HB4116 95TH GENERAL ASSEMBLY

LRB095 12580 MJR 37825 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB4116

Introduced , by Rep. Carolyn H. Krause

SYNOPSIS AS INTRODUCED:

220 ILCS 5/16-131 new

Amends the Electric Service Customer Choice and Rate Relief Law of 1997 in the Public Utilities Act. Creates an electric procurement process that shall be administered by an independent Procurement Administrator and overseen by an independent Procurement Monitor. Provides that a utility shall obtain an independent Procurement Administrator that shall design and administer the request-for-proposal procurement process that shall be approved by the Illinois Commerce Commission. Specifies the duties of the Procurement Administrator and Procurement Monitor. Provides that the fees of the Procurement Administrator and Procurement Monitor shall be paid through fees assessed to the bidders. Specifies the procedures of the request-for-proposal procurement process. Provides that the Procurement Administrator and Procurement Monitor shall establish a price benchmark according to specified criteria. Contains provisions concerning the required reports from the Procurement Administrator and Procurement Monitor to the Commission. Contains the procedures for the Commission to approve or disapprove the reports submitted to it by the Procurement Administrator and Procurement Monitor. Provides that within 5 business days after the Commission's decision to approve the results of a procurement event, the utility shall enter into binding contractual arrangements with the winning suppliers using the standard form contracts. Provides that a utility shall file its proposed tariffs with the Commission through which its costs of procuring power for the applicable customer classes that are incurred pursuant to a Commission-approved procurement event will be recovered. Provides that if the prices of the request-for-proposal procurement process results in an increase in electric rates of more than 10%, then the utilities shall be required to give written notification to the public at least 60 days prior to the increase taking effect. Effective immediately.

A BILL FOR

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 16-131 as follows:

(220 ILCS 5/16-131 new)

Sec. 16-131. Electric procurement process.

(a) A utility shall obtain an independent Procurement Administrator that shall design and administer the request-for-proposal procurement process that shall be approved by the Commission.

The procurement process shall be administered by an independent Procurement Administrator and overseen by an independent Procurement Monitor.

(b) The Procurement Administrator shall do all of the following:

(1) design the final request-for-proposal procurement process in accordance and with final approval by the Commission;

(2) interface between the utility and suppliers;

(3) manage the bidder pre-qualification process;

(4) administer the request-for-proposal process and identify the winning bids;

(5) maintain confidentiality as to the identity of the bidders, with the exception of the disclosure required by subsection (g) of this Section, and preserve the confidentiality of all supplier and bidding information in a manner consistent with all applicable laws, rules, regulations and tariffs;

(6) submit a confidential report to the Commission for approval of the results;

(7) notify the utility of contract counterparts and contract specifics; and

(8) administer related contingency procurement events.

(c) The Procurement Monitor, who shall be retained by the Commission, shall:

(1) oversee all interactions among the Procurement Administrator, suppliers, and utility;

(2) monitor and report to the Commission on the progress of the procurement process;

(3) provide an independent confidential report to the Commission regarding the results of the procurement event;

(4) ensure compliance with the procurement plan approved by the Commission; and

(5) maintain confidentiality as to the identity of the bidders, with the exception of the disclosure required by subsection (g) of this Section, and preserve the confidentiality of all supplier and bidding information in a manner consistent with all applicable laws, rules, regulations, and tariffs.

(d) The fees of the Procurement Administrator and Procurement Monitor shall be paid through fees assessed to the bidders. The Commission may adopt rules, as provided for in this Section, that establish the criteria to be used in selecting the independent Procurement Monitor and Procurement Administrator, and other procedures related to hiring and payment.

(e) The Procurement Administrator shall design and issue a request-for-proposal that shall be approved by the Commission. The Administrator shall set forth a procedure for sealed, binding commitment bidding with pay-as-bid settlement, and provision for selection of bids on the basis of price and in accordance with the price benchmark established.

(f) The Procurement Administrator, in consultation with the Procurement Monitor, shall establish a price benchmark applicable to the products purchased in accordance with a procurement plan approved under this Section that are consistent with the following criteria:

(1) The price benchmark shall incorporate forward market price data for identical products for the same delivery period and at the same delivery point; if identical product transactions are not available, the Procurement Administrator may recommend other criteria to consider in making a determination to accept or reject bids in its confidential report to the Commission.

(2) The price benchmark may consist of a range of prices based on a variety of publicly available data sources that have been approved for this use by the Commission.

(3) The price benchmark may be adjusted to take into account specific differences between transaction data observed in public data sources and the procurement of products for Illinois utilities, including adjustments to account for the difference in counterpart credit risk.

(g) Within 2 business days following a procurement event, the Procurement Administrator shall submit a confidential report to the Commission that shall contain the results of the bidding for each of the products along with the Administrator's recommendation for the acceptance and rejection of bids based on the price benchmark criteria and other factors observed in the process. The Procurement Monitor also shall submit a confidential report to the Commission within 2 business days following a procurement event that shall contain the Monitor's assessment of bidder behavior in the process as well as an assessment of the Procurement Administrator's compliance with the procurement process and rules. The Commission shall review the confidential reports submitted by the Procurement Administrator and Procurement Monitor, and shall accept or reject the recommendations of the Procurement Administrator within 2 business days after receipt of the reports.

(h) The Commission shall have 5 business days after receiving the report of the request-for-proposal procurement process from the Administrator and from the Monitor, to review and rule on the results of the request-for-proposal process. The Commission shall do one of the following:

(1) approve the results of the procurement process in whole;

(2) approve the results of the procurement process in part, and disapprove in part; and

(3) if more than 50% of the contracts resulted in a 10% increase above the established benchmarks, disapprove the entire request-for-proposal, and order another round of request-for-proposal procurement process.

If the Commission disapproves in part, the request-for-proposal procurement process, then the Procurement Administrator shall be allowed to directly negotiate with bidders to obtain the remaining percentage necessary to meet the utility's load requirements. The Procurement Monitor shall monitor all of the negotiations.

The Commission may allow up to 10% above the established benchmarks to provide for a small-risk premium that may result from such impacting events such as weather, supply, and demand.

(i) Within 5 business days after the Commission's decision to approve the results of a procurement event, the utility shall enter into binding contractual arrangements with the winning suppliers using the standard form contracts; provided, however, that the utility shall not be required either directly or indirectly to execute the contracts if a tariff has not been approved and placed into effect for the utility.

(j) The utility shall file its proposed tariffs with the Commission through which its costs of procuring power for the applicable customer classes that are incurred pursuant to a Commission-approved procurement event will be recovered. The tariffs shall include a formula rate or charge designed to pass through both the costs incurred by the utility in procuring a supply of electric power and energy for the applicable customer classes with no mark-up or return on the price paid by the utility for such supply, plus any just and reasonable costs that the utility incurs in arranging and providing for the supply of electric power and energy. The formula rate or charge shall also contain provisions that ensure that its application does not result in over or under recovery due to changes in customer usage and demand patterns, and that provide for the correction, on at least an annual basis, of any accounting errors that may occur. A utility shall recover through the tariff all its wholesale costs of purchasing power and energy and also those ongoing costs of procuring electric supply for which it contracted before the effective date of this amendatory Act of the 95th General Assembly in conjunction with the provision of full requirements service under fixed price bundled service tariffs. All such costs shall be deemed to have been prudently incurred. The pass-through tariffs that are filed and approved pursuant to this Section shall not be subject to review under or in any way limited by subsection (i) of Section 16-111 of this Act.

(k) If the prices of the request-for-proposal procurement process results in an increase in electric rates of more than 10%, then the utilities shall be required to give written notification to the public at least 60 days prior to the increase taking effect. The criteria for the written notification shall be determined by the Commission, and the utility shall issue the notification according to those criteria.

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