§ 16-112 — Determination of market value

(a) The market value to be used in the calculation of transition charges as defined in Section 16-102 shall be determined in accordance with either (i) a tariff that has been filed by the electric utility with the Commission pursuant to Article IX of this Act and that provides for a determination of the market value for electric power and energy as a function of an exchange traded or other market traded index, options or futures contract or contracts applicable to the market in which the utility sells, and the customers in its service area buy, electric power and energy, or (ii) in the event no such tariff has been placed into effect for the electric utility, or in the event such tariff does not establish market values for each of the years specified in the neutral fact-finder process described in subsections (b) through (h) of this Section, a tariff incorporating the market values resulting from the neutral fact-finder process set forth in subsections (b) through (h) of this Section. (b) Except as provided in subsection (m) of this Section, on or before April 30, 1998, on or before February 28, 1999, and on or before each April 30 from 2000 until 2007, the Commission shall appoint a neutral fact-finder to make the calculations described in subsection (c) of this Section. The neutral fact-finder shall be a member of a national public accounting firm, shall not have served as the neutral fact-finder in the previous year, and shall be selected from a list of candidates provided by a nationally recognized provider of neutral fact-finders that has established rules for maintaining confidentiality. An amount sufficient to pay the fees of the neutral fact-finder shall be appropriated annually from the Public Utility Fund in the State treasury. (c) On or before June 1, 1998, on or before April 1, 1999, and on or before each June 1 from 2000 until 2007, or until discontinued in accordance with subsection (m) of this Section, each electric utility and each alternative retail electric supplier shall submit to the neutral fact-finder a summary of (A) all contracts entered into after June 1, 1997 that are for the sale of electric power and energy from a generating facility or facilities located in this State or located in a contiguous State and owned by an electric utility as part of its interconnected operating system and delivery during one or more of the 5 years succeeding the date of submission, and (B) all contracts entered into after June 1, 1997 for purchase and delivery of electric power and energy in or into this State during one or more of the 5 years succeeding the date of submission; provided, however, that such contracts shall not include (i) contracts between the electric utility and an affiliate; (ii) sales, purchases, or deliveries made under rates and tariffs filed with the Commission, except for tariffs filed pursuant to subsection (d) of Section 16-110 and except for special or negotiated rate contracts between an electric utility and a retail customer to the extent that such contracts are for the provision of electric power and energy after the date that the customer becomes eligible for delivery services; and (iii) extensions or amendments to full requirements wholesale contracts existing as of the effective date of this amendatory Act of 1997, provided that such contracts, extensions, or amendments are cost of service regulated by the Federal Energy Regulatory Commission. The summaries shall, at a minimum, identify the date of the contract; the year in which the electric power or energy is to be sold or delivered; the point of delivery; defining characteristics such as the nature of the power transaction (for example, reserve responsibility (firm, non-firm)), length of contract and temporal differences (for example, season, on-peak or off-peak); and the applicable prices stated at the point at which the electric power and energy leaves the electric utility's or alternative retail electric supplier's transmission system, as the case may be, in the case of contracts described in item (A) and at the point at which the electric power and energy enters the electric utility's transmission system in the case of contracts in item (B), provided, that the applicable price shall be stated at the point at which the electric power and energy enters the electric utility's transmission system in the case of electric power and energy generated for delivery within the electric utility's service area. In reporting to the neutral fact-finder the price of power and energy sold under bundled service contracts, electric utilities and alternative retail electric suppliers shall deduct from the contract price the charges for delivery services, including transition charges, applicable to delivery services customers in a utility's service area, and charges for services, if any, other than the provision of power and energy or delivery services. The Commission may adopt orders setting forth requirements governing the form and content of such summaries. (d) The neutral fact-finder shall calculate market values for electric power and energy for each electric utility, taking into account the defining characteristics set forth in subsection (c) of this Section; provided, however, that the neutral fact-finder may determine that a particular value is appropriate for more than one electric utility, or for all electric utilities in this State. The neutral fact-finder shall calculate the market values for the next year and, to the extent the summaries include a sufficient number of actual contracts to represent a viable market for the sale and delivery of electric power and energy in subsequent years, for each of the 4 succeeding years. (e) In calculating market values for electric power, the neutral fact-finder shall weight contract prices (including any contract price indices) by both the amount of capacity covered by the contract and the number of hours in which capacity is to be provided under the contract in each period of the year, shall take into account all of the defining characteristics set forth in subsection (c) of this Section and shall develop such values as required to represent the different types of market values of electric power. (f) The neutral fact-finder shall base calculations of the market values for electric energy on the energy prices stated in the contracts, and where no explicit energy prices or index price basis are stated, on the actual energy costs of the supplier in the corresponding period of the preceding year that would have been applicable to the electric energy provided under the contract. The neutral fact-finder shall develop market values for electric energy and shall take into account the defining characteristics set forth in subsection (c) of this Section, as required to represent the market values of such electric energy. (g) If the contracts used by the neutral fact-finder base prices for future years on one or more indices, the neutral fact-finder shall identify such indices in his or her final report, develop a weighting for each index, and calculate a weighted average index. The market values shall be calculated using the weighted average index when the actual values of the component indices are known. (h) The neutral fact-finder shall publish a final report on or before July 30 of each year, except that in 1999 the neutral fact finder shall publish the report on or before May 30, setting forth the calculated market values and stating the basis for such calculations. The final report shall not, however, disclose any proprietary or confidential data. (i) The market values calculated by the neutral fact-finder shall not be admissible in any proceeding for any purpose other than the calculation of transition charges or calculation of the price for the power purchase options provided pursuant to subsection (b) and (c) of Section 16-110. (j) The Commission shall have access to all contracts described in subsection (c) of this Section and shall perform such audits as it and the neutral fact-finder deem necessary to insure the accuracy of the summaries submitted to the neutral fact-finder. The summaries described in subsection (c) of this Section and each contract shall be accorded confidential and proprietary treatment and their review shall be subject to the provisions of Sections 4-404 and 5-108 of this Act, and the contract between the Commission and the neutral fact-finder shall contain provisions obligating the neutral fact-finder to comply with such Sections. The summaries shall not be discoverable by any party in any proceeding absent a compelling demonstration of need. (k) In determining the market values to be used for the various customer classes in calculating transition charges as defined in Section 16-102 or for the power purchase options set forth in Section 16-110, an electric utility shall apply the market values that are determined as set forth in subsection (a) to the electric power and energy that would have been used to serve the delivery services customers' electric power and energy requirements, based on the usage specified in Section 16-102 and taking into account the daily, monthly, annual and other relevant characteristics of the customers' demands on the electric utility's system. (l) In calculating a lump sum transition charge payment for the purposes of subsection (h) of Section 16-108, the electric utility shall use the market values that were determined as provided in its tariff, or if such market values have not been determined for the full period of time covered by such lump sum calculation, such other basis as is stated in the electric utility's tariff filed pursuant to Section 16-108. (m) The Commission may approve or reject, or propose modifications to, any tariff providing for the determination of market value that has been proposed by an electric utility pursuant to subsection (a) of this Section, but shall not have the power to otherwise order the electric utility to implement a modified tariff or to place into effect any tariff for the determination of market value other than one incorporating the neutral fact-finder procedure set forth in this Section. Provided, however, that if each electric utility serving at least 300,000 customers has placed into effect a tariff that provides for a determination of market value as a function of an exchange traded or other market traded index, options or futures contract or contracts, then the Commission can require any other electric utilities to file such a tariff, and can terminate the neutral fact-finder procedure for the periods covered by such tariffs. (n) To the extent that the summaries list a sufficient number of actual contracts to represent a viable market and market values can be determined for more than one year, the electric utility shall offer customers that are obligated to pay transition charges contracts that establish for one or more years, up to a maximum of the lesser of 5 years or the remaining number of years until December 31, 2008, the market value or values to be used in calculating the customer's transition charges in such years and for which market value determinations have been made. The electric utility may require any customer to give up to one year notice prior to entering into a one or 2 year contract pursuant to this subsection, up to 2 years notice for a 3 year contract, and up to 3 years notice for a 4 or 5 year contract. Contracts of one or 2 years duration shall incorporate the market values that were determined as provided in this Section in the year in which the notice is required to be given. Contracts of more than 2 years duration shall incorporate the market values that are determined in the year prior to the first year in which the electric utility will collect transition charges from the customer under the contract. The electric utility shall also allow customers to select, at the time that a customer gives its notice, an option to revoke the notice within 30 days following the determination of the market values that will apply under the contract requested by the customer, and may charge customers a fee for such option that is set forth in a tariff filed pursuant to Article IX and that is adequate to allow the electric utility to recover its transactional costs and compensate it based on the cost that would be incurred to purchase an option to cover the risk associated with the customer's option to revoke. The electric utility shall not be required to offer customers a contract under this paragraph for any year for which no determination of market value has been made either by the neutral fact-finder or pursuant to a tariff filed by the electric utility. (o) An electric utility shall have no obligation to provide electric power or energy as a tariffed service for the electric power and energy requirements placed on delivery service by any customer that has entered into a contract pursuant to subsection (n) of this Section and has not purchased and exercised an option to revoke, during the term of the contract. A customer that has purchased and exercised an option to revoke under this subsection shall remain eligible to receive any tariffed service for which it would otherwise be eligible.

Legislative History

(Source: P.A. 90-561, eff. 12-16-97.)