HB4321 96TH GENERAL ASSEMBLY

LRB096 11691 MJR 22371 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB4321

Introduced 2/27/2009, by Rep. Harry Osterman

SYNOPSIS AS INTRODUCED:

220 ILCS 5/8-104 new

Amends the Public Utilities Act. Provides that natural gas utilities shall implement cost-effective energy efficiency measures to meet specified cumulative natural gas savings requirements. Provides that a natural gas utility may meet 1/3 of the annual energy efficiency portfolio requirement through electricity savings associated with combined heat and power systems using an electricity-to-gas savings conversion factor, which shall be established by the Illinois Commerce Commission no later than March 1, 2010. Provides that notwithstanding the requirements of specified provisions, a natural gas utility shall limit the amount of energy efficiency implemented in any 3-year reporting period established by specified provisions by an amount necessary to limit the estimated average increase in the amounts paid by retail customers in connection with natural gas service to no more than 2% in the applicable 3-year reporting period. Provides that natural gas utilities shall be responsible for overseeing the design, development, and filing of their efficiency plans with the Commission. Contains provisions concerning the implementation of energy efficiency measures by the Department of Commerce and Economic Opportunity. Provides that each gas utility shall file an energy efficiency plan with the Commission to meet the energy efficiency standards for through May 31, 2014. Contains provisions concerning contributions by a gas utility into the Low-Income Home Energy Assistance Program. Provides that not later than January 1, 2010, the Commission shall, after an opportunity for public comment, provide the General Assembly with recommended modifications to the Act to foster statewide coordination and consistency between statutorily-mandated natural gas and electric energy efficiency programs to achieve specified goals. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning utilities.

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 8-104 as follows:

(220 ILCS 5/8-104 new)

Sec. 8-104. Natural gas energy efficiency programs.

(a) It is the policy of the State that natural gas utilities are required to use cost-effective energy efficiency measures to reduce direct and indirect costs to consumers. It serves the public interest to allow natural gas utilities to recover costs for reasonably and prudently incurred expenses for cost-effective energy efficiency measures.

(b) For purposes of this Section, "energy efficiency measures" means measures that reduce the amount of energy required to achieve a given end use and "cost-effective" means that the measures satisfy the total resource cost test which, for purposes of this Section, means a standard that is met if, for an investment in energy efficiency, the benefit-cost ratio is greater than one. The benefit-cost ratio is the ratio of the net present value of the total benefits of the measures to the net present value of the total costs as calculated over the lifetime of the measures. The total resource cost test compares the sum of avoided natural gas utility costs, representing the benefits that accrue to the system and the participant in the delivery of those efficiency measures, as well as other quantifiable societal benefits, to the sum of all incremental costs of end use measures, including both utility and participant contributions, plus costs to administer, deliver, and evaluate each demand-side measure, to quantify the net savings obtained by substituting demand-side measures for supply resources. In calculating avoided costs, reasonable estimates shall be included for financial costs likely to be imposed by future regulation of emissions of greenhouse gases. The low-income programs described in item (4) of subsection (h) of this Section shall not be required to meet the total resource cost test.

(c) Natural gas utilities shall implement cost-effective energy efficiency measures to meet at least the following cumulative natural gas savings requirements, based upon the total amount of gas delivered during calendar year 2009:

(1) 0.2% by May 31, 2012;

(2) 0.4% by May 31, 2013;

(3) 0.6% by May 31, 2014;

(4) 0.8% by May 31, 2015;

(5) 1% by May 31, 2016;

(6) 1.2% by May 31, 2017;

(7) 1.4% by May 31, 2018; and

(8) 1.5% by May 31, 2019; and in each 12 month period thereafter.

(d) Notwithstanding the requirements of subsection (c) of this Section, a natural gas utility may meet 1/3 of the annual energy efficiency portfolio requirement through electricity savings associated with combined heat and power systems using an electricity-to-gas savings conversion factor, which shall be established by the Commission no later than March 1, 2010. For purposes of this Section:

(1) "Combined heat and power system" means a system that uses the same energy source both for the generation of electrical or mechanical power and the production of steam or another form of useful thermal energy, provided that the net wholesale sales of electricity by the facility will not exceed 10% of total annual electric generation by the facility.

(2) "Combined heat and power system savings" means the electric output, and the electricity saved due to the mechanical output, of a combined heat and power system, adjusted to reflect any increase in fuel consumption by that system as compared to the fuel that would have been required to produce an equivalent useful thermal energy output in a separate thermal-only system.

(e) Notwithstanding the requirements of subsection (c) of this Section, a natural gas utility shall limit the amount of energy efficiency implemented in any 3-year reporting period established by item (8) of subsection (g) of this Section by an amount necessary to limit the estimated average increase in the amounts paid by retail customers in connection with natural gas service to no more than 2% in the applicable 3-year reporting period.

(f) Natural gas utilities shall be responsible for overseeing the design, development, and filing of their efficiency plans with the Commission. The utility shall implement 75% of the energy efficiency programs approved by the Commission, and may outsource program development, administration, and implementation. The remaining 25% of those energy efficiency measures approved by the Commission shall be implemented by the Department of Commerce and Economic Opportunity, and must be designed in conjunction with the utility and the filing process. The Department may outsource development and implementation of energy efficiency measures. A minimum of 10% of the entire portfolio of cost effective energy efficiency measures shall be procured from local government, municipal corporations, school districts, and community college districts. Up to 5% of the entire portfolio of cost-effective energy efficiency measures may be granted to local government and municipal corporations for market transformation initiatives. The Department shall coordinate the implementation of these measures.

The apportionment of the dollars to cover the costs to implement the Department's share of the portfolio of energy efficiency measures shall be made to the Department once the Department has executed grants or contracts for energy efficiency measures and provided supporting documentation for those grants and the contracts to the utility. The details of the measures implemented by the Department shall be submitted by the Department to the Commission in connection with the utility's filing regarding the energy efficiency measures that the utility implements.

A utility providing approved energy efficiency measures in the State shall be permitted to recover costs of those measures through an automatic adjustment clause tariff filed with and approved by the Commission. The tariff shall be established outside the context of a general rate case. Each year the Commission shall initiate a review to reconcile any amounts collected with the actual costs and to determine the required adjustment to the annual tariff factor to match annual expenditures. In order to ensure the least-cost provision of utility service as required by this Act and to promote the efficient use of energy as required by this Section, the Commission shall not approve any charges that penalize customers for reducing their consumption of utility services.

Each utility shall include, in its recovery of costs, the costs estimated for both the utility's and the Department's implementation of energy efficiency measures. Costs collected by the utility for measures implemented by the Department shall be submitted to the Department pursuant to Section 605-323 of the Civil Administrative Code of Illinois and shall be used by the Department solely for the purpose of implementing these measures. A utility shall not be required to advance any moneys to the Department but only to forward such funds as it has collected. The Department shall report to the Commission on an annual basis regarding the costs actually incurred by the Department in the implementation of the measures. Any changes to the costs of energy efficiency measures as a result of plan modifications shall be appropriately reflected in amounts recovered by the utility and turned over to the Department.

The portfolio of measures, administered by both the utilities and the Department, shall, in combination, be designed to achieve the annual savings requirements set forth in subsection (c) of this Section, as modified by subsection (e) of this Section. The utility and the Department shall agree upon a reasonable portfolio of measures and determine the measurable corresponding percentage of the savings goals associated with measures implemented by the utility or Department.

No utility shall be assessed a penalty under subsection (g) of this Section for failure to make a timely filing if that failure is the result of a lack of agreement with the Department with respect to the allocation of responsibilities or related costs or target assignments. In that case, the Department and the utility shall file their respective plans with the Commission and the Commission shall determine an appropriate division of measures and programs that meets the requirements of this Section.

If the Department is unable to meet performance requirements for the portion of the portfolio implemented by the Department, then the utility and the Department shall jointly submit a modified filing to the Commission explaining the performance shortfall and recommending an appropriate course going forward, including any program modifications that may be appropriate in light of the evaluations conducted under item (8) of subsection (g) of this Section. In this case, the utility obligation to collect the Department's costs and turn over those funds to the Department under this subsection (f) shall continue only if the Commission approves the modifications to the plan proposed by the Department.

(g) No later than November 15, 2010, each gas utility shall file an energy efficiency plan with the Commission to meet the energy efficiency standards through May 31, 2014. Every 3 years thereafter, each utility shall file an energy efficiency plan with the Commission. If a utility does not file such a plan by November 15 of the applicable year, it shall face a penalty of $100,000 per day until the plan is filed. Each utility's plan shall set forth the utility's proposals to meet the utility's portion of the energy efficiency standards identified in subsection (c) of this Section, as modified by subsection (e) of this Section, taking into account the unique circumstances of the utility's service territory. The Commission shall seek public comment on the utility's plan and shall issue an order approving or disapproving each plan within 3 months after its submission. If the Commission disapproves a plan, the Commission shall, within 30 days, describe in detail the reasons for the disapproval and describe a path by which the utility may file a revised draft of the plan to address the Commission's concerns satisfactorily. If the utility does not refile with the Commission within 60 days after the disapproval, the utility shall be subject to penalties at a rate of $100,000 per day until the plan is filed. This process shall continue, and penalties shall accrue, until the utility has successfully filed a portfolio of energy efficiency measures. Penalties shall be deposited into the Energy Efficiency Trust Fund and the cost of any such penalties may not be recovered from ratepayers. In submitting proposed energy efficiency plans and funding levels to meet the savings goals adopted by this Act the utility shall:

(1) Demonstrate that its proposed energy efficiency measures will achieve the requirements that are identified in subsection (c) of this Section, as modified by subsection (e) of this Section.

(2) Present specific proposals to implement new building and appliance standards that have been placed into effect.

(3) Present estimates of the total amount paid for gas service expressed on a per-therm basis associated with the proposed portfolio of measures designed to meet the requirements that are identified in subsection (c) of this Section, as modified by subsection (e) of this Section.

(4) Coordinate with the Department to present a portfolio of energy efficiency measures proportionate to the share of total annual utility revenues in Illinois from households at or below 150% of the poverty level. Such programs shall be targeted to households with incomes at or below 80% of area median income.

(5) Demonstrate that its overall portfolio of energy efficiency measures, not including programs covered by item (4) of this subsection (h), are cost effective using the total resource cost test and represent a diverse cross section of opportunities for customers of all rate classes to participate in the programs.

(6) Demonstrate that a gas utility affiliated with an electric utility that is required to comply with Section 8-103 of this Act has integrated gas and electric efficiency measures into a single, fuel-neutral program that reduces program or participant costs and allocates costs to gas and electric ratepayers proportionately to the ratepayer benefits derived from reductions in usage of each energy source. The Department shall integrate all gas and electric programs it delivers in any such utilities' service territories, unless the Department can show that integration is not feasible or appropriate.

(7) Include a proposed cost recovery tariff mechanism to fund the proposed energy efficiency measures and to ensure the recovery of the prudently and reasonably incurred costs of Commission approved programs.

(8) Provide for quarterly status reports tracking implementation of and expenditures for the utility's portfolio of measures and the Department's portfolio of measures, an annual independent review, and a full independent evaluation of the 3-year results of the performance and the cost effectiveness of the utility's and Department's portfolios of measures and broader net program impacts and, to the extent practical, for adjustment of the measures on a going forward basis as a result of the evaluations. The resources dedicated to evaluation shall not exceed 3% of portfolio resources in any given 3-year period.

(h) No more than 3% of expenditures on energy efficiency measures may be allocated for demonstration of breakthrough equipment and devices.

(i) Illinois natural gas utilities that are affiliated by virtue of a common parent company may, at the utilities' request, be considered a single natural gas utility for purposes of complying with this Section.

(j) If, after 3 years or at the end of any subsequent 3-year period thereafter, a gas utility fails to meet the efficiency standard specified in subsection (c) of this Section, as modified by subsection (e) of this Section, hen it shall make a contribution to the Low Income Home Energy Assistance Program in the amount of $3 for each customer served by the utility on December 31, 2010. The costs of this contribution may not be recovered from ratepayers. In addition, if a gas utility fails to meet the efficiency standard specified in subsection (c) of this Section, as modified by subsection (e) of this Section, in any 2 consecutive 3-year periods, then the responsibility for implementing the utility's energy efficiency measures shall be transferred to an independent program administrator selected by the Commission. Reasonable and prudent costs incurred by the independent program administrator to meet the efficiency standard specified in subsection (c) of this Section, as modified by subsection (e) of this Section, may be recovered from the customers of the affected gas utility. The utility shall provide the independent program administrator with all information and assistance necessary to perform the program administrator's duties including, but not limited to, customer, account, and energy use data, and shall allow the program administrator to include inserts in customer bills.

(k) No utility shall be deemed to have failed to meet the energy efficiency standards to the extent any such failure is due to a failure of the Department.

(l) Not later than January 1, 2010, the Commission shall, after an opportunity for public comment, provide the General Assembly with recommended modifications to the Act to foster statewide coordination and consistency between statutorily-mandated natural gas and electric energy efficiency programs to reduce program or participant costs or to improve program performance.

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