Illinois

Summary Illinois has historically had little involvement with utility energy efficiency programs, other than a small annual funding requirement (~ $3 million/year) created in the Illinois restructuring legislation (HB262) in 1997 to support some small programs administered by the state Department of Commerce and Economic Opportunity. New legislation passed in 2007 requires substantial electric utility energy efficiency programs. The legislation set an energy efficiency resource standard (EERS) savings goal, beginning at 0.2% of sales per year in 2008 and ramping up to 2.0% of sales per year by 2015. According to the Energy Information Administration, Illinois electric utilities reported efficiency program savings of 314 MWh and spent $829,000 in 2007. According to the Consortium for Energy Efficiency, Illinois utilities offer natural gas energy efficiency programs. These programs received $0.8 million in 2008. Illinois established a new gas EERS in 2009 with a goal of providing 8.6% cumulative savings by 2020. The state is pilot-testing a natural gas decoupling program. Decoupling reduces the financial disincentive for utilities to support energy efficiency by separating utilities’ profits from their levels of sales. Illinois does not provide shareholder incentives tied to energy efficiency programs. Illinois will receive funding for energy efficiency from the 2009 federal economic stimulus package. $242.5 million will be spent on weatherization projects. $101 million will fund projects sponsored by the Illinois State Energy Program (SEP). (Not all of the SEP projects will necessarily be related to energy efficiency.) Illinois is also considering a plan that would reduce the state's greenhouse gas emissions to 1990 levels by 2020.

Illinois passed legislation (SB1592) in July 2007 that created a requirement for large-scale utility energy efficiency programs in Illinois. The legislation applies only to electric utilities. According to the Energy Information Administration, Illinois electric utilities reported efficiency program savings of 314 MWh in 2007.

Individual electric utilities are required to administer 75% of the total funds. The Illinois Department of Commerce and Economic Opportunity administers 25% of the funds. The funding agencies will target government facilities, low-income households, and market transformation-oriented information and training programs.

In 2008, Illinois set up requirements for natural gas energy efficiency programs. The Consortium for Energy Efficiency reports that Illinois began funding natural gas energy efficiency programs in 2008.

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According to the Energy Information Administration, Illinois electric utilities spent $829,000 on energy efficiency in 2007.

SB1592 authorizes utilities to recover the costs for providing energy efficiency programs and directs utilities to design and implement cost-recovery tariffs. Funds from the tariffs will cover both utility- and state-administered programs. The total charge to customers is limited to 0.5% of their total rate in year one. The cost increases by 0.5% per year until it reaches 2.0% per year in 2015. First-year funding was estimated to be approximately $53 million. (In comparison, the reported spending for 2006, from the preexisting public benefits funding, was about $3 million.) 

Natural gas programs in Illinois were funded at $0.8 million in 2008, although they are not required by law.

Illinois will receive substantial funding for weatherization assistance from the federal economic stimulus package — $242.5 million. $101 million has also been given to the Illinois State Energy Program, which is likely to use this money to fund a variety of energy-related projects.

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SB1592 created an energy efficiency resource standard. It begins with a requirement for saving 0.2% of sales in 2008. This requirement ramps up to 1.0% per year by 2012 and 2.0% per year by 2015 and each year thereafter. These requirements can be modified if they would require spending more than 2.0% of total utility revenues per year. (Utilities are also required to implement cost-effective demand response measures to reduce peak demand by 0.1% per year, each year for ten years, beginning in 2008.) If a utility fails to meet the energy efficiency resource standard, it can be fined up to $665,000 (or $335,000, if it is a small utility). The revenues from such fines will be directed to the Low-Income Home Energy Assistance Program.

If the utility fails to meet the savings requirements over any three-year period, the responsibility for administering the energy efficiency programs shall be transferred to the Illinois Power Agency.

SB 1918 establishes a natural gas savings target that begins with 0.2% savings by May 31, 2011 and ramps up to 1.5% in 2019, providing cumulative savings of 8.6% in 2020. For all programs, there is a rate impact cap of 2% of overall rates over the three-year reporting period.

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In February 2008, North Shore Gas and Peoples Gas and Coke were both approved for four-year revenue-per-customer decoupling pilots. Decoupling reduces the financial disincentive for utilities to support energy efficiency by separating utilities’ profits from their levels of sales. Monthly adjustments began in March 2008. To continue the program after four years, the utility must make a general rate filing in which the commission extends the program. (Cases 07-0241/07-0242 — consolidated and 09-0166/09-0167 — consolidated)

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Illinois does not have a mechanism in place for utility shareholder incentives for energy efficiency, and SB1592 does not address the issue.

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SB1592 establishes a state policy that requires electric utilities to use cost-effective energy efficiency and demand-response measures to reduce direct and indirect costs to consumers. This can be accomplished by avoiding or delaying the need for new generation, transmission, and distribution infrastructure. Because Illinois is still technically a "restructured" state, it is not clear how energy efficiency would be factored into resource planning decisions.

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• Illinois Commerce Commission
• SB1592 (Public Act 095-0481)
• Illinois Department of Commerce and Economic Opportunity
• Illinois State Incentives for Renewables and Efficiency
• SB1918
  

Last Updated 08/24/2009

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