HB3975 Summary

• Electric utilities serving over 1 million customers in Illinois can voluntarily adopt a performance-based formula rate to recover delivery service costs and undertake infrastructure investment programs without standard regulatory approval.

• Participating utilities must invest $1.3 billion over 5-10 years in electric system upgrades, modernization, and training facilities, and contribute $10 million annually for 5 years (or $1 million annually for 10 years for combination utilities) to low-income customer assistance programs.

• Utilities must create 2,000 full-time equivalent jobs during peak program years and meet performance metrics including 20% improvement in service interruption frequency, 15% improvement in interruption duration, and significant reductions in estimated bills and unbilled energy.

• A cost of equity is calculated as the average 30-year Treasury bond yield plus 580 basis points, with annual reconciliation of actual versus projected costs, and financial penalties of up to 38 basis points applied to return on equity for failure to meet performance goals.

• The performance-based formula rate becomes inoperative on December 31, 2019 (extended from 2017) unless residential rate increases exceed 2.5% annually, in which case the program terminates immediately and utilities revert to traditional rate regulation.