Bill Text: IL HB2071 | 2011-2012 | 97th General Assembly | Introduced

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Bill Title: Amends the Illinois Power Agency Act. Provides that through June 1, 2016 (instead of 2011), renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in specified provisions only if they are generated from facilities located in the State, provided that cost-effective renewable energy resources are available from those facilities. Provides that after June 1, 2016 (instead of 2011), cost-effective renewable energy resources located in Illinois and in states that adjoin Illinois may be counted towards compliance with the standards set forth in specified provisions. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2013-01-08 - Session Sine Die [HB2071 Detail]

Download: Illinois-2011-HB2071-Introduced.html

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97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 HB2071 Introduced , by Rep. Lou Lang SYNOPSIS AS INTRODUCED:
20 ILCS 3855/1-75
Amends the Illinois Power Agency Act. Provides that through June 1, 2016 (instead of 2011), renewable energy resources shall be counted for the purpose of meeting the renewable energy standards set forth in specified provisions only if they are generated from facilities located in the State, provided that cost-effective renewable energy resources are available from those facilities. Provides that after June 1, 2016 (instead of 2011), cost-effective renewable energy resources located in Illinois and in states that adjoin Illinois may be counted towards compliance with the standards set forth in specified provisions. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning utilities.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Power Agency Act is amended by
changing Section 1-75 as follows:
(20 ILCS 3855/1-75)
Sec. 1-75. Planning and Procurement Bureau. The Planning
and Procurement Bureau has the following duties and
responsibilities:
(a) The Planning and Procurement Bureau shall each
year, beginning in 2008, develop procurement plans and
conduct competitive procurement processes in accordance
with the requirements of Section 16-111.5 of the Public
Utilities Act for the eligible retail customers of electric
utilities that on December 31, 2005 provided electric
service to at least 100,000 customers in Illinois. For the
purposes of this Section, the term "eligible retail
customers" has the same definition as found in Section
16-111.5(a) of the Public Utilities Act.
(1) The Agency shall each year, beginning in 2008,
as needed, issue a request for qualifications for
experts or expert consulting firms to develop the
procurement plans in accordance with Section 16-111.5

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of the Public Utilities Act. In order to qualify an
expert or expert consulting firm must have:
(A) direct previous experience assembling
large-scale power supply plans or portfolios for
end-use customers;
(B) an advanced degree in economics,
mathematics, engineering, risk management, or a
related area of study;
(C) 10 years of experience in the electricity
sector, including managing supply risk;
(D) expertise in wholesale electricity market
rules, including those established by the Federal
Energy Regulatory Commission and regional
transmission organizations;
(E) expertise in credit protocols and
familiarity with contract protocols;
(F) adequate resources to perform and fulfill
the required functions and responsibilities; and
(G) the absence of a conflict of interest and
inappropriate bias for or against potential
bidders or the affected electric utilities.
(2) The Agency shall each year, as needed, issue a
request for qualifications for a procurement
administrator to conduct the competitive procurement
processes in accordance with Section 16-111.5 of the
Public Utilities Act. In order to qualify an expert or

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expert consulting firm must have:
(A) direct previous experience administering a
large-scale competitive procurement process;
(B) an advanced degree in economics,
mathematics, engineering, or a related area of
study;
(C) 10 years of experience in the electricity
sector, including risk management experience;
(D) expertise in wholesale electricity market
rules, including those established by the Federal
Energy Regulatory Commission and regional
transmission organizations;
(E) expertise in credit and contract
protocols;
(F) adequate resources to perform and fulfill
the required functions and responsibilities; and
(G) the absence of a conflict of interest and
inappropriate bias for or against potential
bidders or the affected electric utilities.
(3) The Agency shall provide affected utilities
and other interested parties with the lists of
qualified experts or expert consulting firms
identified through the request for qualifications
processes that are under consideration to develop the
procurement plans and to serve as the procurement
administrator. The Agency shall also provide each

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qualified expert's or expert consulting firm's
response to the request for qualifications. All
information provided under this subparagraph shall
also be provided to the Commission. The Agency may
provide by rule for fees associated with supplying the
information to utilities and other interested parties.
These parties shall, within 5 business days, notify the
Agency in writing if they object to any experts or
expert consulting firms on the lists. Objections shall
be based on:
(A) failure to satisfy qualification criteria;
(B) identification of a conflict of interest;
or
(C) evidence of inappropriate bias for or
against potential bidders or the affected
utilities.
The Agency shall remove experts or expert
consulting firms from the lists within 10 days if there
is a reasonable basis for an objection and provide the
updated lists to the affected utilities and other
interested parties. If the Agency fails to remove an
expert or expert consulting firm from a list, an
objecting party may seek review by the Commission
within 5 days thereafter by filing a petition, and the
Commission shall render a ruling on the petition within
10 days. There is no right of appeal of the

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Commission's ruling.
(4) The Agency shall issue requests for proposals
to the qualified experts or expert consulting firms to
develop a procurement plan for the affected utilities
and to serve as procurement administrator.
(5) The Agency shall select an expert or expert
consulting firm to develop procurement plans based on
the proposals submitted and shall award one-year
contracts to those selected with an option for the
Agency for a one-year renewal.
(6) The Agency shall select an expert or expert
consulting firm, with approval of the Commission, to
serve as procurement administrator based on the
proposals submitted. If the Commission rejects, within
5 days, the Agency's selection, the Agency shall submit
another recommendation within 3 days based on the
proposals submitted. The Agency shall award a one-year
contract to the expert or expert consulting firm so
selected with Commission approval with an option for
the Agency for a one-year renewal.
(b) The experts or expert consulting firms retained by
the Agency shall, as appropriate, prepare procurement
plans, and conduct a competitive procurement process as
prescribed in Section 16-111.5 of the Public Utilities Act,
to ensure adequate, reliable, affordable, efficient, and
environmentally sustainable electric service at the lowest

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total cost over time, taking into account any benefits of
price stability, for eligible retail customers of electric
utilities that on December 31, 2005 provided electric
service to at least 100,000 customers in the State of
Illinois.
(c) Renewable portfolio standard.
(1) The procurement plans shall include
cost-effective renewable energy resources. A minimum
percentage of each utility's total supply to serve the
load of eligible retail customers, as defined in
Section 16-111.5(a) of the Public Utilities Act,
procured for each of the following years shall be
generated from cost-effective renewable energy
resources: at least 2% by June 1, 2008; at least 4% by
June 1, 2009; at least 5% by June 1, 2010; at least 6%
by June 1, 2011; at least 7% by June 1, 2012; at least
8% by June 1, 2013; at least 9% by June 1, 2014; at
least 10% by June 1, 2015; and increasing by at least
1.5% each year thereafter to at least 25% by June 1,
2025. To the extent that it is available, at least 75%
of the renewable energy resources used to meet these
standards shall come from wind generation and,
beginning on June 1, 2011, at least the following
percentages of the renewable energy resources used to
meet these standards shall come from photovoltaics on
the following schedule: 0.5% by June 1, 2012, 1.5% by

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June 1, 2013; 3% by June 1, 2014; and 6% by June 1,
2015 and thereafter. For purposes of this subsection
(c), "cost-effective" means that the costs of
procuring renewable energy resources do not cause the
limit stated in paragraph (2) of this subsection (c) to
be exceeded and do not exceed benchmarks based on
market prices for renewable energy resources in the
region, which shall be developed by the procurement
administrator, in consultation with the Commission
staff, Agency staff, and the procurement monitor and
shall be subject to Commission review and approval.
(2) For purposes of this subsection (c), the
required procurement of cost-effective renewable
energy resources for a particular year shall be
measured as a percentage of the actual amount of
electricity (megawatt-hours) supplied by the electric
utility to eligible retail customers in the planning
year ending immediately prior to the procurement. For
purposes of this subsection (c), the amount paid per
kilowatthour means the total amount paid for electric
service expressed on a per kilowatthour basis. For
purposes of this subsection (c), the total amount paid
for electric service includes without limitation
amounts paid for supply, transmission, distribution,
surcharges, and add-on taxes.
Notwithstanding the requirements of this

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subsection (c), the total of renewable energy
resources procured pursuant to the procurement plan
for any single year shall be reduced by an amount
necessary to limit the annual estimated average net
increase due to the costs of these resources included
in the amounts paid by eligible retail customers in
connection with electric service to:
(A) in 2008, no more than 0.5% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2007;
(B) in 2009, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2008 or 1%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007;
(C) in 2010, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009 or
1.5% of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007;
(D) in 2011, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2010 or 2%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2007; and
(E) thereafter, the amount of renewable energy

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resources procured pursuant to the procurement
plan for any single year shall be reduced by an
amount necessary to limit the estimated average
net increase due to the cost of these resources
included in the amounts paid by eligible retail
customers in connection with electric service to
no more than the greater of 2.015% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2007 or the incremental
amount per kilowatthour paid for these resources
in 2011.
No later than June 30, 2011, the Commission shall
review the limitation on the amount of renewable energy
resources procured pursuant to this subsection (c) and
report to the General Assembly its findings as to
whether that limitation unduly constrains the
procurement of cost-effective renewable energy
resources.
(3) Through June 1, 2016 2011, renewable energy
resources shall be counted for the purpose of meeting
the renewable energy standards set forth in paragraph
(1) of this subsection (c) only if they are generated
from facilities located in the State, provided that
cost-effective renewable energy resources are
available from those facilities. If those
cost-effective resources are not available in

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Illinois, they shall be procured in states that adjoin
Illinois and may be counted towards compliance. If
those cost-effective resources are not available in
Illinois or in states that adjoin Illinois, they shall
be purchased elsewhere and shall be counted towards
compliance. After June 1, 2016 2011, cost-effective
renewable energy resources located in Illinois and in
states that adjoin Illinois may be counted towards
compliance with the standards set forth in paragraph
(1) of this subsection (c). If those cost-effective
resources are not available in Illinois or in states
that adjoin Illinois, they shall be purchased
elsewhere and shall be counted towards compliance.
(4) The electric utility shall retire all
renewable energy credits used to comply with the
standard.
(5) Beginning with the year commencing June 1,
2010, an electric utility subject to this subsection
(c) shall apply the lesser of the maximum alternative
compliance payment rate or the most recent estimated
alternative compliance payment rate for its service
territory for the corresponding compliance period,
established pursuant to subsection (d) of Section
16-115D of the Public Utilities Act to its retail
customers that take service pursuant to the electric
utility's hourly pricing tariff or tariffs. The

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electric utility shall retain all amounts collected as
a result of the application of the alternative
compliance payment rate or rates to such customers,
and, beginning in 2011, the utility shall include in
the information provided under item (1) of subsection
(d) of Section 16-111.5 of the Public Utilities Act the
amounts collected under the alternative compliance
payment rate or rates for the prior year ending May 31.
Notwithstanding any limitation on the procurement of
renewable energy resources imposed by item (2) of this
subsection (c), the Agency shall increase its spending
on the purchase of renewable energy resources to be
procured by the electric utility for the next plan year
by an amount equal to the amounts collected by the
utility under the alternative compliance payment rate
or rates in the prior year ending May 31.
(d) Clean coal portfolio standard.
(1) The procurement plans shall include electricity
generated using clean coal. Each utility shall enter into
one or more sourcing agreements with the initial clean coal
facility, as provided in paragraph (3) of this subsection
(d), covering electricity generated by the initial clean
coal facility representing at least 5% of each utility's
total supply to serve the load of eligible retail customers
in 2015 and each year thereafter, as described in paragraph
(3) of this subsection (d), subject to the limits specified

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in paragraph (2) of this subsection (d). It is the goal of
the State that by January 1, 2025, 25% of the electricity
used in the State shall be generated by cost-effective
clean coal facilities. For purposes of this subsection (d),
"cost-effective" means that the expenditures pursuant to
such sourcing agreements do not cause the limit stated in
paragraph (2) of this subsection (d) to be exceeded and do
not exceed cost-based benchmarks, which shall be developed
to assess all expenditures pursuant to such sourcing
agreements covering electricity generated by clean coal
facilities, other than the initial clean coal facility, by
the procurement administrator, in consultation with the
Commission staff, Agency staff, and the procurement
monitor and shall be subject to Commission review and
approval.
(A) A utility party to a sourcing agreement shall
immediately retire any emission credits that it
receives in connection with the electricity covered by
such agreement.
(B) Utilities shall maintain adequate records
documenting the purchases under the sourcing agreement
to comply with this subsection (d) and shall file an
accounting with the load forecast that must be filed
with the Agency by July 15 of each year, in accordance
with subsection (d) of Section 16-111.5 of the Public
Utilities Act.

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(C) A utility shall be deemed to have complied with
the clean coal portfolio standard specified in this
subsection (d) if the utility enters into a sourcing
agreement as required by this subsection (d).
(2) For purposes of this subsection (d), the required
execution of sourcing agreements with the initial clean
coal facility for a particular year shall be measured as a
percentage of the actual amount of electricity
(megawatt-hours) supplied by the electric utility to
eligible retail customers in the planning year ending
immediately prior to the agreement's execution. For
purposes of this subsection (d), the amount paid per
kilowatthour means the total amount paid for electric
service expressed on a per kilowatthour basis. For purposes
of this subsection (d), the total amount paid for electric
service includes without limitation amounts paid for
supply, transmission, distribution, surcharges and add-on
taxes.
Notwithstanding the requirements of this subsection
(d), the total amount paid under sourcing agreements with
clean coal facilities pursuant to the procurement plan for
any given year shall be reduced by an amount necessary to
limit the annual estimated average net increase due to the
costs of these resources included in the amounts paid by
eligible retail customers in connection with electric
service to:

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(A) in 2010, no more than 0.5% of the amount
paid per kilowatthour by those customers during
the year ending May 31, 2009;
(B) in 2011, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2010 or 1%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009;
(C) in 2012, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2011 or
1.5% of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009;
(D) in 2013, the greater of an additional 0.5%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2012 or 2%
of the amount paid per kilowatthour by those
customers during the year ending May 31, 2009; and
(E) thereafter, the total amount paid under
sourcing agreements with clean coal facilities
pursuant to the procurement plan for any single
year shall be reduced by an amount necessary to
limit the estimated average net increase due to the
cost of these resources included in the amounts
paid by eligible retail customers in connection
with electric service to no more than the greater

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of (i) 2.015% of the amount paid per kilowatthour
by those customers during the year ending May 31,
2009 or (ii) the incremental amount per
kilowatthour paid for these resources in 2013.
These requirements may be altered only as provided
by statute. No later than June 30, 2015, the
Commission shall review the limitation on the
total amount paid under sourcing agreements, if
any, with clean coal facilities pursuant to this
subsection (d) and report to the General Assembly
its findings as to whether that limitation unduly
constrains the amount of electricity generated by
cost-effective clean coal facilities that is
covered by sourcing agreements.
(3) Initial clean coal facility. In order to promote
development of clean coal facilities in Illinois, each
electric utility subject to this Section shall execute a
sourcing agreement to source electricity from a proposed
clean coal facility in Illinois (the "initial clean coal
facility") that will have a nameplate capacity of at least
500 MW when commercial operation commences, that has a
final Clean Air Act permit on the effective date of this
amendatory Act of the 95th General Assembly, and that will
meet the definition of clean coal facility in Section 1-10
of this Act when commercial operation commences. The
sourcing agreements with this initial clean coal facility

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shall be subject to both approval of the initial clean coal
facility by the General Assembly and satisfaction of the
requirements of paragraph (4) of this subsection (d) and
shall be executed within 90 days after any such approval by
the General Assembly. The Agency and the Commission shall
have authority to inspect all books and records associated
with the initial clean coal facility during the term of
such a sourcing agreement. A utility's sourcing agreement
for electricity produced by the initial clean coal facility
shall include:
(A) a formula contractual price (the "contract
price") approved pursuant to paragraph (4) of this
subsection (d), which shall:
(i) be determined using a cost of service
methodology employing either a level or deferred
capital recovery component, based on a capital
structure consisting of 45% equity and 55% debt,
and a return on equity as may be approved by the
Federal Energy Regulatory Commission, which in any
case may not exceed the lower of 11.5% or the rate
of return approved by the General Assembly
pursuant to paragraph (4) of this subsection (d);
and
(ii) provide that all miscellaneous net
revenue, including but not limited to net revenue
from the sale of emission allowances, if any,

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substitute natural gas, if any, grants or other
support provided by the State of Illinois or the
United States Government, firm transmission
rights, if any, by-products produced by the
facility, energy or capacity derived from the
facility and not covered by a sourcing agreement
pursuant to paragraph (3) of this subsection (d) or
item (5) of subsection (d) of Section 16-115 of the
Public Utilities Act, whether generated from the
synthesis gas derived from coal, from SNG, or from
natural gas, shall be credited against the revenue
requirement for this initial clean coal facility;
(B) power purchase provisions, which shall:
(i) provide that the utility party to such
sourcing agreement shall pay the contract price
for electricity delivered under such sourcing
agreement;
(ii) require delivery of electricity to the
regional transmission organization market of the
utility that is party to such sourcing agreement;
(iii) require the utility party to such
sourcing agreement to buy from the initial clean
coal facility in each hour an amount of energy
equal to all clean coal energy made available from
the initial clean coal facility during such hour
times a fraction, the numerator of which is such

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utility's retail market sales of electricity
(expressed in kilowatthours sold) in the State
during the prior calendar month and the
denominator of which is the total retail market
sales of electricity (expressed in kilowatthours
sold) in the State by utilities during such prior
month and the sales of electricity (expressed in
kilowatthours sold) in the State by alternative
retail electric suppliers during such prior month
that are subject to the requirements of this
subsection (d) and paragraph (5) of subsection (d)
of Section 16-115 of the Public Utilities Act,
provided that the amount purchased by the utility
in any year will be limited by paragraph (2) of
this subsection (d); and
(iv) be considered pre-existing contracts in
such utility's procurement plans for eligible
retail customers;
(C) contract for differences provisions, which
shall:
(i) require the utility party to such sourcing
agreement to contract with the initial clean coal
facility in each hour with respect to an amount of
energy equal to all clean coal energy made
available from the initial clean coal facility
during such hour times a fraction, the numerator of

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which is such utility's retail market sales of
electricity (expressed in kilowatthours sold) in
the utility's service territory in the State
during the prior calendar month and the
denominator of which is the total retail market
sales of electricity (expressed in kilowatthours
sold) in the State by utilities during such prior
month and the sales of electricity (expressed in
kilowatthours sold) in the State by alternative
retail electric suppliers during such prior month
that are subject to the requirements of this
subsection (d) and paragraph (5) of subsection (d)
of Section 16-115 of the Public Utilities Act,
provided that the amount paid by the utility in any
year will be limited by paragraph (2) of this
subsection (d);
(ii) provide that the utility's payment
obligation in respect of the quantity of
electricity determined pursuant to the preceding
clause (i) shall be limited to an amount equal to
(1) the difference between the contract price
determined pursuant to subparagraph (A) of
paragraph (3) of this subsection (d) and the
day-ahead price for electricity delivered to the
regional transmission organization market of the
utility that is party to such sourcing agreement

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(or any successor delivery point at which such
utility's supply obligations are financially
settled on an hourly basis) (the "reference
price") on the day preceding the day on which the
electricity is delivered to the initial clean coal
facility busbar, multiplied by (2) the quantity of
electricity determined pursuant to the preceding
clause (i); and
(iii) not require the utility to take physical
delivery of the electricity produced by the
facility;
(D) general provisions, which shall:
(i) specify a term of no more than 30 years,
commencing on the commercial operation date of the
facility;
(ii) provide that utilities shall maintain
adequate records documenting purchases under the
sourcing agreements entered into to comply with
this subsection (d) and shall file an accounting
with the load forecast that must be filed with the
Agency by July 15 of each year, in accordance with
subsection (d) of Section 16-111.5 of the Public
Utilities Act.
(iii) provide that all costs associated with
the initial clean coal facility will be
periodically reported to the Federal Energy

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Regulatory Commission and to purchasers in
accordance with applicable laws governing
cost-based wholesale power contracts;
(iv) permit the Illinois Power Agency to
assume ownership of the initial clean coal
facility, without monetary consideration and
otherwise on reasonable terms acceptable to the
Agency, if the Agency so requests no less than 3
years prior to the end of the stated contract term;
(v) require the owner of the initial clean coal
facility to provide documentation to the
Commission each year, starting in the facility's
first year of commercial operation, accurately
reporting the quantity of carbon emissions from
the facility that have been captured and
sequestered and report any quantities of carbon
released from the site or sites at which carbon
emissions were sequestered in prior years, based
on continuous monitoring of such sites. If, in any
year after the first year of commercial operation,
the owner of the facility fails to demonstrate that
the initial clean coal facility captured and
sequestered at least 50% of the total carbon
emissions that the facility would otherwise emit
or that sequestration of emissions from prior
years has failed, resulting in the release of

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carbon dioxide into the atmosphere, the owner of
the facility must offset excess emissions. Any
such carbon offsets must be permanent, additional,
verifiable, real, located within the State of
Illinois, and legally and practicably enforceable.
The cost of such offsets for the facility that are
not recoverable shall not exceed $15 million in any
given year. No costs of any such purchases of
carbon offsets may be recovered from a utility or
its customers. All carbon offsets purchased for
this purpose and any carbon emission credits
associated with sequestration of carbon from the
facility must be permanently retired. The initial
clean coal facility shall not forfeit its
designation as a clean coal facility if the
facility fails to fully comply with the applicable
carbon sequestration requirements in any given
year, provided the requisite offsets are
purchased. However, the Attorney General, on
behalf of the People of the State of Illinois, may
specifically enforce the facility's sequestration
requirement and the other terms of this contract
provision. Compliance with the sequestration
requirements and offset purchase requirements
specified in paragraph (3) of this subsection (d)
shall be reviewed annually by an independent

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expert retained by the owner of the initial clean
coal facility, with the advance written approval
of the Attorney General. The Commission may, in the
course of the review specified in item (vii),
reduce the allowable return on equity for the
facility if the facility wilfully fails to comply
with the carbon capture and sequestration
requirements set forth in this item (v);
(vi) include limits on, and accordingly
provide for modification of, the amount the
utility is required to source under the sourcing
agreement consistent with paragraph (2) of this
subsection (d);
(vii) require Commission review: (1) to
determine the justness, reasonableness, and
prudence of the inputs to the formula referenced in
subparagraphs (A)(i) through (A)(iii) of paragraph
(3) of this subsection (d), prior to an adjustment
in those inputs including, without limitation, the
capital structure and return on equity, fuel
costs, and other operations and maintenance costs
and (2) to approve the costs to be passed through
to customers under the sourcing agreement by which
the utility satisfies its statutory obligations.
Commission review shall occur no less than every 3
years, regardless of whether any adjustments have

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been proposed, and shall be completed within 9
months;
(viii) limit the utility's obligation to such
amount as the utility is allowed to recover through
tariffs filed with the Commission, provided that
neither the clean coal facility nor the utility
waives any right to assert federal pre-emption or
any other argument in response to a purported
disallowance of recovery costs;
(ix) limit the utility's or alternative retail
electric supplier's obligation to incur any
liability until such time as the facility is in
commercial operation and generating power and
energy and such power and energy is being delivered
to the facility busbar;
(x) provide that the owner or owners of the
initial clean coal facility, which is the
counterparty to such sourcing agreement, shall
have the right from time to time to elect whether
the obligations of the utility party thereto shall
be governed by the power purchase provisions or the
contract for differences provisions;
(xi) append documentation showing that the
formula rate and contract, insofar as they relate
to the power purchase provisions, have been
approved by the Federal Energy Regulatory

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Commission pursuant to Section 205 of the Federal
Power Act;
(xii) provide that any changes to the terms of
the contract, insofar as such changes relate to the
power purchase provisions, are subject to review
under the public interest standard applied by the
Federal Energy Regulatory Commission pursuant to
Sections 205 and 206 of the Federal Power Act; and
(xiii) conform with customary lender
requirements in power purchase agreements used as
the basis for financing non-utility generators.
(4) Effective date of sourcing agreements with the
initial clean coal facility. Any proposed sourcing
agreement with the initial clean coal facility shall not
become effective unless the following reports are prepared
and submitted and authorizations and approvals obtained:
(i) Facility cost report. The owner of the
initial clean coal facility shall submit to the
Commission, the Agency, and the General Assembly a
front-end engineering and design study, a facility
cost report, method of financing (including but
not limited to structure and associated costs),
and an operating and maintenance cost quote for the
facility (collectively "facility cost report"),
which shall be prepared in accordance with the
requirements of this paragraph (4) of subsection

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(d) of this Section, and shall provide the
Commission and the Agency access to the work
papers, relied upon documents, and any other
backup documentation related to the facility cost
report.
(ii) Commission report. Within 6 months
following receipt of the facility cost report, the
Commission, in consultation with the Agency, shall
submit a report to the General Assembly setting
forth its analysis of the facility cost report.
Such report shall include, but not be limited to, a
comparison of the costs associated with
electricity generated by the initial clean coal
facility to the costs associated with electricity
generated by other types of generation facilities,
an analysis of the rate impacts on residential and
small business customers over the life of the
sourcing agreements, and an analysis of the
likelihood that the initial clean coal facility
will commence commercial operation by and be
delivering power to the facility's busbar by 2016.
To assist in the preparation of its report, the
Commission, in consultation with the Agency, may
hire one or more experts or consultants, the costs
of which shall be paid for by the owner of the
initial clean coal facility. The Commission and

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Agency may begin the process of selecting such
experts or consultants prior to receipt of the
facility cost report.
(iii) General Assembly approval. The proposed
sourcing agreements shall not take effect unless,
based on the facility cost report and the
Commission's report, the General Assembly enacts
authorizing legislation approving (A) the
projected price, stated in cents per kilowatthour,
to be charged for electricity generated by the
initial clean coal facility, (B) the projected
impact on residential and small business
customers' bills over the life of the sourcing
agreements, and (C) the maximum allowable return
on equity for the project; and
(iv) Commission review. If the General
Assembly enacts authorizing legislation pursuant
to subparagraph (iii) approving a sourcing
agreement, the Commission shall, within 90 days of
such enactment, complete a review of such sourcing
agreement. During such time period, the Commission
shall implement any directive of the General
Assembly, resolve any disputes between the parties
to the sourcing agreement concerning the terms of
such agreement, approve the form of such
agreement, and issue an order finding that the

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sourcing agreement is prudent and reasonable.
The facility cost report shall be prepared as follows:
(A) The facility cost report shall be prepared by
duly licensed engineering and construction firms
detailing the estimated capital costs payable to one or
more contractors or suppliers for the engineering,
procurement and construction of the components
comprising the initial clean coal facility and the
estimated costs of operation and maintenance of the
facility. The facility cost report shall include:
(i) an estimate of the capital cost of the core
plant based on one or more front end engineering
and design studies for the gasification island and
related facilities. The core plant shall include
all civil, structural, mechanical, electrical,
control, and safety systems.
(ii) an estimate of the capital cost of the
balance of the plant, including any capital costs
associated with sequestration of carbon dioxide
emissions and all interconnects and interfaces
required to operate the facility, such as
transmission of electricity, construction or
backfeed power supply, pipelines to transport
substitute natural gas or carbon dioxide, potable
water supply, natural gas supply, water supply,
water discharge, landfill, access roads, and coal

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delivery.
The quoted construction costs shall be expressed
in nominal dollars as of the date that the quote is
prepared and shall include (1) capitalized financing
costs during construction, (2) taxes, insurance, and
other owner's costs, and (3) an assumed escalation in
materials and labor beyond the date as of which the
construction cost quote is expressed.
(B) The front end engineering and design study for
the gasification island and the cost study for the
balance of plant shall include sufficient design work
to permit quantification of major categories of
materials, commodities and labor hours, and receipt of
quotes from vendors of major equipment required to
construct and operate the clean coal facility.
(C) The facility cost report shall also include an
operating and maintenance cost quote that will provide
the estimated cost of delivered fuel, personnel,
maintenance contracts, chemicals, catalysts,
consumables, spares, and other fixed and variable
operations and maintenance costs.
(a) The delivered fuel cost estimate will be
provided by a recognized third party expert or
experts in the fuel and transportation industries.
(b) The balance of the operating and
maintenance cost quote, excluding delivered fuel

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costs will be developed based on the inputs
provided by duly licensed engineering and
construction firms performing the construction
cost quote, potential vendors under long-term
service agreements and plant operating agreements,
or recognized third party plant operator or
operators.
The operating and maintenance cost quote
(including the cost of the front end engineering
and design study) shall be expressed in nominal
dollars as of the date that the quote is prepared
and shall include (1) taxes, insurance, and other
owner's costs, and (2) an assumed escalation in
materials and labor beyond the date as of which the
operating and maintenance cost quote is expressed.
(D) The facility cost report shall also include (i)
an analysis of the initial clean coal facility's
ability to deliver power and energy into the applicable
regional transmission organization markets and (ii) an
analysis of the expected capacity factor for the
initial clean coal facility.
(E) Amounts paid to third parties unrelated to the
owner or owners of the initial clean coal facility to
prepare the core plant construction cost quote,
including the front end engineering and design study,
and the operating and maintenance cost quote will be

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reimbursed through Coal Development Bonds.
(5) Re-powering and retrofitting coal-fired power
plants previously owned by Illinois utilities to qualify as
clean coal facilities. During the 2009 procurement
planning process and thereafter, the Agency and the
Commission shall consider sourcing agreements covering
electricity generated by power plants that were previously
owned by Illinois utilities and that have been or will be
converted into clean coal facilities, as defined by Section
1-10 of this Act. Pursuant to such procurement planning
process, the owners of such facilities may propose to the
Agency sourcing agreements with utilities and alternative
retail electric suppliers required to comply with
subsection (d) of this Section and item (5) of subsection
(d) of Section 16-115 of the Public Utilities Act, covering
electricity generated by such facilities. In the case of
sourcing agreements that are power purchase agreements,
the contract price for electricity sales shall be
established on a cost of service basis. In the case of
sourcing agreements that are contracts for differences,
the contract price from which the reference price is
subtracted shall be established on a cost of service basis.
The Agency and the Commission may approve any such utility
sourcing agreements that do not exceed cost-based
benchmarks developed by the procurement administrator, in
consultation with the Commission staff, Agency staff and

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the procurement monitor, subject to Commission review and
approval. The Commission shall have authority to inspect
all books and records associated with these clean coal
facilities during the term of any such contract.
(6) Costs incurred under this subsection (d) or
pursuant to a contract entered into under this subsection
(d) shall be deemed prudently incurred and reasonable in
amount and the electric utility shall be entitled to full
cost recovery pursuant to the tariffs filed with the
Commission.
(e) The draft procurement plans are subject to public
comment, as required by Section 16-111.5 of the Public
Utilities Act.
(f) The Agency shall submit the final procurement plan
to the Commission. The Agency shall revise a procurement
plan if the Commission determines that it does not meet the
standards set forth in Section 16-111.5 of the Public
Utilities Act.
(g) The Agency shall assess fees to each affected
utility to recover the costs incurred in preparation of the
annual procurement plan for the utility.
(h) The Agency shall assess fees to each bidder to
recover the costs incurred in connection with a competitive
procurement process.
(Source: P.A. 95-481, eff. 8-28-07; 95-1027, eff. 6-1-09;
96-159, eff. 8-10-09; 96-1437, eff. 8-17-10.)

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