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State Energy Efficiency Policy Database

Illinois

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Summary

The Illinois General Assembly passed a law in 2007 that requires the state’s electric utilities and state energy office to provide customer energy efficiency programs and to meet energy savings goals. The legislation set an energy efficiency resource standard (EERS) that began at 0.2% of electricity sales per year in 2008 and increases in steps up to 2.0% of sales per year by 2015. With this legislation, Illinois has become a leading state in the Midwest for its customer energy efficiency programs. Individual electric utilities administer 75% of the total funding for energy efficiency programs raised by tariffs in place; the Illinois Department of Commerce and Economic Opportunity (DCEO) administers 25% of the funding, which is used for programs serving government facilities, low-income households and market-transformation-oriented information and training programs.

Illinois established a natural 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. Illinois does not provide shareholder incentives tied to energy efficiency programs.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

Illinois passed legislation (SB1592) in July 2007 that created a requirement for large-scale utility energy efficiency programs in Illinois. 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 cover both utility- and state-administered programs. There is a cost cap in place that limits program costs to a maximum of 2% of customer rates. This cap has been ramped up from an initial cap of 0.5%.

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

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Energy Efficiency Resource Standards

Summary: Electric: 0.2% annual savings in 2008, ramping up to 1% in 2012, 2% in 2015 and thereafter.  Natural Gas: 8.5% cumulative savings by 2020 (0.2% annual savings in 2011, ramping up to 1.5% in 2019).

The scope of energy efficiency activity in Illinois began a dramatic expansion in July 2007, when the state legislature passed the Illinois Power Agency Act (IPAA), which includes requirements for energy efficiency and demand response programs. The IPAA establishes an EERS that sets incremental annual electric and natural gas savings targets based on previous year’s consumption, beginning on June 1 of that year (see § 220 ILCS 5/8-103). The electric savings requirement began at 0.2% in 2008 and ramps up to a requirement of 2% annual savings in 2015 and thereafter. The natural gas goals begin in 2012 with a 0.2% reduction from 2011 sales and ramp up to 1.5% annual savings by 2019 (see Public Act 96-0033).

Investor-owned electric utilities are responsible for roughly 75% of program savings and spending, while the Illinois Department of Commerce and Economic Opportunity (DCEO) administers the remaining 25% of the funds, which are used to for efficiency programs serving government facilities, low-income households, and market transformation-oriented information and training programs.

Energy efficiency measures may not exceed an established cost-cap. The rate increase for customers due to energy efficiency was limited by statute to 0.5% of the total ‘per kWh’ charge in the first year and increased to 2.0% in 2012. If the rate impact cap is reached, the energy savings goals will be relaxed to the maximum savings that can be achieved within the rate impact cap. If, after 2 years, an electric utility fails to meet the efficiency standard it must make a contribution to the Low-Income Home Energy Assistance Program and transfer the program to the Illinois Power Authority.


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August 9, 2013


Alternative Business Models

In February 2008, North Shore Gas and Peoples Gas and Coke were both approved for four-year revenue-per-customer decoupling pilots. 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)).

No mechanism is in place for electric utilities.

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March 28, 2013


Reward Structures for Successful Energy Efficiency Programs

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


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July 28, 2011


Energy Efficiency as a Resource

Illinois legislation (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, as well as off-setting more expensive power purchases. Illinois is a "restructured" state—with distribution utilities purchasing power in competitive wholesale markets. Reduced customer demand thus affects purchase decisions and resource planning. Although there are no rules in place for integrated resource planning, the state does have a filing requirement for long-term utility plans. 


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August 8, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: TRC
  • Uses a deemed savings database: proposed

The evaluation of ratepayer-funded energy efficiency programs in Illinois relies on both legislative mandates (Public Act 95-0481) and regulatory orders (the order follows the legislation). Evaluations are administered by the utilities and The Department of Commerce and Economic Opportunity. Illinois has established formal rules and procedures for evaluation, which are stated in Case No. 07-0540—Order on Rehearingand SAG’s Proposed Framework to Count Savings in Illinois—most recent version. Evaluations are conducted for each of the utilities. In terms of a benefit-cost test, Illinois relies on the Total Resource Cost (TRC) test and considers it to be its primary cost-effectiveness test. The rules for benefit-cost tests are stated in Public Act 95-0481. These benefit-cost tests are required for overall portfolio level screening.

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August 13, 2013