Progress Illinois

Amid the turmoil in the General Assembly this week, environmentalists and consumer groups quietly earned a big victory on Thursday night, passing a sizeable energy efficiency reform package (SB 1918) through both chambers. Originally introduced as a migrant labor bill, an amendment attached to the measure -- crafted with the help of Attorney General Lisa Madigan's office -- transformed it into a clearinghouse for energy reform initiatives intended to lower the state's gas consumption and ultimately save consumers money. 

What will the law do? For starters, it will establish an energy efficiency program for natural gas utilities, similar to a law already on the books for electric companies. Designed to reduce natural gas usage 8.6 percent by 2020, the law requires utility companies to implement "cost-effective energy efficiency measures" to meet an annual, incremental natural gas savings requirement. By May 2012, for example, utilities must cut their savings by 0.2 percent. The next year, the savings goal doubles. If the utilities hit their targets, the Midwest Energy Efficiency Alliance projects that Illinois consumers could save over $10 billion on their utility bills between now and 2030. In order to achieve the reductions, utility companies will ask consumers to finance energy efficiency upgrades by rolling the costs into their monthly bills. (How that'll play out practically has yet to be worked out.)

There are also financial penalties for utilities that miss their targets: companies serving over 1.5 million customers must pay $600,000 into the Low Income Home Energy Assistance Program (LIHEAP) each year they fall short. The penalties are smaller for utilities serving between 500,000 and 1.5 million people ($400,000) and those serving less than 500,000 ($200,000).

So why did the utilities endorse the bill? A separate provisions allows them to adjust rates to account for "bad debt" -- i.e. delinquent customers.  Under the current system, companies can only do so via rate hike appeals to the Illinois Commerce Commission (ICC). In short, if bad debt rises, consumers will see their rate rise.  If it decreases, they will see a corresponding reduction in their monthly bill.

Consumer groups went along with that concession in exchange for one of their own: Under SB 1918, delinquent customers can begin "paying based on their income, rather than what they owe," Environment Illinois' Brian Granahan tells us. That'll be achieved, in part, through the Percentage of Income Payment Plan (PIPP), a program to ease the burden of utility costs on low-income consumers. Essentially, those who participate elect to pay 6 percent of their income for energy costs, (the rest will be covered by the Low Income Home Energy Assistance Program, up to $1,800). This minimizes both the debt utilities accumulate and the number of families bowled over by high-cost energy bills. The ICC will also do its part by conduct annual reviews to make sure each utility is doing all it can to minimize bad debt.

In other environmental news, Rep. Julie Hamos' Energy Efficient Commercial Building Act (HB 3987),  passed the Senate today and arrived in the House. The measure would curb greenhouse gases by forcing homes to adhere to the same high-efficiency standards as new commercial projects.