereafter:

(i) A calculation shall be made for each year to determine whether the estimated average net per killowatthour increase due to the cost of electric power purchased under sourcing agreements and included in the amounts paid by small electric customers in connection with electric service exceeds the greater of (1) 2.015% of the amount paid per kilowatthour by eligible retail customers during the year ending May 31, 2009 or (2) the incremental amount per kilowatthour paid for these resources in 2013. If and for so long as the initial clean coal facility is an SNG-ready generating facility, the percentage in the immediately preceding sentence shall be 0.75% and not 2.015%. These requirements may be altered only as provided by statute. For purposes of such calculation, such average net per kilowatthour increase in rates of small electric customers that are not eligible retail customers shall be deemed to be equal to such average net per kilowatthour increase in rates of eligible retail customers.

(ii) If, for any year, the small customer rate impact would exceed the limitation described in item (i) of this subparagraph (E), the clean coal fraction for each clean coal electricity buyer shall be adjusted for such year in a manner that shall result in (1) the quantity of electric power projected to be purchased by each clean coal electricity buyer being reduced by an amount sufficient to result in such deemed rate impact on all small electric customers (whether served by electric utilities or alternative retail electric suppliers) being equal to such limitation for such year and (2) any such reductions in amounts allocated to the clean coal electricity buyers in order to achieve the objective described in clause (1) of this item (ii) being allocated to, and purchased and paid for by, the clean coal electricity buyers in proportion to their retail sales to large electric customers.

(iii) Each year, after taking account of the adjustment, if any, provided for in item (ii) of this subparagraph (E), a calculation shall be made to determine whether the large customer deemed rate impact for such year exceeds $0.005 per kilowatthour. If and for so long as the initial clean coal facility is an SNG-ready generating facility, the amount in the immediately preceding sentence shall be $0.00085, and not $0.005. The "large customer deemed rate impact" for any year is the projected increase in electric rates of large electric customers (whether served by electric utilities or alternative retail electric suppliers) due to the cost of electric power purchased under sourcing agreements to the extent it is based on each clean coal electricity buyer's retail sales to large electric customers, which shall be calculated in substantially the same manner as the calculation of rate impact on small electric customers, and shall assume that such cost of purchases under sourcing agreements is passed through proportionally by the clean coal electricity buyers to their large electric customers. The calculation of the large customer deemed rate impact shall (1) assume that the total retail sales (expressed in kilowatthours sold) to large electric customers by all clean coal electricity buyers for any year is the greater of the actual amount of such sales in such year and the amount of such sales in 2009 and (2) exclude from the calculation any actual costs for such year incurred by the initial clean coal facility to the extent such costs exceed the corresponding amount assumed in the "reference case" of the facility cost report for the initial clean coal facility for such year and are not principally within the reasonable control of the initial clean coal facility.

Any operating costs or revenues deviating from the corresponding costs assumed in the "reference case" of the facility cost report for the initial clean coal facility as a result of changes in market prices, including, but not limited to, prices of coal, natural gas, electricity, by-products, and emissions allowances, shall be deemed to be outside of the reasonable control of the initial clean coal facility and excluded from the calculation.

Any costs exceeding the corresponding costs assumed in the "reference case" of the facility cost report for the initial clean coal facility as a result of changes in capital costs, fixed operating costs, variable operating costs, operating efficiency, and availability, except in each case to the extent resulting from a change in market prices, as described in the immediately preceding paragraph, or from a change in law, as defined in subsection (b) of Section 1-76 of this Act, shall be deemed to be within the reasonable control of the initial clean coal facility and included in the calculation.

If and for so long as the initial clean coal facility is an SNG-ready generating facility, clause (2) of the fourth sentence and all of the second and third paragraphs of this item (iii) shall not apply.

(iv) If, for any year, the large customer deemed rate impact would exceed the limitation described in item (iii) of this subparagraph (E), the quantity of electric power required to be purchased by each clean coal electricity buyer that serves large electric customers under its sourcing agreement for such year shall be reduced by such amount as will result in the large customer deemed rate impact being equal to such limitation for such year, and the clean coal fractions of each clean coal electricity buyer that serves large electric customers shall be adjusted for such year to reflect this reduction; provided, however, that the reduction under this item (iv) shall not exceed in any year an amount that would result in revenues under the sourcing agreements being reduced by more than $50,000,000 in the aggregate for such year, but this provision shall not apply if and for so long as the initial clean coal facility is an SNG-ready generating facility. Any quantities of electric power not required to be purchased pursuant to the operation of the immediately preceding sentence may be disposed of by the initial clean coal facility for its own account, and the proceeds of any sales of such electric power shall not be included in the formula rate.

(v) The details of the calculations contemplated by this subparagraph (E) shall be set forth in the sourcing agreements.

(vi) No later than June 30, 2016, the Commission shall review the limitation on the total amount paid under sourcing agreements, if any, with the initial clean coal facility pursuant to this subsection (d) and report to the General Assembly its findings as to the effect of the limitation on the initial clean coal facility, electric utilities, alternative retail electric suppliers, and customers of the electric utilities and the alternative retail electric suppliers."; and

on page 54, line 4, immediately after "facility" by inserting "as established by engineering and design studies"; and

on page 54, by replacing line 10 with "intermittent resources, the reliability and cost of"; and

on page 54, line 12, immediately after "utilities" by inserting ", the amount of engineering and design work that has been done for the facility, including, in the case of an SNG-ready generating facility, the engineering and design work relating to features that would accommodate future integrated operation with one or more coal gasification units, the facility's water use and overall environmental attributes, and the schedule for commencement of construction and operation of the facility"; and

on page 54, by replacing line 15 with the following:

"97th General Assembly. The facility designated as the initial clean coal facility under this Section shall operate as an SNG-ready generating facility unless and until it becomes an electric generating facility using gasification technology by adding one or more coal gasification units. The initial clean coal facility may add one or more coal gasification units only after:

(A) the General Assembly, by enactment of a law, authorizes the addition; provided that, within 2 years preceding the effective date of such enactment, the initial clean coal facility shall have submitted a facility cost report for the coal gasification unit or units otherwise meeting the requirements of paragraph (4) of subsection (d) of this Section;

(B) a determination is made by the Commission either that a carbon dioxide pipeline capable of transporting the carbon dioxide captured from such gasification unit or units may be constructed, which shall be deemed to have been made if the Commission issued a certificate of authority of the construction of such a carbon dioxide pipeline, or that the initial clean coal facility has obtained a Class VI injection permit from the United States Environmental Protection Agency or the Illinois Environmental Protection Agency and has completed the other material elements necessary for it to sequester carbon dioxide captured from such gasification unit or units;

(C) a determination of capital costs associated with the addition is made by the Capital Development Board and the Commission according to the process in subsection (b) of Section 1-76 of this Act; and

(D) a determination of sequestration capital costs and sequestration operation and maintenance costs associated with the addition is made by the Capital Development Board according to the process in subsection (e) of Section 1-76 of this Act.

The initial clean coal facility may accomplish the addition of the coal gasification unit or units either (i) by having the coal gasification unit or units owned by the same entity that owns the SNG-ready generating facility and the costs associated with the coal gasification unit or units included in the formula rate under sourcing agreements between the clean coal electricity buyers and the initial clean coal facility or (ii) by having the coal gasification unit or units be owned by a different entity that would sell the SNG produced by such gasification unit or units to the SNG-ready generating facility under a separate formula rate with the SNG-ready generating facility incorporating the costs of the SNG into the formula rate under its sourcing agreement with the clean coal electricity buyers. a proposed clean coal facility in"; and

on page 68, line 12, by deleting "and"; and

on page 69, by replacing line 18 with "approved by the Agency; and"; and

on page 69, immediately below line 18, by inserting:

"(xvii) if the initial clean coal facility is an SNG-ready generating facility, set out a mechanism for adjusting the quantity of electric power purchased by each clean coal electricity buyer so that the small customer rate impact would not exceed 0.375% of the amount paid per kilowatthour by eligible retail customers during the year ending May 31, 2009 and the large customer deemed rate impact would not exceed $0.000425 per kilowatthour, in each case due to the SNG-ready capital rate component; such mechanism shall include a carryforward to subsequent years for any reduced revenues suffered by the initial clean coal facility as a result of such adjustments, but subject to the application of these limitations in subsequent years; such mechanism shall be effective for so long as the initial clean coal facility is an SNG-ready generating facility and shall be compatible with the provisions of subparagraph (E) of paragraph (2) of this subsection." and

on page 81, immediately below line 4, by inserting the following:

"(l) If the initial clean coal facility is an SNG-ready generating facility, then the initial clean coal facility shall continue with its efforts to obtain permits for carbon capture and sequestration facilities that could be used in connection with the portion of the facility that produces SNG if such portion of the facility were to be constructed."; and

on page 83, line 26, after "facility.", by inserting "If the initial clean coal facility is an SNG-ready generating facility, the capital costs of the SNG-ready generating facility shall include reasonable development costs relating to the initial clean coal facility without regard to whether such costs relate to the power block or the proposed portion of the facility that produces SNG and without regard to whether the proposed portion of the facility that produces SNG is to be constructed. If the initial clean coal facility is an SNG-ready generating facility, the Capital Development Board shall include in its calculation of capital costs an identification of which capital costs constitute SNG-ready capital costs and shall not include in the range of capital costs any SNG-ready capital costs that exceed 10% of the total of all capital costs."; and

on page 86, line 18, after "facility.", by inserting "If the initial clean coal facility is an SNG-ready generating facility, any capital costs of the SNG-ready generating facility that exceed the pre-approved capital costs and any SNG-ready capital costs that exceed 10% of the pre-approved capital costs shall not be included in the formula rate and shall be borne by the initial clean coal facility and its contractors, provided that, to the extent any of such incremental costs are the result of change in law or non-insurable force majeure, all of such costs shall be included in the formula rate and recoverable by the initial clean coal facility."; and

on page 86, by replacing line 24 with "authority occurring after the Commission determines the amount of pre-approved capital costs."; and

on page 89, line 9, immediately after "facility", by inserting "and, if the initial clean coal facility is an SNG-ready generating facility, for the initial construction of any coal gasification unit or units that may be added following authorization thereof pursuant to subparagraph (A) of paragraph (3) of subsection (d) of Section 1-75 of this Act,"; and

on page 90, line 22, immediately after "electricity" by inserting ", provided that, if and for so long as the initial clean coal facility is an SNG-ready generating facility, the minimum feedstock procurement requirements in this sentence shall be inapplicable and the reference in this sentence to the term of a sourcing agreement shall be deemed to refer only to the portion, if any, of such term occurring after such SNG-ready generating facility adds one or more coal gasification units following authorization thereof pursuant to subparagraph (A) of paragraph (3) of subsection (d) of Section 1-75 of this Act"; and

on page 91, line 20, after "rate.", by inserting "If and for so long as the initial clean coal facility is an SNG-ready generating facility, the provisions of this subsection (e) shall be inapplicable."; and

on page 96, by replacing line 26 with "authority occurring after the Capital Development Board makes its final determination of sequestration capital costs and sequestration operation and maintenance costs."; and

on page 98, by replacing line 9 with "shall be no lower than the weighted"; and

on page 98, line 12, by replacing "January 1, 2011" with "the effective date of this amendatory Act of the 97th General Assembly"; and

on page 103, immediately below line 20, by inserting the following:

"(e) If and for so long as the initial clean coal facility is an SNG-ready generating facility, all requirements of this Section relating to carbon capture and sequestration shall be deemed to be satisfied if the carbon dioxide emissions from the SNG-ready generating facility are less than 1,000 pounds per megawatt-hour of electricity generated by the SNG-ready generating facility on an average annual basis; the initial clean coal facility shall submit to the Commission on an annual basis information demonstrating compliance with such emissions limit."; and

on page 103, by replacing lines 22 through 25 with the following:

"Sec. 1-77.5. Sequestration permitting.

(a) No initial clean coal facility"; and

on page 104, by replacing lines 11 through 13 with the following:

"(b) No later than 6 months prior to the date upon which the owner of the initial clean coal facility intends to commence construction of any coal gasification unit or units, the owner of such facility shall file with the Commission a carbon"; and

by deleting line 17 on page 105 through line 11 on page 107; and

on page 112, lines 1 and 14, by replacing "2012" each time it appears with "2014"; and

on page 121, immediately below line 1, by inserting the following:

"(n) If and for so long as the initial clean coal facility is an SNG-ready generating facility, the provisions of this Section relating to the procurement of coal or other feedstock that would be used by coal gasification units or relating to any minimum feedstock procurement or minimum feedstock usage shall not be applicable."; and

on page 187, by replacing lines 8 through 15 with the following:

"(iii) the required sourcing of electricity generated by clean coal facilities, other than the initial clean coal facility, shall be limited to the amount of electricity that can be procured or sourced at a price at or below the benchmarks approved by the Commission each year in accordance with item (1) of subsection (c) and items (1) and (5) of subsection (d) of Section 1-75 of the Illinois Power Agency Act;"; and

on page 209, immediately below line 14, by inserting the following:

"Section 999. Effective date. This Act takes effect upon becoming law.".