Bill Text: IL SB3176 | 2011-2012 | 97th General Assembly | Engrossed

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Bill Title: Amends the Public Utilities Act. Provides that customers may apply to the Department of Commerce and Economic Opportunity to be designated as a self-directing customer or exempt customer using natural gas as a feedstock from which other products are made on or before the 1st day of December, 2012 (instead of the 1st day of February, 2010). Effective immediately.

Spectrum: Bipartisan Bill

Status: (Failed) 2013-01-08 - Session Sine Die [SB3176 Detail]

Download: Illinois-2011-SB3176-Engrossed.html

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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 Public Utilities Act is amended by changing
Section 8-104 as follows:
(220 ILCS 5/8-104)
Sec. 8-104. Natural gas energy efficiency programs.
(a) It is the policy of the State that natural gas
utilities and the Department of Commerce and Economic
Opportunity are required to use cost-effective energy
efficiency to reduce direct and indirect costs to consumers. It
serves the public interest to allow natural gas utilities to
recover costs for reasonably and prudently incurred expenses
for cost-effective energy efficiency measures.
(b) For purposes of this Section, "energy efficiency" means
measures that reduce the amount of energy required to achieve a
given end use and "cost-effective" means that the measures
satisfy the total resource cost test which, for purposes of
this Section, means a standard that is met if, for an
investment in energy efficiency, the benefit-cost ratio is
greater than one. The benefit-cost ratio is the ratio of the
net present value of the total benefits of the measures to the
net present value of the total costs as calculated over the

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lifetime of the measures. The total resource cost test compares
the sum of avoided natural gas utility costs, representing the
benefits that accrue to the system and the participant in the
delivery of those efficiency measures, as well as other
quantifiable societal benefits, including avoided electric
utility costs, to the sum of all incremental costs of end use
measures (including both utility and participant
contributions), plus costs to administer, deliver, and
evaluate each demand-side measure, to quantify the net savings
obtained by substituting demand-side measures for supply
resources. In calculating avoided costs, reasonable estimates
shall be included for financial costs likely to be imposed by
future regulation of emissions of greenhouse gases. The
low-income programs described in item (4) of subsection (f) of
this Section shall not be required to meet the total resource
cost test.
(c) Natural gas utilities shall implement cost-effective
energy efficiency measures to meet at least the following
natural gas savings requirements, which shall be based upon the
total amount of gas delivered to retail customers, other than
the customers described in subsection (m) of this Section,
during calendar year 2009 multiplied by the applicable
percentage. Natural gas utilities may comply with this Section
by meeting the annual incremental savings goal in the
applicable year or by showing that total savings associated
with measures implemented after May 31, 2011 were equal to the

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sum of each annual incremental savings requirement from May 31,
2011 through the end of the applicable year:
(1) 0.2% by May 31, 2012;
(2) an additional 0.4% by May 31, 2013, increasing
total savings to .6%;
(3) an additional 0.6% by May 31, 2014, increasing
total savings to 1.2%;
(4) an additional 0.8% by May 31, 2015, increasing
total savings to 2.0%;
(5) an additional 1% by May 31, 2016, increasing total
savings to 3.0%;
(6) an additional 1.2% by May 31, 2017, increasing
total savings to 4.2%;
(7) an additional 1.4% by May 31, 2018, increasing
total savings to 5.6%;
(8) an additional 1.5% by May 31, 2019, increasing
total savings to 7.1%; and
(9) an additional 1.5% in each 12-month period
thereafter.
(d) Notwithstanding the requirements of subsection (c) of
this Section, a natural gas utility shall limit the amount of
energy efficiency implemented in any 3-year reporting period
established by subsection (f) of Section 8-104 of this Act, by
an amount necessary to limit the estimated average increase in
the amounts paid by retail customers in connection with natural
gas service to no more than 2% in the applicable 3-year

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reporting period. The energy savings requirements in
subsection (c) of this Section may be reduced by the Commission
for the subject plan, if the utility demonstrates by
substantial evidence that it is highly unlikely that the
requirements could be achieved without exceeding the
applicable spending limits in any 3-year reporting period. No
later than September 1, 2013, the Commission shall review the
limitation on the amount of energy efficiency measures
implemented pursuant to this Section and report to the General
Assembly, in the report required by subsection (k) of this
Section, its findings as to whether that limitation unduly
constrains the procurement of energy efficiency measures.
(e) Natural gas utilities shall be responsible for
overseeing the design, development, and filing of their
efficiency plans with the Commission. The utility shall utilize
75% of the available funding associated with energy efficiency
programs approved by the Commission, and may outsource various
aspects of program development and implementation. The
remaining 25% of available funding shall be used by the
Department of Commerce and Economic Opportunity to implement
energy efficiency measures that achieve no less than 20% of the
requirements of subsection (c) of this Section. Such measures
shall be designed in conjunction with the utility and approved
by the Commission. The Department may outsource development and
implementation of energy efficiency measures. A minimum of 10%
of the entire portfolio of cost-effective energy efficiency

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measures shall be procured from local government, municipal
corporations, school districts, and community college
districts. Five percent of the entire portfolio of
cost-effective energy efficiency measures may be granted to
local government and municipal corporations for market
transformation initiatives. The Department shall coordinate
the implementation of these measures and shall integrate
delivery of natural gas efficiency programs with electric
efficiency programs delivered pursuant to Section 8-103 of this
Act, unless the Department can show that integration is not
feasible.
The apportionment of the dollars to cover the costs to
implement the Department's share of the portfolio of energy
efficiency measures shall be made to the Department once the
Department has executed grants or contracts for energy
efficiency measures and provided supporting documentation for
those grants and the contracts to the utility.
The details of the measures implemented by the Department
shall be submitted by the Department to the Commission in
connection with the utility's filing regarding the energy
efficiency measures that the utility implements.
A utility providing approved energy efficiency measures in
this State shall be permitted to recover costs of those
measures through an automatic adjustment clause tariff filed
with and approved by the Commission. The tariff shall be
established outside the context of a general rate case and

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shall be applicable to the utility's customers other than the
customers described in subsection (m) of this Section. Each
year the Commission shall initiate a review to reconcile any
amounts collected with the actual costs and to determine the
required adjustment to the annual tariff factor to match annual
expenditures.
Each utility shall include, in its recovery of costs, the
costs estimated for both the utility's and the Department's
implementation of energy efficiency measures. Costs collected
by the utility for measures implemented by the Department shall
be submitted to the Department pursuant to Section 605-323 of
the Civil Administrative Code of Illinois and shall be used by
the Department solely for the purpose of implementing these
measures. A utility shall not be required to advance any moneys
to the Department but only to forward such funds as it has
collected. The Department shall report to the Commission on an
annual basis regarding the costs actually incurred by the
Department in the implementation of the measures. Any changes
to the costs of energy efficiency measures as a result of plan
modifications shall be appropriately reflected in amounts
recovered by the utility and turned over to the Department.
The portfolio of measures, administered by both the
utilities and the Department, shall, in combination, be
designed to achieve the annual energy savings requirements set
forth in subsection (c) of this Section, as modified by
subsection (d) of this Section.

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The utility and the Department shall agree upon a
reasonable portfolio of measures and determine the measurable
corresponding percentage of the savings goals associated with
measures implemented by the Department.
No utility shall be assessed a penalty under subsection (f)
of this Section for failure to make a timely filing if that
failure is the result of a lack of agreement with the
Department with respect to the allocation of responsibilities
or related costs or target assignments. In that case, the
Department and the utility shall file their respective plans
with the Commission and the Commission shall determine an
appropriate division of measures and programs that meets the
requirements of this Section.
If the Department is unable to meet performance
requirements for the portion of the portfolio implemented by
the Department, then the utility and the Department shall
jointly submit a modified filing to the Commission explaining
the performance shortfall and recommending an appropriate
course going forward, including any program modifications that
may be appropriate in light of the evaluations conducted under
item (8) of subsection (f) of this Section. In this case, the
utility obligation to collect the Department's costs and turn
over those funds to the Department under this subsection (e)
shall continue only if the Commission approves the
modifications to the plan proposed by the Department.
(f) No later than October 1, 2010, each gas utility shall

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file an energy efficiency plan with the Commission to meet the
energy efficiency standards through May 31, 2014. Every 3 years
thereafter, each utility shall file, no later than October 1,
an energy efficiency plan with the Commission. If a utility
does not file such a plan by October 1 of the applicable year,
then it shall face a penalty of $100,000 per day until the plan
is filed. Each utility's plan shall set forth the utility's
proposals to meet the utility's portion of the energy
efficiency standards identified in subsection (c) of this
Section, as modified by subsection (d) of this Section, taking
into account the unique circumstances of the utility's service
territory. The Commission shall seek public comment on the
utility's plan and shall issue an order approving or
disapproving each plan. If the Commission disapproves a plan,
the Commission shall, within 30 days, describe in detail the
reasons for the disapproval and describe a path by which the
utility may file a revised draft of the plan to address the
Commission's concerns satisfactorily. If the utility does not
refile with the Commission within 60 days after the
disapproval, the utility shall be subject to penalties at a
rate of $100,000 per day until the plan is filed. This process
shall continue, and penalties shall accrue, until the utility
has successfully filed a portfolio of energy efficiency
measures. Penalties shall be deposited into the Energy
Efficiency Trust Fund and the cost of any such penalties may
not be recovered from ratepayers. In submitting proposed energy

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efficiency plans and funding levels to meet the savings goals
adopted by this Act the utility shall:
(1) Demonstrate that its proposed energy efficiency
measures will achieve the requirements that are identified
in subsection (c) of this Section, as modified by
subsection (d) of this Section.
(2) Present specific proposals to implement new
building and appliance standards that have been placed into
effect.
(3) Present estimates of the total amount paid for gas
service expressed on a per therm basis associated with the
proposed portfolio of measures designed to meet the
requirements that are identified in subsection (c) of this
Section, as modified by subsection (d) of this Section.
(4) Coordinate with the Department to present a
portfolio of energy efficiency measures proportionate to
the share of total annual utility revenues in Illinois from
households at or below 150% of the poverty level. Such
programs shall be targeted to households with incomes at or
below 80% of area median income.
(5) Demonstrate that its overall portfolio of energy
efficiency measures, not including programs covered by
item (4) of this subsection (f), are cost-effective using
the total resource cost test and represent a diverse cross
section of opportunities for customers of all rate classes
to participate in the programs.

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(6) Demonstrate that a gas utility affiliated with an
electric utility that is required to comply with Section
8-103 of this Act has integrated gas and electric
efficiency measures into a single program that reduces
program or participant costs and appropriately allocates
costs to gas and electric ratepayers. The Department shall
integrate all gas and electric programs it delivers in any
such utilities' service territories, unless the Department
can show that integration is not feasible or appropriate.
(7) Include a proposed cost recovery tariff mechanism
to fund the proposed energy efficiency measures and to
ensure the recovery of the prudently and reasonably
incurred costs of Commission-approved programs.
(8) Provide for quarterly status reports tracking
implementation of and expenditures for the utility's
portfolio of measures and the Department's portfolio of
measures, an annual independent review, and a full
independent evaluation of the 3-year results of the
performance and the cost-effectiveness of the utility's
and Department's portfolios of measures and broader net
program impacts and, to the extent practical, for
adjustment of the measures on a going forward basis as a
result of the evaluations. The resources dedicated to
evaluation shall not exceed 3% of portfolio resources in
any given 3-year period.
(g) No more than 3% of expenditures on energy efficiency

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measures may be allocated for demonstration of breakthrough
equipment and devices.
(h) Illinois natural gas utilities that are affiliated by
virtue of a common parent company may, at the utilities'
request, be considered a single natural gas utility for
purposes of complying with this Section.
(i) If, after 3 years, a gas utility fails to meet the
efficiency standard specified in subsection (c) of this Section
as modified by subsection (d), then it shall make a
contribution to the Low-Income Home Energy Assistance Program.
The total liability for failure to meet the goal shall be
assessed as follows:
(1) a large gas utility shall pay $600,000;
(2) a medium gas utility shall pay $400,000; and
(3) a small gas utility shall pay $200,000.
For purposes of this Section, (i) a "large gas utility" is
a gas utility that on December 31, 2008, served more than
1,500,000 gas customers in Illinois; (ii) a "medium gas
utility" is a gas utility that on December 31, 2008, served
fewer than 1,500,000, but more than 500,000 gas customers in
Illinois; and (iii) a "small gas utility" is a gas utility that
on December 31, 2008, served fewer than 500,000 and more than
100,000 gas customers in Illinois. The costs of this
contribution may not be recovered from ratepayers.
If a gas utility fails to meet the efficiency standard
specified in subsection (c) of this Section, as modified by

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subsection (d) of this Section, in any 2 consecutive 3-year
planning periods, then the responsibility for implementing the
utility's energy efficiency measures shall be transferred to an
independent program administrator selected by the Commission.
Reasonable and prudent costs incurred by the independent
program administrator to meet the efficiency standard
specified in subsection (c) of this Section, as modified by
subsection (d) of this Section, may be recovered from the
customers of the affected gas utilities, other than customers
described in subsection (m) of this Section. The utility shall
provide the independent program administrator with all
information and assistance necessary to perform the program
administrator's duties including but not limited to customer,
account, and energy usage data, and shall allow the program
administrator to include inserts in customer bills. The utility
may recover reasonable costs associated with any such
assistance.
(j) No utility shall be deemed to have failed to meet the
energy efficiency standards to the extent any such failure is
due to a failure of the Department.
(k) Not later than January 1, 2012, the Commission shall
develop and solicit public comment on a plan to foster
statewide coordination and consistency between statutorily
mandated natural gas and electric energy efficiency programs to
reduce program or participant costs or to improve program
performance. Not later than September 1, 2013, the Commission

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shall issue a report to the General Assembly containing its
findings and recommendations.
(l) This Section does not apply to a gas utility that on
January 1, 2009, provided gas service to fewer than 100,000
customers in Illinois.
(m) Subsections (a) through (k) of this Section do not
apply to customers of a natural gas utility that have a North
American Industry Classification System code number that is
22111 or any such code number beginning with the digits 31, 32,
or 33 and (i) annual usage in the aggregate of 4 million therms
or more within the service territory of the affected gas
utility or with aggregate usage of 8 million therms or more in
this State and complying with the provisions of item (l) of
this subsection (m); or (ii) using natural gas as feedstock and
meeting the usage requirements described in item (i) of this
subsection (m), to the extent such annual feedstock usage is
greater than that 60% of the customer's total annual usage of
natural gas.
(1) Customers described in this subsection (m) of this
Section shall apply, on a form approved on or before
October 1, 2009 by the Department, to the Department to be
designated as a self-directing customer ("SDC") or as an
exempt customer using natural gas as a feedstock from which
other products are made, including, but not limited to,
feedstock for a hydrogen plant, on or before the 1st day of
February, 2010. Thereafter, application may be made not

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less than 6 months before the filing date of the gas
utility energy efficiency plan described in subsection (f)
of this Section; however, a new customer that commences
taking service from a natural gas utility after February 1,
2010 may apply to become a SDC or exempt customer up to 30
days after beginning service. Customers described in this
subsection (m) that have not already been approved by the
Department may apply to be designated a self-directing
customer or exempt customer, on a form approved by the
Department, between September 1, 2012 and September 30,
2012. Customer applications that are approved by the
Department under this amendatory Act of the 97th General
Assembly shall be considered to be a self-directing
customer or exempt customer, as applicable, for the current
3-year planning period effective December 1, 2012. Such
application shall contain the following:
(A) the customer's certification that, at the time
of its application, it qualifies to be a SDC or exempt
customer described in this subsection (m) of this
Section;
(B) in the case of a SDC, the customer's
certification that it has established or will
establish by the beginning of the utility's 3-year
planning period commencing subsequent to the
application, and will maintain for accounting
purposes, an energy efficiency reserve account and

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that the customer will accrue funds in said account to
be held for the purpose of funding, in whole or in
part, energy efficiency measures of the customer's
choosing, which may include, but are not limited to,
projects involving combined heat and power systems
that use the same energy source both for the generation
of electrical or mechanical power and the production of
steam or another form of useful thermal energy or the
use of combustible gas produced from biomass, or both;
(C) in the case of a SDC, the customer's
certification that annual funding levels for the
energy efficiency reserve account will be equal to 2%
of the customer's cost of natural gas, composed of the
customer's commodity cost and the delivery service
charges paid to the gas utility, or $150,000, whichever
is less;
(D) in the case of a SDC, the customer's
certification that the required reserve account
balance will be capped at 3 years' worth of accruals
and that the customer may, at its option, make further
deposits to the account to the extent such deposit
would increase the reserve account balance above the
designated cap level;
(E) in the case of a SDC, the customer's
certification that by October 1 of each year, beginning
no sooner than October 1, 2012, the customer will

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report to the Department information, for the 12-month
period ending May 31 of the same year, on all deposits
and reductions, if any, to the reserve account during
the reporting year, and to the extent deposits to the
reserve account in any year are in an amount less than
$150,000, the basis for such reduced deposits; reserve
account balances by month; a description of energy
efficiency measures undertaken by the customer and
paid for in whole or in part with funds from the
reserve account; an estimate of the energy saved, or to
be saved, by the measure; and that the report shall
include a verification by an officer or plant manager
of the customer or by a registered professional
engineer or certified energy efficiency trade
professional that the funds withdrawn from the reserve
account were used for the energy efficiency measures;
(F) in the case of an exempt customer, the
customer's certification of the level of gas usage as
feedstock in the customer's operation in a typical year
and that it will provide information establishing this
level, upon request of the Department;
(G) in the case of either an exempt customer or a
SDC, the customer's certification that it has provided
the gas utility or utilities serving the customer with
a copy of the application as filed with the Department;
(H) in the case of either an exempt customer or a

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SDC, certification of the natural gas utility or
utilities serving the customer in Illinois including
the natural gas utility accounts that are the subject
of the application; and
(I) in the case of either an exempt customer or a
SDC, a verification signed by a plant manager or an
authorized corporate officer attesting to the
truthfulness and accuracy of the information contained
in the application.
(2) The Department shall review the application to
determine that it contains the information described in
provisions (A) through (I) of item (1) of this subsection
(m), as applicable. The review shall be completed within 30
days after the date the application is filed with the
Department. Absent a determination by the Department
within the 30-day period, the applicant shall be considered
to be a SDC or exempt customer, as applicable, for all
subsequent 3-year planning periods, as of the date of
filing the application described in this subsection (m). If
the Department determines that the application does not
contain the applicable information described in provisions
(A) through (I) of item (1) of this subsection (m), it
shall notify the customer, in writing, of its determination
that the application does not contain the required
information and identify the information that is missing,
and the customer shall provide the missing information

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within 15 working days after the date of receipt of the
Department's notification.
(3) The Department shall have the right to audit the
information provided in the customer's application and
annual reports to ensure continued compliance with the
requirements of this subsection. Based on the audit, if the
Department determines the customer is no longer in
compliance with the requirements of items (A) through (I)
of item (1) of this subsection (m), as applicable, the
Department shall notify the customer in writing of the
noncompliance. The customer shall have 30 days to establish
its compliance, and failing to do so, may have its status
as a SDC or exempt customer revoked by the Department. The
Department shall treat all information provided by any
customer seeking SDC status or exemption from the
provisions of this Section as strictly confidential.
(4) Upon request, or on its own motion, the Commission
may open an investigation, no more than once every 3 years
and not before October 1, 2014, to evaluate the
effectiveness of the self-directing program described in
this subsection (m).
(n) The applicability of this Section to customers
described in subsection (m) of this Section is conditioned on
the existence of the SDC program. In no event will any
provision of this Section apply to such customers after January
1, 2020.

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(Source: P.A. 96-33, eff. 7-10-09; revised 11-18-11.)
Section 99. Effective date. This Act takes effect upon
becoming law.