Sen. David Koehler

Filed: 10/22/2013

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 635

2    AMENDMENT NO. ______. Amend Senate Bill 635 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Public Utilities Act is amended by changing
5Section 8-104 as follows:
 
6    (220 ILCS 5/8-104)
7    Sec. 8-104. Natural gas energy efficiency programs.
8    (a) It is the policy of the State that natural gas
9utilities and the Department of Commerce and Economic
10Opportunity are required to use cost-effective energy
11efficiency to reduce direct and indirect costs to consumers. It
12serves the public interest to allow natural gas utilities to
13recover costs for reasonably and prudently incurred expenses
14for cost-effective energy efficiency measures.
15    (b) For purposes of this Section, "energy efficiency" means
16measures that reduce the amount of energy required to achieve a

 

 

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1given end use. "Energy efficiency" also includes measures that
2reduce the total Btus of electricity and natural gas needed to
3meet the end use or uses. "Cost-effective" means that the
4measures satisfy the total resource cost test which, for
5purposes of this Section, means a standard that is met if, for
6an investment in energy efficiency, the benefit-cost ratio is
7greater than one. The benefit-cost ratio is the ratio of the
8net present value of the total benefits of the measures to the
9net present value of the total costs as calculated over the
10lifetime of the measures. The total resource cost test compares
11the sum of avoided natural gas utility costs, representing the
12benefits that accrue to the system and the participant in the
13delivery of those efficiency measures, as well as other
14quantifiable societal benefits, including avoided electric
15utility costs, to the sum of all incremental costs of end use
16measures (including both utility and participant
17contributions), plus costs to administer, deliver, and
18evaluate each demand-side measure, to quantify the net savings
19obtained by substituting demand-side measures for supply
20resources. In calculating avoided costs, reasonable estimates
21shall be included for financial costs likely to be imposed by
22future regulation of emissions of greenhouse gases. The
23low-income programs described in item (4) of subsection (f) of
24this Section shall not be required to meet the total resource
25cost test.
26    (c) Natural gas utilities shall implement cost-effective

 

 

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1energy efficiency measures to meet at least the following
2natural gas savings requirements, which shall be based upon the
3total amount of gas delivered to retail customers, other than
4the customers described in subsection (m) of this Section,
5during calendar year 2009 multiplied by the applicable
6percentage. Natural gas utilities may comply with this Section
7by meeting the annual incremental savings goal in the
8applicable year or by showing that total cumulative annual
9savings within a 3-year planning period associated with
10measures implemented after May 31, 2011 were equal to the sum
11of each annual incremental savings requirement from May 31,
122011 through the end of the applicable year:
13        (1) 0.2% by May 31, 2012;
14        (2) an additional 0.4% by May 31, 2013, increasing
15    total savings to .6%;
16        (3) an additional 0.6% by May 31, 2014, increasing
17    total savings to 1.2%;
18        (4) an additional 0.8% by May 31, 2015, increasing
19    total savings to 2.0%;
20        (5) an additional 1% by May 31, 2016, increasing total
21    savings to 3.0%;
22        (6) an additional 1.2% by May 31, 2017, increasing
23    total savings to 4.2%;
24        (7) an additional 1.4% by May 31, 2018, increasing
25    total savings to 5.6%;
26        (8) an additional 1.5% by May 31, 2019, increasing

 

 

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1    total savings to 7.1%; and
2        (9) an additional 1.5% in each 12-month period
3    thereafter.
4    (d) Notwithstanding the requirements of subsection (c) of
5this Section, a natural gas utility shall limit the amount of
6energy efficiency implemented in any 3-year reporting period
7established by subsection (f) of Section 8-104 of this Act, by
8an amount necessary to limit the estimated average increase in
9the amounts paid by retail customers in connection with natural
10gas service to no more than 2% in the applicable 3-year
11reporting period. The energy savings requirements in
12subsection (c) of this Section may be reduced by the Commission
13for the subject plan, if the utility demonstrates by
14substantial evidence that it is highly unlikely that the
15requirements could be achieved without exceeding the
16applicable spending limits in any 3-year reporting period. No
17later than September 1, 2013, the Commission shall review the
18limitation on the amount of energy efficiency measures
19implemented pursuant to this Section and report to the General
20Assembly, in the report required by subsection (k) of this
21Section, its findings as to whether that limitation unduly
22constrains the procurement of energy efficiency measures.
23    (e) Natural gas utilities shall be responsible for
24overseeing the design, development, and filing of their
25efficiency plans with the Commission. The utility shall utilize
2675% of the available funding associated with energy efficiency

 

 

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1programs approved by the Commission, and may outsource various
2aspects of program development and implementation. The
3remaining 25% of available funding shall be used by the
4Department of Commerce and Economic Opportunity to implement
5energy efficiency measures that achieve no less than 20% of the
6requirements of subsection (c) of this Section. Such measures
7shall be designed in conjunction with the utility and approved
8by the Commission. The Department may outsource development and
9implementation of energy efficiency measures. A minimum of 10%
10of the entire portfolio of cost-effective energy efficiency
11measures shall be procured from local government, municipal
12corporations, school districts, and community college
13districts. Five percent of the entire portfolio of
14cost-effective energy efficiency measures may be granted to
15local government and municipal corporations for market
16transformation initiatives. The Department shall coordinate
17the implementation of these measures and shall integrate
18delivery of natural gas efficiency programs with electric
19efficiency programs delivered pursuant to Section 8-103 of this
20Act, unless the Department can show that integration is not
21feasible.
22    The apportionment of the dollars to cover the costs to
23implement the Department's share of the portfolio of energy
24efficiency measures shall be made to the Department once the
25Department has executed rebate agreements, grants, or
26contracts for energy efficiency measures and provided

 

 

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1supporting documentation for those rebate agreements, grants,
2and contracts to the utility. The Department is authorized to
3adopt any rules necessary and prescribe procedures in order to
4ensure compliance by applicants in carrying out the purposes of
5rebate agreements for energy efficiency measures implemented
6by the Department made under this Section.
7    The details of the measures implemented by the Department
8shall be submitted by the Department to the Commission in
9connection with the utility's filing regarding the energy
10efficiency measures that the utility implements.
11    A utility providing approved energy efficiency measures in
12this State shall be permitted to recover costs of those
13measures through an automatic adjustment clause tariff filed
14with and approved by the Commission. The tariff shall be
15established outside the context of a general rate case and
16shall be applicable to the utility's customers other than the
17customers described in subsection (m) of this Section. Each
18year the Commission shall initiate a review to reconcile any
19amounts collected with the actual costs and to determine the
20required adjustment to the annual tariff factor to match annual
21expenditures.
22    Each utility shall include, in its recovery of costs, the
23costs estimated for both the utility's and the Department's
24implementation of energy efficiency measures. Costs collected
25by the utility for measures implemented by the Department shall
26be submitted to the Department pursuant to Section 605-323 of

 

 

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1the Civil Administrative Code of Illinois, shall be deposited
2into the Energy Efficiency Portfolio Standards Fund, and shall
3be used by the Department solely for the purpose of
4implementing these measures. A utility shall not be required to
5advance any moneys to the Department but only to forward such
6funds as it has collected. The Department shall report to the
7Commission on an annual basis regarding the costs actually
8incurred by the Department in the implementation of the
9measures. Any changes to the costs of energy efficiency
10measures as a result of plan modifications shall be
11appropriately reflected in amounts recovered by the utility and
12turned over to the Department.
13    The portfolio of measures, administered by both the
14utilities and the Department, shall, in combination, be
15designed to achieve the annual energy savings requirements set
16forth in subsection (c) of this Section, as modified by
17subsection (d) of this Section.
18    The utility and the Department shall agree upon a
19reasonable portfolio of measures and determine the measurable
20corresponding percentage of the savings goals associated with
21measures implemented by the Department.
22    No utility shall be assessed a penalty under subsection (f)
23of this Section for failure to make a timely filing if that
24failure is the result of a lack of agreement with the
25Department with respect to the allocation of responsibilities
26or related costs or target assignments. In that case, the

 

 

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1Department and the utility shall file their respective plans
2with the Commission and the Commission shall determine an
3appropriate division of measures and programs that meets the
4requirements of this Section.
5    If the Department is unable to meet performance
6requirements for the portion of the portfolio implemented by
7the Department, then the utility and the Department shall
8jointly submit a modified filing to the Commission explaining
9the performance shortfall and recommending an appropriate
10course going forward, including any program modifications that
11may be appropriate in light of the evaluations conducted under
12item (8) of subsection (f) of this Section. In this case, the
13utility obligation to collect the Department's costs and turn
14over those funds to the Department under this subsection (e)
15shall continue only if the Commission approves the
16modifications to the plan proposed by the Department.
17    (f) No later than October 1, 2010, each gas utility shall
18file an energy efficiency plan with the Commission to meet the
19energy efficiency standards through May 31, 2014. Every 3 years
20thereafter, each utility shall file, no later than October 1,
21an energy efficiency plan with the Commission. If a utility
22does not file such a plan by October 1 of the applicable year,
23then it shall face a penalty of $100,000 per day until the plan
24is filed. Each utility's plan shall set forth the utility's
25proposals to meet the utility's portion of the energy
26efficiency standards identified in subsection (c) of this

 

 

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1Section, as modified by subsection (d) of this Section, taking
2into account the unique circumstances of the utility's service
3territory. The Commission shall seek public comment on the
4utility's plan and shall issue an order approving or
5disapproving each plan. If the Commission disapproves a plan,
6the Commission shall, within 30 days, describe in detail the
7reasons for the disapproval and describe a path by which the
8utility may file a revised draft of the plan to address the
9Commission's concerns satisfactorily. If the utility does not
10refile with the Commission within 60 days after the
11disapproval, the utility shall be subject to penalties at a
12rate of $100,000 per day until the plan is filed. This process
13shall continue, and penalties shall accrue, until the utility
14has successfully filed a portfolio of energy efficiency
15measures. Penalties shall be deposited into the Energy
16Efficiency Trust Fund and the cost of any such penalties may
17not be recovered from ratepayers. In submitting proposed energy
18efficiency plans and funding levels to meet the savings goals
19adopted by this Act the utility shall:
20        (1) Demonstrate that its proposed energy efficiency
21    measures will achieve the requirements that are identified
22    in subsection (c) of this Section, as modified by
23    subsection (d) of this Section.
24        (2) Present specific proposals to implement new
25    building and appliance standards that have been placed into
26    effect.

 

 

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1        (3) Present estimates of the total amount paid for gas
2    service expressed on a per therm basis associated with the
3    proposed portfolio of measures designed to meet the
4    requirements that are identified in subsection (c) of this
5    Section, as modified by subsection (d) of this Section.
6        (4) Coordinate with the Department to present a
7    portfolio of energy efficiency measures proportionate to
8    the share of total annual utility revenues in Illinois from
9    households at or below 150% of the poverty level. Such
10    programs shall be targeted to households with incomes at or
11    below 80% of area median income.
12        (5) Demonstrate that its overall portfolio of energy
13    efficiency measures, not including programs covered by
14    item (4) of this subsection (f), are cost-effective using
15    the total resource cost test and represent a diverse cross
16    section of opportunities for customers of all rate classes
17    to participate in the programs.
18        (6) Demonstrate that a gas utility affiliated with an
19    electric utility that is required to comply with Section
20    8-103 of this Act has integrated gas and electric
21    efficiency measures into a single program that reduces
22    program or participant costs and appropriately allocates
23    costs to gas and electric ratepayers. The Department shall
24    integrate all gas and electric programs it delivers in any
25    such utilities' service territories, unless the Department
26    can show that integration is not feasible or appropriate.

 

 

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1        (7) Include a proposed cost recovery tariff mechanism
2    to fund the proposed energy efficiency measures and to
3    ensure the recovery of the prudently and reasonably
4    incurred costs of Commission-approved programs.
5        (8) Provide for quarterly status reports tracking
6    implementation of and expenditures for the utility's
7    portfolio of measures and the Department's portfolio of
8    measures, an annual independent review, and a full
9    independent evaluation of the 3-year results of the
10    performance and the cost-effectiveness of the utility's
11    and Department's portfolios of measures and broader net
12    program impacts and, to the extent practical, for
13    adjustment of the measures on a going forward basis as a
14    result of the evaluations. The resources dedicated to
15    evaluation shall not exceed 3% of portfolio resources in
16    any given 3-year period.
17    (g) No more than 3% of expenditures on energy efficiency
18measures may be allocated for demonstration of breakthrough
19equipment and devices.
20    (h) Illinois natural gas utilities that are affiliated by
21virtue of a common parent company may, at the utilities'
22request, be considered a single natural gas utility for
23purposes of complying with this Section.
24    (i) If, after 3 years, a gas utility fails to meet the
25efficiency standard specified in subsection (c) of this Section
26as modified by subsection (d), then it shall make a

 

 

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1contribution to the Low-Income Home Energy Assistance Program.
2The total liability for failure to meet the goal shall be
3assessed as follows:
4        (1) a large gas utility shall pay $600,000;
5        (2) a medium gas utility shall pay $400,000; and
6        (3) a small gas utility shall pay $200,000.
7    For purposes of this Section, (i) a "large gas utility" is
8a gas utility that on December 31, 2008, served more than
91,500,000 gas customers in Illinois; (ii) a "medium gas
10utility" is a gas utility that on December 31, 2008, served
11fewer than 1,500,000, but more than 500,000 gas customers in
12Illinois; and (iii) a "small gas utility" is a gas utility that
13on December 31, 2008, served fewer than 500,000 and more than
14100,000 gas customers in Illinois. The costs of this
15contribution may not be recovered from ratepayers.
16    If a gas utility fails to meet the efficiency standard
17specified in subsection (c) of this Section, as modified by
18subsection (d) of this Section, in any 2 consecutive 3-year
19planning periods, then the responsibility for implementing the
20utility's energy efficiency measures shall be transferred to an
21independent program administrator selected by the Commission.
22Reasonable and prudent costs incurred by the independent
23program administrator to meet the efficiency standard
24specified in subsection (c) of this Section, as modified by
25subsection (d) of this Section, may be recovered from the
26customers of the affected gas utilities, other than customers

 

 

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1described in subsection (m) of this Section. The utility shall
2provide the independent program administrator with all
3information and assistance necessary to perform the program
4administrator's duties including but not limited to customer,
5account, and energy usage data, and shall allow the program
6administrator to include inserts in customer bills. The utility
7may recover reasonable costs associated with any such
8assistance.
9    (j) No utility shall be deemed to have failed to meet the
10energy efficiency standards to the extent any such failure is
11due to a failure of the Department.
12    (k) Not later than January 1, 2012, the Commission shall
13develop and solicit public comment on a plan to foster
14statewide coordination and consistency between statutorily
15mandated natural gas and electric energy efficiency programs to
16reduce program or participant costs or to improve program
17performance. Not later than September 1, 2013, the Commission
18shall issue a report to the General Assembly containing its
19findings and recommendations.
20    (l) This Section does not apply to a gas utility that on
21January 1, 2009, provided gas service to fewer than 100,000
22customers in Illinois.
23    (m) Subsections (a) through (k) of this Section do not
24apply to customers of a natural gas utility that have a North
25American Industry Classification System code number that is
2622111 or any such code number beginning with the digits 31, 32,

 

 

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1or 33 and (i) annual usage in the aggregate of 4 million therms
2or more within the service territory of the affected gas
3utility or with aggregate usage of 8 million therms or more in
4this State and complying with the provisions of item (l) of
5this subsection (m); or (ii) using natural gas as feedstock and
6meeting the usage requirements described in item (i) of this
7subsection (m), to the extent such annual feedstock usage is
8greater than 60% of the customer's total annual usage of
9natural gas.
10        (1) Customers described in this subsection (m) of this
11    Section shall apply, on a form approved on or before
12    October 1, 2009 by the Department, to the Department to be
13    designated as a self-directing customer ("SDC") or as an
14    exempt customer using natural gas as a feedstock from which
15    other products are made, including, but not limited to,
16    feedstock for a hydrogen plant, on or before the 1st day of
17    February, 2010. Thereafter, application may be made not
18    less than 6 months before the filing date of the gas
19    utility energy efficiency plan described in subsection (f)
20    of this Section; however, a new customer that commences
21    taking service from a natural gas utility after February 1,
22    2010 may apply to become a SDC or exempt customer up to 30
23    days after beginning service. Customers described in this
24    subsection (m) that have not already been approved by the
25    Department may apply to be designated a self-directing
26    customer or exempt customer, on a form approved by the

 

 

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1    Department, between September 1, 2013 and September 30,
2    2013. Customer applications that are approved by the
3    Department under this amendatory Act of the 98th General
4    Assembly shall be considered to be a self-directing
5    customer or exempt customer, as applicable, for the current
6    3-year planning period effective December 1, 2013. Such
7    application shall contain the following:
8            (A) the customer's certification that, at the time
9        of its application, it qualifies to be a SDC or exempt
10        customer described in this subsection (m) of this
11        Section;
12            (B) in the case of a SDC, the customer's
13        certification that it has established or will
14        establish by the beginning of the utility's 3-year
15        planning period commencing subsequent to the
16        application, and will maintain for accounting
17        purposes, an energy efficiency reserve account and
18        that the customer will accrue funds in said account to
19        be held for the purpose of funding, in whole or in
20        part, energy efficiency measures of the customer's
21        choosing, which may include, but are not limited to,
22        projects involving combined heat and power systems
23        that use the same energy source both for the generation
24        of electrical or mechanical power and the production of
25        steam or another form of useful thermal energy or the
26        use of combustible gas produced from biomass, or both;

 

 

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1            (C) in the case of a SDC, the customer's
2        certification that annual funding levels for the
3        energy efficiency reserve account will be equal to 2%
4        of the customer's cost of natural gas, composed of the
5        customer's commodity cost and the delivery service
6        charges paid to the gas utility, or $150,000, whichever
7        is less;
8            (D) in the case of a SDC, the customer's
9        certification that the required reserve account
10        balance will be capped at 3 years' worth of accruals
11        and that the customer may, at its option, make further
12        deposits to the account to the extent such deposit
13        would increase the reserve account balance above the
14        designated cap level;
15            (E) in the case of a SDC, the customer's
16        certification that by October 1 of each year, beginning
17        no sooner than October 1, 2012, the customer will
18        report to the Department information, for the 12-month
19        period ending May 31 of the same year, on all deposits
20        and reductions, if any, to the reserve account during
21        the reporting year, and to the extent deposits to the
22        reserve account in any year are in an amount less than
23        $150,000, the basis for such reduced deposits; reserve
24        account balances by month; a description of energy
25        efficiency measures undertaken by the customer and
26        paid for in whole or in part with funds from the

 

 

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1        reserve account; an estimate of the energy saved, or to
2        be saved, by the measure; and that the report shall
3        include a verification by an officer or plant manager
4        of the customer or by a registered professional
5        engineer or certified energy efficiency trade
6        professional that the funds withdrawn from the reserve
7        account were used for the energy efficiency measures;
8            (F) in the case of an exempt customer, the
9        customer's certification of the level of gas usage as
10        feedstock in the customer's operation in a typical year
11        and that it will provide information establishing this
12        level, upon request of the Department;
13            (G) in the case of either an exempt customer or a
14        SDC, the customer's certification that it has provided
15        the gas utility or utilities serving the customer with
16        a copy of the application as filed with the Department;
17            (H) in the case of either an exempt customer or a
18        SDC, certification of the natural gas utility or
19        utilities serving the customer in Illinois including
20        the natural gas utility accounts that are the subject
21        of the application; and
22            (I) in the case of either an exempt customer or a
23        SDC, a verification signed by a plant manager or an
24        authorized corporate officer attesting to the
25        truthfulness and accuracy of the information contained
26        in the application.

 

 

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1        (2) The Department shall review the application to
2    determine that it contains the information described in
3    provisions (A) through (I) of item (1) of this subsection
4    (m), as applicable. The review shall be completed within 30
5    days after the date the application is filed with the
6    Department. Absent a determination by the Department
7    within the 30-day period, the applicant shall be considered
8    to be a SDC or exempt customer, as applicable, for all
9    subsequent 3-year planning periods, as of the date of
10    filing the application described in this subsection (m). If
11    the Department determines that the application does not
12    contain the applicable information described in provisions
13    (A) through (I) of item (1) of this subsection (m), it
14    shall notify the customer, in writing, of its determination
15    that the application does not contain the required
16    information and identify the information that is missing,
17    and the customer shall provide the missing information
18    within 15 working days after the date of receipt of the
19    Department's notification.
20        (3) The Department shall have the right to audit the
21    information provided in the customer's application and
22    annual reports to ensure continued compliance with the
23    requirements of this subsection. Based on the audit, if the
24    Department determines the customer is no longer in
25    compliance with the requirements of items (A) through (I)
26    of item (1) of this subsection (m), as applicable, the

 

 

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1    Department shall notify the customer in writing of the
2    noncompliance. The customer shall have 30 days to establish
3    its compliance, and failing to do so, may have its status
4    as a SDC or exempt customer revoked by the Department. The
5    Department shall treat all information provided by any
6    customer seeking SDC status or exemption from the
7    provisions of this Section as strictly confidential.
8        (4) Upon request, or on its own motion, the Commission
9    may open an investigation, no more than once every 3 years
10    and not before October 1, 2014, to evaluate the
11    effectiveness of the self-directing program described in
12    this subsection (m).
13    Customers described in this subsection (m) that were
14approved by the Department in February 2013 shall be considered
15to be a self-directing customer or exempt customer, as
16applicable, for the current 3-year planning period effective
17December 1, 2013.
18    (n) The applicability of this Section to customers
19described in subsection (m) of this Section is conditioned on
20the existence of the SDC program. In no event will any
21provision of this Section apply to such customers after January
221, 2020.
23(Source: P.A. 97-813, eff. 7-13-12; 97-841, eff. 7-20-12;
2498-90, eff. 7-15-13; 98-225, eff. 8-9-13; revised 9-9-13.)
 
25    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.".