Sen. Don Harmon

Filed: 4/11/2008

 

 


 

 


 
09500SB2695sam001 LRB095 05628 MJR 48686 a

1
AMENDMENT TO SENATE BILL 2695

2     AMENDMENT NO. ______. Amend Senate Bill 2695 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Department of Commerce and Economic
5 Opportunity Law of the Civil Administrative Code of Illinois is
6 amended by adding Section 605-975 as follows:
 
7     (20 ILCS 605/605-975 new)
8     Sec. 605-975. On-bill financing of energy efficiency,
9 renewable energy, and demand response resources.
10     (a) The Illinois General Assembly finds that Illinois homes
11 and businesses have the potential to save 25% or more of energy
12 now used through conservation and by implementation of
13 cost-effective energy efficiency, renewable energy, and demand
14 response measures. However, persistent barriers in the markets
15 for these measures, including lack of information and lack of
16 capital, prevent many Illinois consumers and businesses from

 

 

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1 making economical investments in them. It is the purpose of
2 this Section to help overcome those barriers, to assist energy
3 consumers in Illinois to make the most efficient use of energy
4 resources, and to maximize the amount of value that is
5 extracted from electricity and gas delivered by utilities in
6 the State, by the creation of energy efficiency, renewable
7 energy, and demand response resources on-bill financing
8 programs. Programs created pursuant to this Section will allow
9 utility customers to obtain energy efficiency products and
10 services and renewable energy and demand response resources
11 with no required initial payment, and to pay the cost of those
12 products and services and resources over time on a utility
13 bill.
14     (b) For purposes of this Section:
15     "Capital provider" means an entity that provides funds to
16 pay the initial costs of the energy efficiency measures and
17 demand response resources installed through the on-bill
18 financing program created pursuant to this Section.
19     "Certification agent" means an entity designated by the
20 Department to implement a system of energy efficiency and
21 demand response on-bill financing programs.
22     "Certified contractor" means a person authorized by a
23 certification agent to identify or develop, market, and install
24 energy efficiency measures and renewable energy and demand
25 response resources in programs established under this Section.
26     "Cost-effective measures" means those energy efficiency

 

 

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1 products and services, and those renewable energy and demand
2 response resources, identified by the certification agent to
3 have estimated electricity or gas savings, which are determined
4 by rates in effect at the time of purchase, that are sufficient
5 to cover the costs of implementing the measures, including
6 financing charges and program fees, through payments of no more
7 than three-quarters of the estimated savings and over a period
8 no greater than three-quarters of the estimated useful life of
9 the measure. Payment for a measure made by a customer at the
10 time of installation may be deducted from the cost of the
11 measure in determining whether the measure is cost-effective.
12     "Demand response resources" means tools and devices,
13 including recording-demand meters, that allow a customer to
14 better control energy use in response to price changes.
15     "Department" means the Department of Commerce and Economic
16 Opportunity.
17     "Energy efficiency" means the reduction in energy usage by
18 installation of energy-saving devices, materials, appliances
19 or processes, while maintaining comparable light, power, heat,
20 and cooling previously enjoyed.
21     "Energy efficiency, renewable energy, and demand response
22 on-bill financing system" means a market-based system through
23 which electric and gas utility customers may purchase
24 cost-effective energy efficiency measures and demand response
25 resources with no required upfront payment, and pay the cost of
26 the energy efficiency measures and demand response resources

 

 

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1 over time on their electric or gas bill after independent
2 certification that the measures and resources are appropriate
3 and that estimated savings will exceed payments. The system
4 assigns the obligation of repayment for permanent measures that
5 continue to provide benefits of energy savings, and for
6 resources, to the meter location
7     "Energy efficiency, renewable energy, and demand response
8 tariff" means a tariff developed under this Section that
9 defines the requirements for and operational arrangements
10 between and among purchasers of energy efficiency products and
11 services and renewable energy and demand response resources,
12 sellers and installers of the products and services and
13 resources, capital providers who provide financing for the
14 initial costs of these products and services and resources,
15 including vendors who finance the sale and installation of
16 their products, services, and resources, public utilities, and
17 certification agents.
18     "Permanent measures" means energy efficiency, renewable
19 energy and demand response measures that, as determined by the
20 certification agent, are likely to remain in the premises where
21 installed.
22     (c) Not later than January 2, 2009, the Department, in
23 cooperation with the Illinois Commerce Commission, shall
24 establish one or more pilot programs through which certain
25 customers of a public utility may be eligible to have
26 cost-effective energy efficiency, renewable energy, or demand

 

 

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1 response measures that may be installed at the customer's
2 location by a certified contractor. Those customers shall not
3 be required to make any up-front payment for the installation,
4 and may pay the cost of the energy efficiency, renewable
5 energy, or demand response measures over time on a utility
6 bill.
7     No later than January 2, 2012, the Department shall make an
8 energy efficiency, renewable energy, and demand response
9 on-bill financing system available to all public utility
10 customers in the State. The Department shall monitor and
11 evaluate the effects of the energy efficiency, renewable
12 energy, and demand response measures installed pursuant to the
13 programs established under this Section, and shall issue a
14 report to the Governor and General Assembly on its findings
15 every 2 years beginning in January 2011. This report shall
16 describe, at a minimum, the nature of the measures installed,
17 estimated energy and costs savings from the measures, the
18 effects of reduced energy use on utility costs, and the effects
19 of reduced energy use on the environment.
20     (d) Within 30 days after the effective date of this
21 amendatory Act of the 95th General Assembly, the Department
22 shall convene and provide staff support to an ad hoc task force
23 comprised of the Illinois Commerce Commission, governments
24 from municipalities with more than 1,000,000 residents,
25 governments from municipalities with less than 1,000,000
26 residents, representatives of consumer, utility, energy

 

 

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1 efficiency, renewable energy, and demand response resource
2 vendors, financial institutions, and other relevant interests,
3 which shall advise the Department on the design of an energy
4 efficiency, renewable energy, and demand response on-bill
5 financing system including, but not limited to, the following
6 considerations:
7         (1) criteria for selection of certification agents to
8     be appointed by the Department;
9         (2) guidelines for financing of measures and resources
10     installed under an energy efficiency, renewable energy,
11     and demand response resources tariff;
12         (3) criteria and standards for qualified
13     cost-effective energy efficiency, renewable energy and
14     demand response resources;
15         (4) qualifications of vendors that will market and
16     install efficiency products and services and renewable
17     energy and demand response resources;
18         (5) rules for recovering costs for cost-effective
19     energy efficiency measures, renewable energy, and demand
20     response resources when the property where the measures or
21     resources have been implemented transfers ownership;
22         (6) terms for the establishment of energy efficiency,
23     renewable energy, and demand response resources tariffs in
24     markets throughout the State;
25         (7) sample contracts and agreements necessary to
26     implement energy efficiency, renewable energy, and demand

 

 

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1     response resources tariffs throughout the State;
2         (8) a recommended budget and funding sources to cover
3     the costs to establish and operate an energy efficiency,
4     renewable energy, and demand response resources on-bill
5     financing system throughout the State; and
6         (9) cost estimates and plans to modify utility billing
7     systems to include billing and collection capabilities for
8     measures and resources installed under an energy
9     efficiency, renewable energy, and demand response tariff.
10     (e) The Department shall designate, and subject to
11 appropriations for this purpose shall contract with,
12 certification agents to implement energy efficiency, renewable
13 energy, and demand response on-bill financing systems. A
14 certification agent designated by the Department under this
15 Section:
16         (1) may be for a specified geographic areas of the
17     State, or for specific classes of customers, or both;
18         (2) shall be qualified by relevant experience and
19     expertise; and
20         (3) shall have general responsibility for the
21     implementation and operation of an energy efficiency,
22     renewable energy, and demand response resources on-bill
23     financing system, including such duties as the Department
24     assigns it through contract.
 
25     Section 10. The Public Utilities Act is amended by adding

 

 

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1 Sections 4-204.5 and 8-104 as follows:
 
2     (220 ILCS 5/4-204.5 new)
3     Sec. 4-204.5. Energy efficiency, renewable energy, and
4 demand response on-bill financing programs.
5     (a) The Commission shall, not later than November 1, 2008,
6 issue an order or orders that: (i) will allow certain customers
7 of a public utility in Illinois to purchase cost-effective
8 energy efficiency measures, renewable energy, and demand
9 response resources under an energy efficiency and demand
10 response resources tariff as part of a pilot program
11 established under Section 605-975 of the Department of Commerce
12 and Economic Opportunity Law of the Civil Administrative Code
13 of Illinois; and (ii) require each public utility to file and
14 maintain an energy efficiency, renewable energy, and demand
15 response tariff or tariffs in accordance with this Section no
16 later than January 2, 2010.
17     (b) Each public utility shall file and maintain an energy
18 efficiency, renewable energy, and demand response tariff or
19 tariffs in accordance with this Section and any applicable
20 order of the Commission to allow any of its customers to pay
21 over time on the utility bill for cost-effective energy
22 efficiency measures, renewable energy, demand response
23 resources as provided in Section 605-975 of the Department of
24 Commerce and Economic Opportunity Law of the Civil
25 Administrative Code of Illinois. An electric utility may

 

 

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1 include gas saving measures under its energy efficiency,
2 renewable energy, and demand response resources tariff, and a
3 gas distribution utility may include electricity saving
4 measures under its energy efficiency, renewable energy, and
5 demand response resources tariff. Disconnection for
6 non-payment and treatment of bad debt under such a tariff will
7 be subject to the same rules and regulations as other tariffs
8 offered by the utility. To reduce bad debt, the Commission may
9 direct public utilities to extend the payment term as necessary
10 to recover any missed payments or costs needed to repair
11 measures providing the payment term never exceeds the useful
12 life of the measure.
13     (c) A public utility shall be entitled to recover
14 reasonable costs incurred in complying with this Section and
15 Section 605-975 of the Department of Commerce and Economic
16 Opportunity Law of the Civil Administrative Code of Illinois.
 
17     (220 ILCS 5/8-104 new)
18     Sec. 8-104. Natural gas energy efficiency programs.
19     (a) It is the policy of the State that natural gas
20 utilities are required to use cost-effective energy efficiency
21 to reduce direct and indirect costs to consumers. It serves the
22 public interest to allow gas utilities to recover costs for
23 reasonably and prudently incurred expenses for energy
24 efficiency.
25     (b) For purposes of this Section, "cost-effective" means

 

 

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1 that the measures satisfy the total resource cost test as
2 defined in this Section, and "energy efficiency" means measures
3 that reduce the amount of gas required to achieve a given end
4 use.
5     For purposes of this Section only, "total resource cost
6 test" means a standard that is met if, for an investment in
7 energy efficiency, the benefit-cost ratio is greater than one.
8 The benefit-cost ratio is the ratio of the net present value of
9 the total benefits of the program to the net present value of
10 the total costs as calculated over the lifetime of the
11 measures. The total resource cost test compares the sum of
12 avoided natural gas utility costs, representing the benefits
13 that accrue to the system and the participant in the delivery
14 of those efficiency programs, to the sum of all incremental
15 costs of end-use measures that are implemented due to the
16 program (including both utility and participant
17 contributions), plus costs to administer, deliver, and
18 evaluate each demand-side program, to quantify the net savings
19 obtained by substituting the demand-side program for supply
20 resources. In calculating avoided costs of power and energy
21 that the gas utility would otherwise have had to acquire,
22 reasonable estimates shall include financial costs likely to be
23 imposed by future regulations and legislation on emissions of
24 greenhouse gases. Provisions include an oversight and
25 evaluation process that shall periodically monitor and develop
26 data on the cost-effectiveness and actual productivity of

 

 

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1 demand-side efficiency and conservation programs. The
2 low-income measures described in item (4) of subsection (f) of
3 this Section shall not be required to meet the total resource
4 cost test.
5     (c) Natural gas utilities shall implement cost-effective
6 energy efficiency measures to meet the following incremental
7 annual energy savings goals, based upon the amount of gas
8 delivered in the immediately preceding calendar year:
9         (1) 0.2% of the total annual Mcf (1,000 cubic feet of
10     gas) delivered in 2009;
11         (2) 0.4% of the total annual Mcf delivered in 2010;
12         (3) 0.6% of the total annual Mcf delivered in 2011;
13         (4) 0.8% of the total annual Mcf delivered in 2012;
14         (5) 1% of the total annual Mcf delivered in 2013;
15         (6) 1.4% of the total annual Mcf delivered in 2014;
16         (7) 1.8% of the total annual Mcf delivered in 2015; and
17         (8) 2% of the total annual Mcf delivered in 2016; and
18     each year thereafter.
19     (d) Notwithstanding the requirements of subsection (c) of
20 this Section, a natural gas utility may reduce the amount of
21 energy efficiency resources it procures to meet energy savings
22 goals in any single year by an amount necessary to limit the
23 estimated average increase due to the cost of these resources
24 included in the amounts paid by retail customers in connection
25 with gas service to no more than 0.5% of the amount estimated
26 to have been paid by such customers during the preceding

 

 

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1 calendar year procurement, with such limit increasing by 0.5%
2 in each of the years 2010 through 2012, for a maximum cap on
3 the allowed estimated average increase due to the cost of these
4 resources of 2%. Three years after the date the Commission
5 approves the initial energy efficiency plan filings, the
6 Commission shall review the rate limitation and report to the
7 General Assembly its findings as to whether the rate cap unduly
8 constrains the procurement of energy efficiency resources that
9 would be cost-effective.
10     (e) Natural gas public utilities shall be responsible for
11 overseeing the design, development, and filing of their
12 efficiency plans with the Commission. Those public utilities
13 shall implement 75% of the energy efficiency programs approved
14 by the Commission and may, as part of that implementation,
15 outsource various aspects of program development and
16 implementation. The remaining 25% of those energy efficiency
17 measures approved by the Commission shall be implemented by the
18 Department of Commerce and Economic Opportunity, and must be
19 designed in conjunction with the utility and the filing
20 process. The Department may outsource development and
21 implementation of energy efficiency measures. A minimum of 10%
22 of the entire portfolio of cost-effective energy efficiency
23 measures shall be procured from units of local government,
24 municipal corporations, school districts, and community
25 college districts. The Department shall coordinate the
26 implementation of these measures. The apportionment of the

 

 

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1 dollars to cover the costs to implement the Department's share
2 of the portfolio of energy efficiency measures shall be made to
3 the Department once the Department has executed grants or
4 contracts for energy efficiency measures and provided
5 supporting documentation for those grants and the contracts to
6 the utility. The details of the measures implemented by the
7 Department shall be submitted by the Department to the
8 Commission in connection with the utility's filing regarding
9 the energy efficiency measures that the utility implements. A
10 gas utility providing approved energy efficiency measures in
11 the State shall be permitted to recover costs of those measures
12 through an automatic adjustment clause tariff filed with and
13 approved by the Commission. The tariff shall be established
14 outside the context of a general rate case. Each year the
15 Commission shall initiate a review to reconcile any amounts
16 collected with the actual costs and to determine the required
17 adjustment to the annual tariff factor to match annual
18 expenditures.
19     Each utility shall include in its recovery of costs the
20 costs estimated for both the utility's and the Department's
21 implementation of energy efficiency measures. Costs collected
22 by the utility for measures implemented by the Department shall
23 be submitted to the Department pursuant to Section 605-323 of
24 the Civil Administrative Code of Illinois and shall be used by
25 the Department solely for the purpose of implementing these
26 measures. A utility shall not be required to advance any moneys

 

 

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1 to the Department, but only to forward such funds it has
2 collected. The Department shall report to the Commission on an
3 annual basis regarding the costs actually incurred by the
4 Department in the implementation of the measures. Any changes
5 to the costs of energy efficiency measures as a result of plan
6 modifications shall be appropriately reflected in amounts
7 recovered by the utility and turned over to the Department. The
8 portfolio of measures administered by both the utilities and
9 the Department shall, in combination, be designed to achieve
10 the annual savings targets described in subsection (c) of this
11 Section, as modified by subsection (d) of this Section.
12     The utility and the Department shall agree upon a
13 reasonable portfolio of measures and determine the measurable
14 corresponding percentage of the savings goals associated with
15 measures implemented by the utility or Department.
16     No utility shall be assessed a penalty under subsection (f)
17 of this Section for failure to make a timely filing if that
18 failure is the result of a lack of agreement with the
19 Department with respect to the allocation of responsibilities
20 or related costs or target assignments. In that case, the
21 Department and the utility shall file their respective plans
22 with the Commission and the Commission shall determine an
23 appropriate division of measures and programs that meets the
24 requirements of this Section.
25     If the Department is unable to meet incremental annual
26 performance goals for the portion of the portfolio implemented

 

 

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1 by the Department, then the utility and the Department shall
2 jointly submit a modified filing to the Commission explaining
3 the performance shortfall and recommending an appropriate
4 course going forward, including any program modifications that
5 may be appropriate in light of the evaluations conducted under
6 item (7) of subsection (f) of this Section. In this case, the
7 utility obligation to collect the Department's costs and turn
8 over those funds to the Department under this subsection (e)
9 shall continue only if the Commission approves the
10 modifications to the plan proposed by the Department.
11     (f) No later than November 15, 2008, each gas utility shall
12 file an energy efficiency and demand-response plan with the
13 Commission to meet the energy efficiency and demand-response
14 standards for 2008 through 2010. Every 3 years thereafter, each
15 utility shall file an energy efficiency plan with the
16 Commission. If a utility does not file a plan, it shall face a
17 penalty of $100,000 per day until the plan is filed. Each
18 utility's plan shall set forth the utility's proposals to meet
19 the utility's portion of the energy efficiency standards
20 identified in subsection (c) of this Section, as modified by
21 subsection (d) of this Section, taking into account the unique
22 circumstances of the utility's service territory. The
23 Commission shall seek public comment on the utility's plan and
24 shall issue an order approving or disapproving each plan within
25 3 months after its submission. If the Commission disapproves a
26 plan, the Commission shall, within 30 days, describe in detail

 

 

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1 the reasons for the disapproval and describe a path by which
2 the utility may file a revised draft of the plan to address the
3 Commission's concerns satisfactorily. If the utility does not
4 refile with the Commission within 60 days after the
5 disapproval, the utility shall be subject to penalties at a
6 rate of $100,000 per day until the plan is filed. This process
7 shall continue, and penalties shall accrue, until the utility
8 has successfully filed a portfolio of energy efficiency
9 measures. Penalties shall be deposited into the Energy
10 Efficiency Trust Fund. In submitting proposed energy
11 efficiency plans and funding levels to meet the savings goals
12 adopted by this Act the utility shall:
13         (1) Demonstrate that its proposed energy efficiency
14     and demand-response measures will achieve the requirements
15     that are identified in subsection (c) of this Section, as
16     modified by subsection (d) of this Section.
17         (2) Present specific proposals to implement new
18     building and appliance standards that have been placed into
19     effect.
20         (3) Present estimates of the total amount paid for gas
21     service expressed on a per kilowatthour basis associated
22     with the proposed portfolio of measures designed to meet
23     the requirements that are identified in subsection (c) of
24     this Section, as modified by subsection (d) of this
25     Section.
26         (4) Coordinate with the Department and the Department

 

 

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1     of Healthcare and Family Services to present a portfolio of
2     energy efficiency measures targeted to households at or
3     below 150% of the poverty level at a level proportionate to
4     those households' share of total annual utility revenues in
5     Illinois.
6         (5) Demonstrate that its overall portfolio of energy
7     efficiency and demand-response measures, not including
8     programs covered by item (4) of this subsection (f), are
9     cost-effective using the total resource cost test and
10     represent a diverse cross-section of opportunities for
11     customers of all rate classes to participate in the
12     programs.
13         (6) Include a proposed cost-recovery tariff mechanism
14     to fund the proposed energy efficiency and demand-response
15     measures and to ensure the recovery of the prudently and
16     reasonably incurred costs of Commission-approved programs.
17         (7) Provide for an annual independent evaluation of the
18     performance of the cost-effectiveness of the utility's
19     portfolio of measures and the Department's portfolio of
20     measures, as well as a full review of the 3-year results of
21     the broader net program impacts and, to the extent
22     practical, for adjustment of the measures on a
23     going-forward basis as a result of the evaluations. The
24     resources dedicated to evaluation shall not exceed 3% of
25     portfolio resources in any given year.
26     (g) No more than 3% of energy efficiency and

 

 

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1 demand-response program revenue may be allocated for
2 demonstration of breakthrough equipment and devices.
3     (h) This Section does not apply to a gas utility that on
4 December 31, 2006 provided gas service to fewer than 100,000
5 customers in Illinois.
6     (i) A utility company that implements energy efficiency
7 programs, and that has a conservation stabilization adjustment
8 rider approved by the Commission, shall be entitled to recover
9 lost revenues that derive from customer implementation of
10 energy efficiency measures. The utility shall submit an annual
11 report to the Commission to reconcile its actual lost revenues
12 with customer adoption of energy efficiency measures. The
13 report shall include whatever information the Commission may
14 require.
15     For purposes of this subsection (i), "conservation
16 stabilization adjustment" means a utility tariff mechanism
17 intended to recover the annual lost utility revenue from
18 successful customer participation in energy efficiency
19 programs. Annual lost revenue shall be calculated by
20 multiplying (1) the volumetric delivery charges established in
21 the utility's last rate case by applicable rate classification
22 by (2) the deemed volumetric energy reductions for each energy
23 efficiency measure enumerated in the utility's energy
24 efficiency plan and successfully implemented by customers of
25 the utility. The Commission may approve a similar, reasonable
26 method for determining lost utility revenues that derive from

 

 

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1 programs implemented under this Section.
2     (j) If a gas utility fails to meet the efficiency standard
3 specified in subsection (c) of this Section, as modified by
4 subsection (d) of this Section, 2 years after the specified
5 year and each year thereafter, it shall make a contribution to
6 the Low-Income Home Energy Assistance Program. The combined
7 total liability for failure to meet the goal shall be
8 $1,000,000, which shall be assessed as follows: a large gas
9 utility shall pay $665,000 and a medium gas utility shall pay
10 $335,000.
11     For purposes of this subsection (j), (1) a "large gas
12 utility" is a gas utility that, on December 31, 2006, served
13 more than 2,000,000 gas customers in Illinois; (2) a "medium
14 gas utility" is a gas utility that, on December 31, 2005,
15 served 2,000,000 or fewer but more than 100,000 gas customers
16 in Illinois; and (3) Illinois gas utilities that are affiliated
17 by virtue of a common parent company are considered a single
18 gas utility.
19     (k) No utility shall be deemed to have failed to meet the
20 energy efficiency standards to the extent any failure is due to
21 a failure of the Department.
 
22     Section 99. Effective date. This Act takes effect upon
23 becoming law.".