Illinois General Assembly - Full Text of HB2541
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Full Text of HB2541  103rd General Assembly




State of Illinois
2023 and 2024


Introduced 2/15/2023, by Rep. Theresa Mah


220 ILCS 5/1-102  from Ch. 111 2/3, par. 1-102
220 ILCS 5/9-201  from Ch. 111 2/3, par. 9-201
220 ILCS 5/16-108.18

    Amends the Public Utilities Act. Provides that in a ratemaking proceeding, the Illinois Commerce Commission shall not approve for ratemaking purposes either a cost of equity exceeding 8% unless clear and convincing record evidence demonstrates that a higher return on equity is strictly necessary to prevent an imminent and significant threat of negative credit action that would be expected to increase the cost of service for the utility's ratepayers; or a capital structure comprised of more than 50% common equity unless clear and convincing record evidence demonstrates that a higher equity ratio is strictly necessary to prevent an imminent and significant threat of negative credit action that would be expected to increase the cost of service for the utility's ratepayers. Provides that the Commission shall not treat the utility's interest in offsetting the revenue impact of enforcing either of these limitations as justification for approving or adjusting any other proposed revenues. Makes corresponding changes to the Multi-Year Rate Plan.

LRB103 29016 AMQ 55402 b





HB2541LRB103 29016 AMQ 55402 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Public Utilities Act is amended by changing
5Sections 1-102, 9-201, and 16-108.18 as follows:
6    (220 ILCS 5/1-102)  (from Ch. 111 2/3, par. 1-102)
7    Sec. 1-102. Findings and Intent. The General Assembly
8finds that the health, welfare and prosperity of all Illinois
9citizens require the provision of adequate, efficient,
10reliable, environmentally safe and least-cost public utility
11services at prices which accurately reflect the long-term cost
12of such services and which are equitable to all citizens. It is
13therefore declared to be the policy of the State that public
14utilities shall continue to be regulated effectively and
15comprehensively. It is further declared that the goals and
16objectives of such regulation shall be to ensure
17        (a) Efficiency: the provision of reliable energy
18    services at the least possible cost to the citizens of the
19    State; in such manner that:
20            (i) physical, human and financial resources are
21        allocated efficiently;
22            (ii) all supply and demand options are considered
23        and evaluated using comparable terms and methods in



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1        order to determine how utilities shall meet their
2        customers' demands for public utility services at the
3        least cost;
4            (iii) utilities are allowed only a sufficient
5        return on investment so as to enable them to attract
6        capital in financial markets at competitive rates and
7        no more;
8            (iv) tariff rates for the sale of various public
9        utility services are authorized such that they
10        accurately reflect the cost of delivering those
11        services and allow utilities to recover the total
12        costs prudently and reasonably incurred;
13            (v) variation in costs by customer class and time
14        of use is taken into consideration in authorizing
15        rates for each class.
16        (b) Environmental Quality: the protection of the
17    environment from the adverse external costs of public
18    utility services so that
19            (i) environmental costs of proposed actions having
20        a significant impact on the environment and the
21        environmental impact of the alternatives are
22        identified, documented and considered in the
23        regulatory process;
24            (ii) the prudently and reasonably incurred costs
25        of environmental controls are recovered.
26        (c) Reliability: the ability of utilities to provide



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1    consumers with public utility services under varying
2    demand conditions in such manner that suppliers of public
3    utility services are able to provide service at varying
4    levels of economic reliability giving appropriate
5    consideration to the costs likely to be incurred as a
6    result of service interruptions, and to the costs of
7    increasing or maintaining current levels of reliability
8    consistent with commitments to consumers.
9        (d) Equity: the fair treatment of consumers and
10    investors in order that
11            (i) the public health, safety and welfare shall be
12        protected;
13            (ii) the application of rates is based on public
14        understandability and acceptance of the reasonableness
15        of the rate structure and level;
16            (iii) the cost of supplying public utility
17        services is allocated to those who cause the costs to
18        be incurred;
19            (iv) if factors other than cost of service are
20        considered in regulatory decisions, the rationale for
21        these actions is set forth;
22            (v) regulation allows for orderly transition
23        periods to accommodate changes in public utility
24        service markets;
25            (vi) regulation does not result in undue or
26        sustained adverse impact on utility earnings;



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1            (vii) the impacts of regulatory actions on all
2        sectors of the State are carefully weighed;
3            (viii) the rates for utility services are
4        affordable and therefore preserve the availability of
5        such services to all citizens.
6    It is further declared to be the policy of the State that
7this Act shall not apply in relation to motor carriers and rail
8carriers as defined in the Illinois Commercial Transportation
9Law, or to the Commission in the regulation of such carriers.
10    Nothing in this Act shall be construed to limit, restrict,
11or mitigate in any way the power and authority of the State's
12Attorneys or the Attorney General under the Consumer Fraud and
13Deceptive Business Practices Act.
14(Source: P.A. 92-22, eff. 6-30-01.)
15    (220 ILCS 5/9-201)  (from Ch. 111 2/3, par. 9-201)
16    Sec. 9-201. (a) Unless the Commission otherwise orders,
17and except as otherwise provided in this Section, no change
18shall be made by any public utility in any rate or other charge
19or classification, or in any rule, regulation, practice or
20contract relating to or affecting any rate or other charge,
21classification or service, or in any privilege or facility,
22except after 45 days' notice to the Commission and to the
23public as herein provided. Such notice shall be given by
24filing with the Commission and keeping open for public
25inspection new schedules or supplements stating plainly the



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1change or changes to be made in the schedule or schedules then
2in force, and the time when the change or changes will go into
3effect, and by publication in a newspaper of general
4circulation or such other notice to persons affected by such
5change as may be prescribed by rule of the Commission. The
6Commission, for good cause shown, may allow changes without
7requiring the 45 days' notice herein provided for, by an order
8specifying the changes so to be made and the time when they
9shall take effect and the manner in which they shall be filed
10and published.
11    When any change is proposed in any rate or other charge, or
12classification, or in any rule, regulation, practice, or
13contract relating to or affecting any rate or other charge,
14classification or service, or in any privilege or facility,
15such proposed change shall be plainly indicated on the new
16schedule filed with the Commission, by some character to be
17designated by the Commission, immediately preceding or
18following the item.
19    When any public utility providing water or sewer service
20proposes any change in any rate or other charge, or
21classification, or in any rule, regulation, practice, or
22contract relating to or affecting any rate or other charge,
23classification or service, or in any privilege or facility,
24such utility shall, in addition to the other notice
25requirements of this Act, provide notice of such change to all
26customers potentially affected by including a notice and



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1description of such change, and of Commission procedures for
2intervention, in the first bill sent to each such customer
3after the filing of the proposed change.
4    For water or sewer utilities with greater than 15,000
5total customers, the following notice requirements are
6applicable, in addition to the other notice requirements of
7this Act:
8        (1) As a separate bill insert, an initial notice in
9    the first bill sent to all customers potentially affected
10    by the proposed change after the filing of the proposed
11    change shall include:
12            (A) the approximate date when the change or
13        changes shall go into effect assuming the Commission
14        utilizes the 11-month process as described in this
15        Section;
16            (B) a statement indicating that the estimated bill
17        impact may vary based on multiple factors, including,
18        but not limited to, meter size, usage volume, and the
19        fire protection district;
20            (C) the water or sewer utility's customer service
21        number or other number as may be appropriate where an
22        authorized agent of the water or sewer utility can
23        explain how the proposed increase might impact an
24        individual customer's bill;
25            (D) if the proposed change involves a change from
26        a flat to a volumetric rate, an explanation of



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1        volumetric rate;
2            (E) a reference to the water or sewer utility's
3        website where customers can find tips on water
4        conservation; and
5            (F) for customers receiving both water and sewer
6        service from a utility and if the customer has an
7        option to install a separate meter for irrigation to
8        mitigate sewer charges, an explanation of the water
9        and sewer utility's and the customer's
10        responsibilities for installation of a separate meter
11        if such a change is approved.
12        (2) A second notice to all customers shall be included
13    on the first bill after the Commission suspends the
14    tariffs initiating the rate case.
15        (3) Final notice of such change shall be sent to all
16    customers potentially affected by the proposed change by
17    including information required under this paragraph (3)
18    with the first bill after the effective date of the rates
19    approved by the Final Order of the Commission in a rate
20    case. The notice shall include the following:
21            (A) the date when the change or changes went into
22        effect;
23            (B) the water or sewer utility's customer service
24        number or other number as may be appropriate where an
25        authorized agent of the water or sewer utility can
26        explain how the proposed increase might impact an



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1        individual customer's bill;
2            (C) an explanation that usage shall now be charged
3        at a volumetric rate rather than a flat rate, if
4        applicable;
5            (D) a reference to the water or sewer utility's
6        website where the customer can find tips on water
7        conservation; and
8            (E) for customers receiving both water and sewer
9        service from a utility and if the customer has an
10        option to install a separate meter for irrigation to
11        mitigate sewer charges, an explanation of the water
12        and sewer utility's and the customer's
13        responsibilities for installation of a separate meter
14        if such a change is approved.
15    (b) Whenever there shall be filed with the Commission any
16schedule stating an individual or joint rate or other charge,
17classification, contract, practice, rule or regulation, the
18Commission shall have power, and it is hereby given authority,
19either upon complaint or upon its own initiative without
20complaint, at once, and if it so orders, without answer or
21other formal pleadings by the interested public utility or
22utilities, but upon reasonable notice, to enter upon a hearing
23concerning the propriety of such rate or other charge,
24classification, contract, practice, rule or regulation, and
25pending the hearing and decision thereon, such rate or other
26charge, classification, contract, practice, rule or regulation



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1shall not go into effect. The period of suspension of such rate
2or other charge, classification, contract, practice, rule or
3regulation shall not extend more than 105 days beyond the time
4when such rate or other charge, classification, contract,
5practice, rule or regulation would otherwise go into effect
6unless the Commission, in its discretion, extends the period
7of suspension for a further period not exceeding 6 months.
8    All rates or other charges, classifications, contracts,
9practices, rules or regulations not so suspended shall, on the
10expiration of 45 days from the time of filing the same with the
11Commission, or of such lesser time as the Commission may
12grant, go into effect and be the established and effective
13rates or other charges, classifications, contracts, practices,
14rules and regulations, subject to the power of the Commission,
15after a hearing had on its own motion or upon complaint, as
16herein provided, to alter or modify the same.
17    Within 30 days after such changes have been authorized by
18the Commission, copies of the new or revised schedules shall
19be posted or filed in accordance with the terms of Section
209-103 of this Act, in such a manner that all changes shall be
21plainly indicated. The Commission shall incorporate into the
22period of suspension a review period of 4 business days during
23which the Commission may review and determine whether the new
24or revised schedules comply with the Commission's decision
25approving a change to the public utility's rates. Such review
26period shall not extend the suspension period by more than 2



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1days. Absent notification to the contrary within the 4
2business day period, the new or revised schedules shall be
3deemed approved.
4    (c) If the Commission enters upon a hearing concerning the
5propriety of any proposed rate or other charge,
6classification, contract, practice, rule or regulation, the
7Commission shall establish the rates or other charges,
8classifications, contracts, practices, rules or regulations
9proposed, in whole or in part, or others in lieu thereof, which
10it shall find to be just and reasonable. In such hearing, the
11burden of proof to establish the justness and reasonableness
12of the proposed rates or other charges, classifications,
13contracts, practices, rules or regulations, in whole and in
14part, shall be upon the utility. The utility, the staff of the
15Commission, the Attorney General, or any party to a proceeding
16initiated under this Section who has been granted intervenor
17status and submitted a post-hearing brief must be given the
18opportunity to present oral argument, if requested no later
19than the date for filing exceptions, on the propriety of any
20proposed rate or other charge, classification, contract,
21practice, rule, or regulation. No rate or other charge,
22classification, contract, practice, rule or regulation shall
23be found just and reasonable unless it is consistent with
24Sections of this Article.
25    (d) Except where compliance with Section 8-401 of this Act
26is of urgent and immediate concern, no representative of a



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1public utility may discuss with a commissioner, commissioner's
2assistant, or administrative law judge in a non-public setting
3a planned filing for a general rate increase. If a public
4utility makes a filing under this Section, then no substantive
5communication by any such person with a commissioner,
6commissioner's assistant, or administrative law judge
7concerning the filing is permitted until a notice of hearing
8has been issued. After the notice of hearing has been issued,
9the only communications by any such person with a
10commissioner, commissioner's assistant, or administrative law
11judge concerning the filing permitted are communications
12permitted under Section 10-103 of this Act. If any such
13communication does occur, then within 5 days of the docket
14being initiated all details relating to the communication
15shall be placed on the public record of the proceeding. The
16record shall include any materials, whether written, recorded,
17filmed, or graphic in nature, produced or reproduced on any
18media, used in connection with the communication. The record
19shall reflect the names of all persons who transmitted,
20received, or were otherwise involved in the communication, the
21duration of the communication, and whether the communication
22occurred in person or by other means. In the case of an oral
23communication, the record shall also reflect the location or
24locations of all persons involved in the communication and, if
25the communication occurred by telephone, the telephone numbers
26for the callers and recipients of the communication. A



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1commissioner, commissioner's assistant, or administrative law
2judge who is involved in any such communication shall be
3recused from the affected proceeding. The Commission, or any
4commissioner or administrative law judge presiding over the
5proceeding shall, in the event of a violation of this Section,
6take action necessary to ensure that such violation does not
7prejudice any party or adversely affect the fairness of the
8proceedings including dismissing the affected proceeding.
9Nothing in this subsection (d) is intended to preclude
10otherwise allowable updates on issues that may be indirectly
11related to a general rate case filing because cost recovery
12for the underlying activity may be requested. Such updates may
13include, without limitation, issues related to outages and
14restoration, credit ratings, security issuances, reliability,
15Federal Energy Regulatory Commission matters, Federal
16Communications Commission matters, regional reliability
17organizations, consumer education, or labor matters, provided
18that such updates may not include cost recovery in a planned
19rate case.
20    (e) In a ratemaking proceeding, the Commission shall not
21approve for ratemaking purposes either of the following:
22        (1) a cost of equity exceeding 8% unless clear and
23    convincing record evidence demonstrates that a higher
24    return on equity is strictly necessary to prevent an
25    imminent and significant threat of negative credit action
26    that would be expected to increase the cost of service for



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1    the utility's ratepayers;
2        (2) a capital structure comprised of more than 50%
3    common equity unless clear and convincing record evidence
4    demonstrates that a higher equity ratio is strictly
5    necessary to prevent an imminent and significant threat of
6    negative credit action that would be expected to increase
7    the cost of service for the utility's ratepayers.
8    The Commission shall not treat the utility's interest in
9offsetting the revenue impact of enforcing either of the
10limitations set forth in this subsection as justification for
11approving or adjusting any other proposed revenues.
12(Source: P.A. 100-840, eff. 8-13-18.)
13    (220 ILCS 5/16-108.18)
14    Sec. 16-108.18. Performance-based ratemaking.
15    (a) The General Assembly finds:
16        (1) That improving the alignment of utility customer
17    and company interests is critical to ensuring equity,
18    rapid growth of distributed energy resources, electric
19    vehicles, and other new technologies that substantially
20    change the makeup of the grid and protect Illinois
21    residents and businesses from potential economic and
22    environmental harm from the State's energy systems.
23        (2) There is urgency around addressing increasing
24    threats from climate change and assisting communities that
25    have borne disproportionate impacts from climate change,



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1    including air pollution, greenhouse gas emissions, and
2    energy burdens. Addressing this problem requires changes
3    to the business model under which utilities in Illinois
4    have traditionally functioned.
5        (3) Providing targeted incentives to support change
6    through a new performance-based structure to enhance
7    ratemaking is intended to enable alignment of utility,
8    customer, community, and environmental goals.
9        (4) Though Illinois has taken some measures to move
10    utilities to performance-based ratemaking through the
11    establishment of performance incentives and a
12    performance-based formula rate under the Energy
13    Infrastructure Modernization Act, these measures have not
14    been sufficiently transformative in urgently moving
15    electric utilities toward the State's ambitious energy
16    policy goals: protecting a healthy environment and
17    climate, improving public health, and creating quality
18    jobs and economic opportunities, including wealth
19    building, especially in economically disadvantaged
20    communities and communities of color.
21        (5) These measures were not developed through a
22    process to understand first what performance measures and
23    penalties would help drive the sought-after behavior by
24    the utilities.
25        (6) While the General Assembly has not made a finding
26    that the spending related to the Energy Infrastructure and



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1    Modernization Act and its performance metrics was not
2    reasonable, it is important to address concerns that these
3    measures may have resulted in excess utility spending and
4    guaranteed profits without meaningful improvements in
5    customer experience, rate affordability, or equity.
6        (7) Discussions of performance incentive mechanisms
7    must always take into account the affordability of
8    customer rates and bills for all customers, including
9    low-income customers.
10        (8) The General Assembly therefore directs the
11    Illinois Commerce Commission to complete a transition that
12    includes a comprehensive performance-based regulation
13    framework for electric utilities serving more than 500,000
14    customers. The breadth of this framework should revise
15    existing utility regulations to position Illinois electric
16    utilities to effectively and efficiently achieve current
17    and anticipated future energy needs of this State, while
18    ensuring affordability for consumers.
19    (b) As used in this Section:
20    "Commission" means the Illinois Commerce Commission.
21    "Demand response" means measures that decrease peak
22electricity demand or shift demand from peak to off-peak
24    "Distributed energy resources" or "DER" means a wide range
25of technologies that are connected to the grid including those
26that are located on the customer side of the customer's



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1electric meter and can provide value to the distribution
2system, including, but not limited to, distributed generation,
3energy storage, electric vehicles, and demand response
5    "Economically disadvantaged communities" means areas of
6one or more census tracts where average household income does
7not exceed 80% of area median income.
8    "Environmental justice communities" means the definition
9of that term as used and as may be updated in the long-term
10renewable resources procurement plan by the Illinois Power
11Agency and its Program Administrator in the Illinois Solar for
12All Program.
13    "Equity investment eligible community" means the
14geographic areas throughout Illinois which would most benefit
15from equitable investments by the State designed to combat
16discrimination. Specifically, the equity investment eligible
17communities shall be defined as the following areas:
18        (1) R3 Areas as established pursuant to Section 10-40
19    of the Cannabis Regulation and Tax Act, where residents
20    have historically been excluded from economic
21    opportunities, including opportunities in the energy
22    sector; and
23        (2) Environmental justice communities, as defined by
24    the Illinois Power Agency pursuant to the Illinois Power
25    Agency Act, where residents have historically been subject
26    to disproportionate burdens of pollution, including



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1    pollution from the energy sector.
2    "Performance incentive mechanism" means an instrument by
3which utility performance is incentivized, which could include
4a monetary performance incentive.
5    "Performance metric" means a manner of measurement for a
6particular utility activity.
7    (c) Through coordinated, comprehensive system planning,
8ratemaking, and performance incentives, the performance-based
9ratemaking framework should be designed to accomplish the
10following objectives:
11        (1) maintain and improve service reliability and
12    safety, including and particularly in environmental
13    justice, low-income and equity investment eligible
14    communities;
15        (2) decarbonize utility systems at a pace that meets
16    or exceeds State climate goals, while also ensuring the
17    affordability of rates for all customers, including
18    low-income customers;
19        (3) direct electric utilities to make cost-effective
20    investments that support achievement of Illinois' clean
21    energy policies, including, at a minimum, investments
22    designed to integrate distributed energy resources, comply
23    with critical infrastructure protection standards, plans,
24    and industry best practices, and support and take
25    advantage of potential benefits from the electric vehicle
26    charging and other electrification, while mitigating the



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1    impacts;
2        (4) choose cost-effective assets and services, whether
3    utility-supplied or through third-party contracting,
4    considering both economic and environmental costs and the
5    effects on utility rates, to deliver high-quality service
6    to customers at least cost;
7        (5) maintain the affordability of electric delivery
8    services for all customers, including low-income
9    customers;
10        (6) maintain and grow a diverse workforce, diverse
11    supplier procurement base and, for relevant programs,
12    diverse approved-vendor pools, including increased
13    opportunities for minority-owned, female-owned,
14    veteran-owned, and disability-owned business enterprises;
15        (7) improve customer service performance and
16    engagement;
17        (8) address the particular burdens faced by consumers
18    in environmental justice and equity investment eligible
19    communities, including shareholder, consumer, and publicly
20    funded bill payment assistance and credit and collection
21    policies, and ensure equitable disconnections, late fees,
22    or arrearages as a result of utility credit and collection
23    practices, which may include consideration of impact by
24    zip code; and
25        (9) implement or otherwise enhance current supplier
26    diversity programs to increase diverse contractor



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1    participation in professional services, subcontracting,
2    and prime contracting opportunities with programs that
3    address barriers to access. Supplier diversity programs
4    shall address specific barriers related to RFP and
5    contract access, access to capital, information technology
6    and cyber security access and costs, administrative
7    burdens, and quality control with specific metrics,
8    outcomes, and demographic data reported.
9    (d) Multi-Year Rate Plan.
10        (1) If an electric utility had a performance-based
11    formula rate in effect under Section 16-108.5 as of
12    December 31, 2020, then the utility may file a petition
13    proposing tariffs implementing a 4-year Multi-Year Rate
14    Plan as provided in this Section no later than, January
15    20, 2023, for delivery service rates to be effective for
16    the billing periods January 1, 2024 through December 31,
17    2027. The Commission shall issue an order approving or
18    approving as modified the utility's plan no later than
19    December 20, 2023. The term "Multi-Year Rate Plan" refers
20    to a plan establishing the base rates the utility shall
21    charge for each delivery year of the 4-year period to be
22    covered by the plan, which shall be subject to
23    modification only as expressly allowed in this Section.
24        (2) A utility proposing a Multi-Year Rate Plan shall
25    provide a 4-year investment plan and a description of the
26    utility's major planned investments, including, at a



HB2541- 20 -LRB103 29016 AMQ 55402 b

1    minimum, all investments of $2,000,000 or greater over the
2    plan period for an electric utility that serves more than
3    3,000,000 retail customers in the State or $500,000 for an
4    electric utility that serves less than 3,000,000 retail
5    customers in the State but more than 500,000 retail
6    customers in the State. The 4-year investment plan must be
7    consistent with the Multi-Year Integrated Grid Plan
8    described in Section 16-105.17 of this Act. The investment
9    plan shall provide sufficiently detailed information, as
10    required by the Commission, including, at a minimum, a
11    description of each investment, the location of the
12    investment, and an explanation of the need for and benefit
13    of such an investment to the extent known.
14        (3) The Multi-Year Rate Plan shall be implemented
15    through a tariff filed with the Commission consistent with
16    the provisions of this paragraph (3) that shall apply to
17    all delivery service customers. The Commission shall
18    initiate and conduct an investigation of the tariff in a
19    manner consistent with the provisions of this paragraph
20    (3) and the provisions of Article IX of this Act, to the
21    extent they do not conflict with this paragraph (3). The
22    Multi-Year Rate Plan approved by the Commission shall do
23    the following:
24            (A) Provide for the recovery of the utility's
25        forecasted rate base, based on the 4-year investment
26        plan and the utility's Integrated Grid Plan. The



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1        forecasted rate base must include the utility's
2        planned capital investments, with rates based on
3        average annual plant investment, and
4        investment-related costs, including income tax
5        impacts, depreciation, and ratemaking adjustments and
6        costs that are prudently incurred and reasonable in
7        amount consistent with Commission practice and law.
8        The process used to develop the forecasts must be
9        iterative, rigorous, and lead to forecasts that
10        reasonably represent the utility's investments during
11        the forecasted period and ensure that the investments
12        are projected to be used and useful during the annual
13        investment period and least cost, consistent with the
14        provisions of Articles VIII and IX of this Act.
15            (B) The cost of equity shall be approved by the
16        Commission consistent with Commission practice and law
17        and shall not exceed 8% unless clear and convincing
18        record evidence demonstrates that a higher return on
19        equity is strictly necessary to prevent an imminent
20        and significant threat of negative credit action that
21        would be expected to increase the cost of service for
22        the utility's ratepayers. The Commission shall not
23        treat offsetting the impact of the cap on equity ratio
24        in subparagraph (C) of this Section on the utility's
25        revenues as a justification for increasing the cost of
26        equity beyond what is otherwise sufficient and



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1        necessary. A cost of equity of more than 8% shall not
2        be permitted unless specifically approved by the
3        Commission.
4            (C) The revenue requirement shall reflect the
5        utility's actual capital structure for the applicable
6        calendar year, subject to the limitations that (i) the
7        Commission shall not approve a common equity ratio
8        above 50% absent clear and convincing record evidence
9        demonstrating that a higher equity ratio is strictly
10        necessary to prevent an imminent and significant
11        threat of negative credit action that would be
12        expected to increase the cost of service for
13        ratepayers, and (ii) the Commission shall not treat
14        offsetting the impact of the cap on cost of equity in
15        subparagraph (B) on the utility's revenues as a
16        justification for increasing the equity ratio beyond
17        what is otherwise sufficient and necessary. A year-end
18        capital structure that includes a common equity ratio
19        of up to and including 50% of the total capital
20        structure shall be deemed prudent and reasonable. A
21        higher common equity ratio of more than 50% shall not
22        be permitted unless must be specifically approved by
23        the Commission.
24            (E) Provide for recovery of prudent and reasonable
25        projected operating expenses, giving effect to
26        ratemaking adjustments, consistent with Commission



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1        practice and law under Article IX of this Act.
2        Operating expenses for years after the first year of
3        the Multi-Year Rate Plan may be estimated by the use of
4        known and measurable changes, expense reductions
5        associated with planned capital investments as
6        appropriate, and reasonable and appropriate
7        escalators, indices, or other metrics.
8            (F) Amortize the amount of unprotected
9        property-related excess accumulated deferred income
10        taxes in rates as of January 1, 2023 over a period
11        ending December 31, 2027, unless otherwise required to
12        amortize the excess deferred income tax pursuant to
13        Section 16-108.21 of this Act.
14            (G) Allow recovery of incentive compensation
15        expense that is based on the achievement of
16        operational metrics, including metrics related to
17        budget controls, outage duration and frequency,
18        safety, customer service, efficiency and productivity,
19        environmental compliance and attainment of
20        affordability and environmental goals, and other goals
21        and metrics approved by the Commission. Incentive
22        compensation expense that is based on net income or an
23        affiliate's earnings per share shall not be
24        recoverable.
25            (H) To the maximum extent practicable, align the
26        4-year investment plan and annual capital budgets with



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1        the electric utility's Multi-Year Integrated Grid
2        Plan.
3        (4) The Commission shall establish annual rates for
4    each year of the Multi-Year Rate Plan that accurately
5    reflect and are based only upon the utility's reasonable
6    and prudent costs of service over the term of the plan,
7    including the effect of all ratemaking adjustments
8    consistent with Commission practice and law as determined
9    by the Commission, provided that the costs are not being
10    recovered elsewhere in rates. Tariff riders authorized by
11    the Commission may continue outside of a plan authorized
12    under this Section to the extent such costs are not
13    recovered elsewhere in rates. For the first multi-year
14    rate plan, the burden of proof shall be on the electric
15    utility to establish the prudence of investments and
16    expenditures and to establish that such investments
17    consistent with and reasonably necessary to meet the
18    requirements of the utility's first approved Multi-Year
19    Integrated Grid Plan described in Section 16-105.17 of
20    this Act. For subsequent Multi-Year Rate Plans, the burden
21    of proof shall be on the electric utility to establish the
22    prudence of investments and expenditures and to establish
23    that such investments are consistent with and reasonably
24    necessary to meet the requirements of the utility's most
25    recently approved Multi-Year Integrated Grid Plan
26    described in Section 16-105.17 of this Act. The sole fact



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1    that a cost differs from that incurred in a prior period or
2    that an investment is different from that described in the
3    Multi-Year Integrated Grid Plan shall not imply the
4    imprudence or unreasonableness of that cost or investment.
5    The sole fact that an investment is the same or similar to
6    that described in the Multi-Year Integrated Grid Plan
7    shall not imply prudence and reasonableness of that
8    investment.
9        (5) To facilitate public transparency, all materials,
10    data, testimony, and schedules shall be provided to the
11    Commission in an editable, machine-readable electronic
12    format including .doc, .docx, .xls, .xlsx, and similar
13    file formats, but not including .pdf or .exif. Should
14    utilities designate any materials confidential, they shall
15    have an affirmative duty to explain why the particular
16    information is marked confidential. In determining
17    prudence and reasonableness of rates, the Commission shall
18    make its determination based upon the record, including
19    each public comment filed or provided orally at open
20    meetings consistent with the Commission's rules and
21    practices.
22        (6) The Commission may, by order, establish terms,
23    conditions, and procedures for submitting and approving a
24    Multi-Year Rate Plan necessary to implement this Section
25    and ensure that rates remain just and reasonable during
26    the course of the plan, including terms and procedures for



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1    rate adjustment.
2        (7) An electric utility that files a tariff pursuant
3    to paragraph (3) of this subsection (e) must submit a
4    one-time $300,000 filing fee at the time the Chief Clerk
5    of the Commission accepts the filing, which shall be a
6    recoverable expense.
7        (8) An electric utility operating under a Multi-Year
8    Rate Plan shall file a new Multi-Year Rate Plan at least
9    300 days prior to the end of the initial Multi-Year Rate
10    Plan unless it elects to file a general rate case pursuant
11    to paragraph (9), and every 4 years thereafter, with a
12    rate-effective date of the proposed tariffs such that,
13    after the Commission suspension period, the rates would
14    take effect immediately at the close of the final year of
15    the initial Multi-Year Rate Plan. In subsequent Multi-Year
16    Rate Plans, as in the initial plans, utilities and
17    stakeholders may propose additional metrics that achieve
18    the outcomes described in paragraph (2) of subsection (f)
19    of this Section.
20        (9) Election of Rate Case.
21            (A) On or before the date prescribed by
22        subparagraph (B) of paragraph (9) of this Section,
23        electric utilities that serve more than 500,000 retail
24        customers in the State shall file either a general
25        rate case under Section 9-201 of this Act, or a
26        Multi-Year Rate Plan, as set forth in paragraph (1) of



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1        this subsection (d).
2            (B) Electric utilities described in subparagraph
3        (A) of paragraph (9) of this Section shall file their
4        initial general rate case or Multi-Year Rate Plan, as
5        applicable, with the Commission no later than January
6        20, 2023.
7            (C) Notwithstanding which rate filing option an
8        electric utility elects to file on the date prescribed
9        by subparagraph (B) of paragraph (9) of this Section,
10        the electric utility shall be subject to the
11        Multi-year Integrated Plan filing requirements.
12            (D) Following its initial rate filing pursuant to
13        paragraph (2), an electric utility subject to the
14        requirements of this Section shall thereafter be
15        permitted to elect a different rate filing option
16        consistent with any filing intervals established for a
17        general rate case or Multi-Year Rate Plan, as follows:
18                (i) An electric utility that initially elected
19            to file a Multi-Year Rate Plan and thereafter
20            elects to transition to a general rate case may do
21            so upon completion of the 4-year Multi-Year Rate
22            Plan by filing a general rate case at the same time
23            that the utility would have filed its subsequent
24            Multi-Year Rate Plan, as specified in paragraph
25            (8) of this subsection (d). Notwithstanding this
26            election, the annual adjustment of the final year



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1            of the Multi-Year Rate Plan shall proceed as
2            specified in paragraph (6) of subsection (f).
3                (ii) An electric utility that initially
4            elected to a file general rate case and thereafter
5            elects to transition to a Multi-Year Rate Plan may
6            do so only at the 4-year filing intervals
7            identified by paragraph (8) of this subsection
8            (d).
9        (10) The Commission shall approve tariffs establishing
10    rate design for all delivery service customers unless the
11    electric utility makes the election specified in Section
12    16-105.5, in which case the rate design shall be subject
13    to the provisions of that Section.
14        (11) The Commission shall establish requirements for
15    annual performance evaluation reports to be submitted
16    annually for performance metrics. Such reports shall
17    include, but not be limited to, a description of the
18    utility's performance under each metric and an
19    identification of any extraordinary events that adversely
20    affected the utility's performance.
21        (12) For the first Multi-Year Rate Plan, the
22    Commission shall consolidate its investigation with the
23    proceeding under Section 16-105.17 to establish the
24    Multi-Year Integrated Grid Plan no later than 45 days
25    after plan filing.
26        (13) Where a rate change under a Multi-Year Rate Plan



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1    will result in a rate increase, an electric utility may
2    propose a rate phase-in plan that the Commission shall
3    approve with or without modification or deny in its final
4    order approving the new delivery services rates. A
5    proposed rate phase-in plan under this paragraph (13) must
6    allow the new delivery services rates to be implemented in
7    no more than 2 steps, as follows: in the first step, at
8    least 50% of the approved rate increase must be reflected
9    in rates, and, in the second step, 100% of the rate
10    increase must be reflected in rates. The second step's
11    rates must take effect no later than 12 months after the
12    first step's rates were placed into effect. The portion of
13    the approved rate increase not implemented in the first
14    step shall be recorded on the electric utility's books as
15    a regulatory asset, and shall accrue carrying costs to
16    ensure that the utility does not recover more or less than
17    it otherwise would because of the deferral. This portion
18    shall be recovered, with such carrying costs at the
19    weighted average cost of capital, through a surcharge
20    applied to retail customer bills that (i) begins no later
21    than 12 months after the date on which the second step's
22    rates went into effect and (ii) is applied over a period
23    not to exceed 24 months. Nothing in this paragraph is
24    intended to limit the Commission's authority to mitigate
25    the impact of rates caused by rate plans, or any other
26    instance on a revenue-neutral basis; nor shall it mitigate



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1    a utility's ability to make proposals to mitigate the
2    impact of rates. When a deferral, or similar method, is
3    used to mitigate the impact of rates, the utility should
4    be allowed to recover carrying costs.
5        (14) Notwithstanding the provisions of Section (13),
6    the Commission may, on its own initiative, take
7    revenue-neutral measures to relieve the impact of rate
8    increases on customers. Such initiatives may be taken by
9    the Commission in the first Multi-Year Rate Plan,
10    subsequent multi-year plans, or in other instances
11    described in this Act.
12        (15) Whenever during the pendency of a Multi-year Rate
13    Plan, an electric utility subject to this Section becomes
14    aware that, due to circumstances beyond its control,
15    prudent operating practices will require the utility to
16    make adjustments to the Multi-Year Rate Plan, the electric
17    utility may file a petition with the Commission requesting
18    modification of the approved annual revenue requirements
19    included in the Multi-Year Rate Plan. The electric utility
20    must support its request with evidence demonstrating why a
21    modification is necessary, due to circumstances beyond the
22    utility's control, to follow prudent operating practices
23    and must set forth the changes to each annual revenue
24    requirement to be approved, and the basis for any changes
25    in anticipated operating expenses or capital investment
26    levels. The utility shall affirmatively address the impact



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1    of the changes on the Multi-Year Integrated Grid Plan and
2    Multi-Year Rate Plan originally submitted and approved by
3    the Commission. Any interested party may file an objection
4    to the changes proposed, or offer alternatives to the
5    utility's proposal, as supported by testimony and
6    evidence. After notice and hearing, the Commission shall
7    issue a final order regarding the electric utility's
8    request no later than 180 days after the filing of the
9    petition.
10    (e) Performance incentive mechanisms.
11        (1) The electric industry is undergoing rapid
12    transformation, including fundamental changes in how
13    electricity is generated, procured, and delivered and how
14    customers are choosing to participate in the supply and
15    delivery of electricity to and from the electric grid.
16    Building upon the State's goals to increase the
17    procurement of electricity from renewable energy
18    resources, including distributed generation and storage
19    devices, the General Assembly finds that electric
20    utilities should make cost-effective investments that
21    support moving forward on Illinois' clean energy policies.
22    It is therefore in the State's interest for the Commission
23    to establish performance incentive mechanisms in order to
24    better tie utility revenues to performance and customer
25    benefits, accelerate progress on Illinois energy and other
26    goals, ensure equity and affordability of rates for all



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1    customers, including low-income customers, and hold
2    utilities publicly accountable.
3        (2) The Commission shall approve, based on the
4    substantial evidence proffered in the proceeding initiated
5    pursuant to this subsection performance metrics that, to
6    the extent practicable and achievable by the electric
7    utility, encourage cost-effective, equitable utility
8    achievement of the outcomes described in this subsection
9    (e) while ensuring no degradation in the significant
10    performance improvement achieved through previously
11    established performance metrics. For each electric
12    utility, the Commission shall approve metrics designed to
13    achieve incremental improvements over baseline performance
14    values and targets, over a performance period of up to 10
15    years, and no less than 4 years.
16            (A) The Commission shall approve no more than 8
17        metrics, with at least one metric from each of the
18        categories below, for each electric utility, from
19        subparagraphs (i) through (vi) of this subsection (A).
20        Upon a utility request, the Commission may approve the
21        use of a specific, measurable, and achievable tracking
22        metric described in paragraph (3) of subsection (e) as
23        a performance metric pursuant to paragraph (2) of
24        subsection (e).
25                (i) Metrics designed to ensure the utility
26            maintains and improves the high standards of both



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1            overall and locational reliability and resiliency,
2            and makes improvements in power quality, including
3            and particularly in environmental justice and
4            equity investment eligible communities.
5                (ii) Peak load reductions attributable to
6            demand response programs.
7                (iii) Supplier diversity expansion, including
8            diverse contractor participation in professional
9            services, subcontracting, and prime contracting
10            opportunities, development of programs that
11            address the barriers to access, aligning
12            demographics of contractors to the demographics in
13            the utility's service territory, establish
14            long-term mentoring relationships that develop and
15            remove barriers to access for diverse and
16            underserved contractors. The utilities shall
17            provide solutions, resources, and tools to address
18            complex barriers of entry related to costly and
19            time-intensive cyber security requirements,
20            increasingly complex information technology
21            requirements, insurance barriers, service provider
22            sign-up process barriers, administrative process
23            barriers, and other barriers that inhibit access
24            to RFPs and contracts. For programs with contracts
25            over $1,000,000, winning bidders must demonstrate
26            a subcontractor development or mentoring



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1            relationship with at least one of their diverse
2            subcontracting partners for a core component of
3            the scope of the project. The mentoring time and
4            cost shall be taken into account in the creation
5            of RFP and shall include a structured and measured
6            plan by the prime contractor to increase the
7            capabilities of the subcontractor in their
8            proposed scope. The metric shall include reporting
9            on all supplier diversity programs by goals,
10            program results, demographics and geography, with
11            separate reporting by category of minority-owned,
12            female-owned, veteran-owned, and disability-owned
13            business enterprise metrics. The report shall
14            include resources and expenses committed to the
15            programs and conversion rates of new diverse
16            utility contractors.
17                (iv) Achieve affordable customer delivery
18            service costs, with particular emphasis on keeping
19            the bills of lower-income households, households
20            in equity investment eligible communities, and
21            household in environmental justice communities
22            within a manageable portion of their income and
23            adopting credit and collection policies that
24            reduce disconnections for these households
25            specifically and for customers overall to ensure
26            equitable disconnections, late fees, or arrearages



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1            as a result of utility credit and collection
2            practices, which may include consideration of
3            impact by zip code.
4                (v) Metrics designed around the utility's
5            timeliness to customer requests for
6            interconnection in key milestone areas, such as:
7            initial response, supplemental review, and system
8            feasibility study; improved average service
9            reliability index for those customers that have
10            interconnected a distributed renewable energy
11            generation device to the utility's distribution
12            system and are lawfully taking service under an
13            applicable tariff; offering a variety of
14            affordable rate options, including demand
15            response, time of use rates for delivery and
16            supply, real-time pricing rates for supply;
17            comprehensive and predictable net metering, and
18            maximizing the benefits of grid modernization and
19            clean energy for ratepayers; and improving
20            customer access to utility system information
21            according to consumer demand and interest.
22                (vi) Metrics designed to measure the utility's
23            customer service performance, which may include
24            the average length of time to answer a customer's
25            call by a customer service representative, the
26            abandoned call rate and the relative ranking of



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1            the electric utility, by a reputable third-party
2            organization, in customer service satisfaction
3            when compared to other similar electric utilities
4            in the Midwest region.
5            (B) Performance metrics shall include a
6        description of the metric, a calculation method, a
7        data collection method, annual performance targets,
8        and any incentives or penalties for the utility's
9        achievement of, or failure to achieve, their
10        performance targets, provided that the total amount of
11        potential incentives and penalties shall be
12        symmetrical. Incentives shall be rewards or penalties
13        or both, reflected as basis points added to, or
14        subtracted from, the utility's cost of equity. The
15        metrics and incentives shall apply for the entire time
16        period covered by a Multi-Year Rate Plan. The total
17        for all metrics shall be equal to 40 basis points,
18        however, the Commission may adjust the basis points
19        upward or downward by up to 20 basis points for any
20        given Multi-Year Rate Plan, as appropriate, but in no
21        event may the total exceed 60 basis points or fall
22        below 20 basis points.
23            (C) Metrics related to reliability shall be
24        implemented to ensure equitable benefits to
25        environmental justice and equity investment eligible
26        communities, as defined in this Act.



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1            (D) The Commission shall approve performance
2        metrics that are reasonably within control of the
3        utility to achieve. The Commission also shall not
4        approve a metric that is solely expected to have the
5        effect of reducing the workforce. Performance metrics
6        should measure outcomes and actual, rather than
7        projected, results where possible. Nothing in this
8        paragraph is intended to require that different
9        electric utilities must be subject to the same
10        metrics, goals, or incentives.
11            (E) Increases or enhancements to an existing
12        performance goal or target shall be considered in
13        light of other metrics, cost-effectiveness, and other
14        factors the Commission deems appropriate. Performance
15        metrics shall include one year of tracking data
16        collected in a consistent manner, verifiable by an
17        independent evaluator in order to establish a baseline
18        and measure outcomes and actual results against
19        projections where possible.
20            (F) For the purpose of determining reasonable
21        performance metrics and related incentives, the
22        Commission shall develop a methodology to calculate
23        net benefits that includes customer and societal costs
24        and benefits and quantifies the effect on delivery
25        rates. In determining the appropriate level of a
26        performance incentive, the Commission shall consider:



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1        the extent to which the amount is likely to encourage
2        the utility to achieve the performance target in the
3        least cost manner; the value of benefits to customers,
4        the grid, public health and safety, and the
5        environment from achievement of the performance
6        target, including in particular benefits to equity
7        investment eligible community; the affordability of
8        customer's electric bills, including low-income
9        customers, the utility's revenue requirement, the
10        promotion of renewable and distributed energy, and
11        other such factors that the Commission deems
12        appropriate. The consideration of these factors shall
13        result in an incentive level that ensures benefits
14        exceed costs for customers.
15            (G) Achievement of performance metrics are based
16        on the assumptions that the utility will adopt or
17        implement the technology and equipment, and make the
18        investments to the extent reasonably necessary to
19        achieve the goal. If the electric utility is unable to
20        meet the performance metrics as a result of
21        extraordinary circumstances outside of its control,
22        including but not limited to government-declared
23        emergencies, then the utility shall be permitted to
24        file a petition with the Commission requesting that
25        the utility be excused from compliance with the
26        applicable performance goal or goals and the



HB2541- 39 -LRB103 29016 AMQ 55402 b

1        associated financial incentives and penalties. The
2        burden of proof shall be on the utility, consistent
3        with Article IX, and the utility's petition shall be
4        supported by substantial evidence. The Commission
5        shall, after notice and hearing, enter its order
6        approving or denying, in whole or in part, the
7        utility's petition based on the extent to which the
8        utility demonstrated that its achievement of the
9        affected metrics and performance goals was hindered by
10        extraordinary circumstances outside of the utility's
11        control.
12        (3) The Commission shall approve reasonable and
13    appropriate tracking metrics to collect and monitor data
14    for the purpose of measuring and reporting utility
15    performance and for establishing future performance
16    metrics. These additional tracking metrics shall include
17    at least one metric from each of the following categories
18    of performance:
19            (A) Minimize emissions of greenhouse gases and
20        other air pollutants that harm human health,
21        particularly in environmental justice and equity
22        investment eligible communities, through minimizing
23        total emissions by accelerating electrification of
24        transportation, buildings and industries where such
25        electrification results in net reductions, across all
26        fuels and over the life of electrification measures,



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1        of greenhouse gases and other pollutants, taking into
2        consideration the fuel mix used to produce electricity
3        at the relevant hour and the effect of accelerating
4        electrification on electricity delivery services
5        rates, supply prices and peak demand, provided the
6        revenues the utility receives from accelerating
7        electrification of transportation, buildings and
8        industries exceed the costs.
9            (B) Enhance the grid's flexibility to adapt to
10        increased deployment of nondispatchable resources,
11        improve the ability and performance of the grid on
12        load balancing, and offer a variety of rate plans to
13        match consumer consumption patterns and lower consumer
14        bills for electricity delivery and supply.
15            (C) Ensure rates reflect cost savings attributable
16        to grid modernization and utilize distributed energy
17        resources that allow the utility to defer or forgo
18        traditional grid investments that would otherwise be
19        required to provide safe and reliable service.
20            (D) Metrics designed to create and sustain
21        full-time-equivalent jobs and opportunities for all
22        segments of the population and workforce, including
23        minority-owned businesses, women-owned businesses,
24        veteran-owned businesses, and businesses owned by a
25        person or persons with a disability, and that do not,
26        consistent with State and federal law, discriminate



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1        based on race or socioeconomic status as a result of
2        this amendatory Act of the 102nd General Assembly.
3            (E) Maximize and prioritize the allocation of grid
4        planning benefits to environmental justice and
5        economically disadvantaged customers and communities,
6        such that all metrics provide equitable benefits
7        across the utility's service territory and maintain
8        and improve utility customers' access to uninterrupted
9        utility services.
10        (4) The Commission may establish new tracking and
11    performance metrics in future Multi-Year Rate Plans to
12    further measure achievement of the outcomes set forth in
13    paragraph (2) of subsection (f) of this Section and the
14    other goals and requirements of this Section.
15        (5) The Commission shall also evaluate metrics that
16    were established in prior Multi-Year Rate Plans to
17    determine if there has been an unanticipated material
18    change in circumstances such that adjustments are required
19    to improve the likelihood of the outcomes described in
20    paragraph (2) of subsection (f). For metrics that were
21    established in prior Multi-Year Rate Plan proceedings and
22    that the Commission elects to continue, the design of
23    these metrics, including the goals of tracking metrics and
24    the targets and incentive levels and structures of
25    performance metrics, may be adjusted pursuant to the
26    requirements in this Section. The Commission may also



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1    change, adjust or phase out tracking and performance
2    metrics that were established in prior Multi-Year Rate
3    Plan proceedings if these metrics no longer meet the
4    requirements of this Section or if they are rendered
5    obsolete by the changing needs and technology of an
6    evolving grid. Additionally, performance metrics that no
7    longer require an incentive to create improved utility
8    performance may become tracking metrics in a Multi-Year
9    Rate Plan proceeding.
10        (6) The Commission shall initiate a workshop process
11    no later than August 1, 2021, or 15 days after the
12    effective date of this amendatory Act of the 102nd General
13    Assembly, whichever is later, for the purpose of
14    facilitating the development of metrics for each utility.
15    The workshop shall be coordinated by the staff of the
16    Commission, or a facilitator retained by staff, and shall
17    be organized and facilitated in a manner that encourages
18    representation from diverse stakeholders and ensures
19    equitable opportunities for participation, without
20    requiring formal intervention or representation by an
21    attorney. Working with staff of the Commission the
22    facilitator may conduct a combination of workshops
23    specific to a utility or applicable to multiple utilities
24    where content and stakeholders are substantially similar.
25    The workshop process shall conclude no later than October
26    31, 2021. Following the workshop, the staff of the



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1    Commission, or the facilitator retained by the Staff,
2    shall prepare and submit a report to the Commission that
3    identifies the participants in the process, the metrics
4    proposed during the process, any material issues that
5    remained unresolved at the conclusions of such process,
6    and any recommendations for workshop process improvements.
7    Any workshop participant may file comments and reply
8    comments in response to the Staff report.
9            (A) No later than January, 20, 2022, each electric
10        utility that intends to file a petition pursuant to
11        subsection (b) of this Section shall file a petition
12        with the Commission seeking approval of its
13        performance metrics, which shall include for each
14        metric, at a minimum, (i) a detailed description, (ii)
15        the calculation of the baseline, (iii) the performance
16        period and overall performance goal, provided that the
17        performance period shall not commence prior to January
18        1, 2024, (iv) each annual performance goal, (v) the
19        performance adjustment, which shall be a symmetrical
20        basis point increase or decrease to the utility's cost
21        of equity based on the extent to which the utility
22        achieved the annual performance goal, and (vi) the new
23        or modified tariff mechanism that will apply the
24        performance adjustments. The Commission shall issue
25        its order approving, or approving with modification,
26        the utility's proposed performance metrics no later



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1        than September 30, 2022.
2            (B) No later than August 1, 2025, the Commission
3        shall initiate a workshop process that conforms to the
4        workshop purpose and requirements of this paragraph
5        (6) of this Section to the extent they do not conflict.
6        The workshop process shall conclude no later than
7        October 31, 2025, and the staff of the Commission, or
8        the facilitator retained by the Staff, shall prepare
9        and submit a report consistent with the requirements
10        described in this paragraph (6) of this Section. No
11        later than January 20, 2026, each electric utility
12        subject to the requirements of this Section shall file
13        a petition the reflects, and is consistent with, the
14        components required in this paragraph (6) of this
15        Section, and the Commission shall issue its order
16        approving, or approving with modification, the
17        utility's proposed performance metrics no later than
18        September 30, 2026.
19    (f) On May 1 of each year, following the approval of the
20first Multi-Year Rate Plan and its initial year, the
21Commission shall open an annual performance evaluation
22proceeding to evaluate the utilities' performance on their
23metric targets during the year just completed, as well as the
24appropriate Annual Adjustment as defined in paragraph (6). The
25Commission shall determine the performance and annual
26adjustments to be applied through a surcharge in the following



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1calendar year.
2        (1) On February 15 of each year, prior to the annual
3    performance evaluation proceeding, each utility shall file
4    a performance evaluation report with the Commission that
5    includes a description of and all data supporting how the
6    utility performed under each performance metric and an
7    identification of any extraordinary events that adversely
8    impacted the utility's performance.
9        (2) The metrics approved under this Section are based
10    on the assumptions that the utility may fully implement
11    the technology and equipment, and make the investments,
12    required to achieve the metrics and performance goals. If
13    the utility is unable to meet the metrics and performance
14    goals because it was hindered by unanticipated technology
15    or equipment implementation delays, government-declared
16    emergencies, or other investment impediments, then the
17    utility shall be permitted to file a petition with the
18    Commission on or before the date that its report is due
19    pursuant to paragraph (1) of this subsection (f)
20    requesting that the utility be excused from compliance
21    with the applicable performance goal or goals. The burden
22    of proof shall be on the utility, consistent with Article
23    IX, and the utility's petition shall be supported by
24    substantial evidence. No later than 90 days after the
25    utility files its petition, the Commission shall, after
26    notice and hearing, enter its order approving or denying,



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1    in whole or in part, the utility's petition based on the
2    extent to which the utility demonstrated that its
3    achievement of the affected metrics and performance goals
4    was hindered by unanticipated technology or equipment
5    implementation delays, or other investment impediments,
6    that were reasonably outside of the utility's control.
7        (3) The electric utility shall provide for an annual
8    independent evaluation of its performance on metrics. The
9    independent evaluator shall review the utility's
10    assumptions, baselines, targets, calculation
11    methodologies, and other relevant information, especially
12    ensuring that the utility's data for establishing
13    baselines matches actual performance, and shall provide a
14    report to the Commission in each annual performance
15    evaluation describing the results. The independent
16    evaluator shall present this report as evidence as a
17    nonparty participant and shall not be represented by the
18    utility's legal counsel. The independent evaluator shall
19    be hired through a competitive bidding process with
20    approval of the contract by the Commission.
21        The Commission shall consider the report of the
22    independent evaluator in determining the utility's
23    achievement of performance targets. Discrepancies between
24    the utility's assumptions, baselines, targets, or
25    calculations and those of the independent evaluator shall
26    be closely scrutinized by the Commission. If the



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1    Commission finds that the utility's reported data for any
2    metric or metrics significantly and incorrectly deviates
3    from the data reported by the independent evaluator, then
4    the Commission shall order the utility to revise its data
5    collection and calculation process within 60 days, with
6    specifications where appropriate.
7        (4) The Commission shall, after notice and hearing in
8    the annual performance evaluation proceeding, enter an
9    order approving the utility's performance adjustment based
10    on its achievement of or failure to achieve its
11    performance targets no later than December 20 each year.
12    The Commission-approved penalties or incentives shall be
13    applied beginning with the next calendar year.
14        (5) In order to promote the transparency of utility
15    investments during the effective period of a multi-year
16    rate plan, inform the Commission's investigation and
17    adjustment of rates in the annual adjustment process, and
18    to facilitate the participation of stakeholders in the
19    annual adjustment process, an electric utility with an
20    effective Multi-Year Rate Plan shall, within 90 days of
21    the close of each quarter during the Multi-Year Rate Plan
22    period, submit to the Commission a report that summarizes
23    the additions to utility plant that were placed into
24    service during the prior quarter, which for purposes of
25    the report shall be the most recently closed fiscal
26    quarter. The report shall also summarize the utility plant



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1    the electric utility projects it will place into service
2    through the end of the calendar year in which the report is
3    filed. The projections, estimates, plans, and
4    forward-looking information that are provided in the
5    reports pursuant to this paragraph (5) are for planning
6    purposes and are intended to be illustrative of the
7    investments that the utility proposes to make as of the
8    time of submittal. Nothing in this paragraph (5)
9    precludes, or is intended to limit, a utility's ability to
10    modify and update its projections, estimates, plans, and
11    forward-looking information previously submitted in order
12    to reflect stakeholder input or other new or updated
13    information and analysis, including, but not limited to,
14    changes in specific investment needs, customer electric
15    use patterns, customer applications and preferences, and
16    commercially available equipment and technologies, however
17    the utility shall explain any changes or deviations
18    between the projected investments from the quarterly
19    reports and actual investments in the annual report. The
20    reports submitted pursuant to this subsection are intended
21    to be flexible planning tools, and are expected to evolve
22    as new information becomes available. Within 7 days of
23    receiving a quarterly report, the Commission shall timely
24    make such report available to the public by posting it on
25    the Commission's website. Each quarterly report shall
26    include the following detail:



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1            (A) The total dollar value of the additions to
2        utility plant placed in service during the prior
3        quarter;
4            (B) A list of the major investment categories the
5        electric utility used to manage its routine standing
6        operational activities during the prior quarter
7        including the total dollar amount for the work
8        reflected in each investment category in which utility
9        plant in service is equal to or greater than
10        $2,000,000 for an electric utility that serves more
11        than 3,000,000 customers in the State or $500,000 for
12        an electric utility that serves less than 3,000,000
13        customers but more than 500,000 customers in the State
14        as of the last day of the quarterly reporting period,
15        as well as a summary description of each investment
16        category;
17            (C) A list of the projects which the electric
18        utility has identified by a unique investment tracking
19        number for utility plant placed in service during the
20        prior quarter for utility plant placed in service with
21        a total dollar value as of the last day of the
22        quarterly reporting period that is equal to or greater
23        than $2,000,000 for an electric utility that serves
24        more than 3,000,000 customers in the State or $500,000
25        for an electric utility that serves less than
26        3,000,000 retail customers but more than $500,000



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1        retail customers in the State, as well as a summary of
2        each project;
3            (D) The estimated total dollar value of the
4        additions to utility plant projected to be placed in
5        service through the end of the calendar year in which
6        the report is filed;
7            (E) A list of the major investment categories the
8        electric utility used to manage its routine standing
9        operational activities with utility plant projected to
10        be placed in service through the end of the calendar
11        year in which the report is filed, including the total
12        dollar amount for the work reflected in each
13        investment category in which utility plant in service
14        is projected to be equal to or greater than $2,000,000
15        for an electric utility that serves more than
16        3,000,000 customers in the State or $500,000 for an
17        electric utility that serves less than 3,000,000
18        retail customers but more than 500,000 retail
19        customers in the State, as well as a summary
20        description of each investment category; and
21            (F) A list of the projects for which the electric
22        utility has identified by a unique investment tracking
23        number for utility plant projected to be placed in
24        service through the end of the calendar year in which
25        the report is filed with an estimated dollar value
26        that is equal to or greater than $2,000,000 for an



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1        electric utility that serves more than 3,000,000
2        customers in the State or $500,000 for an electric
3        utility that serves less than 3,000,000 retails
4        customers but more than $500,000 retail customers in
5        the State, as well as a summary description of each
6        project.
7        (6) As part of the Annual Performance Adjustment, the
8    electric utility shall submit evidence sufficient to
9    support a determination of its actual revenue requirement
10    for the applicable calendar year, consistent with the
11    provisions of paragraphs (d) and (f) of this subsection.
12    The electric utility shall bear the burden of
13    demonstrating that its costs were prudent and reasonable,
14    subject to the provisions of paragraph (4) of this
15    subsection (f). The Commission's review of the electric
16    utility's annual adjustment shall be based on the same
17    evidentiary standards, including, but not limited to,
18    those concerning the prudence and reasonableness of the
19    known and measurable costs forecasted to be incurred by
20    the utility, and the used and usefulness of the actual
21    plant investment pursuant to Section 9-211 of this Act,
22    that the Commission applies in a proceeding to review a
23    filing for changes in rates pursuant to Section 9-201 of
24    this Act. The Commission shall determine the prudence and
25    reasonableness of the actual costs incurred by the utility
26    during the applicable calendar year, as well as determine



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1    the original cost of plant in service as of the end of the
2    applicable calendar year. The Commission shall then
3    determine the Annual Adjustment, which shall mean the
4    amount by which, the electric utility's actual revenue
5    requirement for the applicable year of the Multi-Year Rate
6    Plan either exceeded, or was exceeded by, the revenue
7    requirement approved by the Commission for such calendar
8    year, plus carrying costs calculated at the weighted
9    average cost of capital approved for the Multi-Year Rate
10    Plan.
11        The Commission's determination of the electric
12    utility's actual revenue requirement for the applicable
13    calendar year shall be based on:
14            (A) the Commission-approved used and useful,
15        prudent and reasonable actual costs for the applicable
16        calendar year, which shall be determined pursuant to
17        the following criteria:
18                (i) The overall level of actual costs incurred
19            during the calendar year, provided that the
20            Commission may not allow recovery of actual costs
21            that are more than 105% of the approved revenue
22            requirement calculated as provided in item (ii) of
23            this subparagraph (A), except to the extent the
24            Commission approves a modification of the
25            Multi-Year Rate Plan to permit such recovery.
26                (ii) The calculation of 105% of the revenue



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1            requirement required by this subparagraph (A)
2            shall exclude the revenue requirement impacts of
3            the following volatile and fluctuating variables
4            that occurred during the year: (i) storms and
5            weather-related events for which the utility
6            provides sufficient evidence to demonstrate that
7            such expenses were not foreseeable and not in
8            control of the utility; (ii) new business; (iii)
9            changes in interest rates; (iv) changes in taxes;
10            (v) facility relocations; (vi) changes in pension
11            or post-retirement benefits costs due to
12            fluctuations in interest rates, market returns or
13            actuarial assumptions; (vii) amortization expenses
14            related to costs; and (viii) changes in the timing
15            of when an expenditure or investment is made such
16            that it is accelerated to occur during the
17            applicable year or deferred to occur in a
18            subsequent year.
19            (B) the year-end rate base;
20            (C) the cost of equity approved in the multi-year
21        rate plan; and
22            (D) the electric utility's actual year-end capital
23        structure, provided that the common equity ratio in
24        such capital structure may not exceed the common
25        equity ratio that was approved by the Commission in
26        the Multi-Year Rate Plan.



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1        (2) The Commission's determinations of the prudence
2    and reasonableness of the costs incurred for the
3    applicable year, and of the original cost of plant in
4    service as of the end of the applicable calendar year,
5    shall be final upon entry of the Commission's order and
6    shall not be subject to collateral attack in any other
7    Commission proceeding, case, docket, order, rule, or
8    regulation; however, nothing in this Section shall
9    prohibit a party from petitioning the Commission to rehear
10    or appeal to the courts the order pursuant to the
11    provisions of this Act.
12    (g) During the period leading to approval of the first
13Multi-Year Integrated Grid Plan, each electric utility will
14necessarily continue to invest in its distribution grid. Those
15investments will be subject to a determination of prudence and
16reasonableness consistent with Commission practice and law.
17Any failure to conform to the Multi-Year Integrated Grid Plan
18ultimately approved shall not imply imprudence or
20    (h) After calculating the Performance Adjustment and
21Annual Adjustment, the Commission shall order the electric
22utility to collect the amount in excess of the revenue
23requirement from customers, or issue a refund to customers, as
24applicable, to be applied through a surcharge beginning with
25the next calendar year.
26    Electric utilities subject to the requirements of this



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1Section shall be permitted to file new or revised tariffs to
2comply with the provisions of, and Commission orders entered
3pursuant to, this Section.
4(Source: P.A. 102-662, eff. 9-15-21.)