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Incentives/Policies for Renewables & Efficiency

Printable Version
Energy Efficiency Standard   

Last DSIRE Review: 08/16/2012
Program Overview:
State: Illinois
Incentive Type: Energy Efficiency Resource Standard
Eligible Efficiency Technologies: Custom/Others pending approval, Electricity and Natural Gas Reduction Technologies
Applicable Sectors: Investor-Owned Utility, Retail Supplier, Illinois DCEO
Electric Sales Reduction0.2% of energy delivered in EY 2009, increasing to 2% of energy delivered in EY 2016 and thereafter
Electric Peak Demand Reduction0.1% reduction in peak demand each year for 10 years (EY 2009-2019)
Natural Gas Sales Reduction7.1% total savings by EY 2019
Additional 1.5% savings each year thereafter
Rate Impact ParametersMeasures must satisfy the Total Resource Cost (TRC) Test
Web Site:
Authority 1:
§ 220 ILCS 5/8-104
Authority 2:
§ 220 ILCS 5/8-103
Authority 3:
Date Enacted:
Date Effective:
Public Act 097-0616
Authority 4:
Date Enacted:
Date Effective:
Public Act 097-0841

The 2007 Illinois Power Agency Act (IPAA) requires both electric and natural gas utilities establish annual energy-savings goals and reduce energy delivered and peak demand. Utilities are required to file an energy efficiency and demand-response plan with the Illinois Commerce Commission (ICC) every three years, beginning in 2007.

Electric Utility Compliance

Electricity Sales Reduction
The electricity reduction goals apply to utilities that had 100,000 or more customers on December 31, 2005. In February 2008, the ICC approved utility implementation plans for these requirements, available in Dockets 07-0539 (Ameren) and 07-0540 (ComEd). The IPAA established an electricity savings goal of incremental annual sales reduction over the previous year's consumption rate with a goal for 2015 of 2.0% reduction of 2014 electricity sales. Each year's benchmark is thus set by the preceding year's energy consumption, commencing on June 1 of that year. The electricity sales reduction percentage holds at 2.0% for every year thereafter. Utilities are responsible for implementing 75% of the energy efficiency measures approved by the ICC, and the Department of Commerce and Economic Opportunity (DCEO) is responsible for 25% of the savings using by administering public programs through the Energy Efficiency Portfolio Standards (EEPS) Fund. Utilities are responsible for collecting funds for measures implemented by the DCEO and transferring those funds directly to the DCEO.

Energy Year Electric Sales Reduction
2009 0.2%
2010 0.4%
2011 0.6%
2012 0.8%
2013 1.0%
2014 1.4%
2015 1.8%
2016 2.0%

Peak Demand Reduction
Electric utilities shall implement cost-effective demand-response measures to reduce peak demand by 0.1% over the prior year for eligible retail customers. Commencing on June 1, 2008, this requirement continues for 10 years. Utilities are responsible for 100% of the demand-response measures.

Natural Gas Utility Compliance
Natural gas utilities that served 100,000 customers or more on January 1, 2009 must implement cost-effective energy efficiency measures with the goal of meeting annual incremental reduction benchmarks, starting with a 0.2% reduction of 2011 natural gas sales in EY 2012. The natural gas annual sales percentage reduction increases annually until EY 2019 for a total of 7.1% savings by May 31, 2019. Each year thereafter, utilities must continue to increase efficiency reductions . The measurement for compliance shall be a reduction percentage of the previous year's total amount of natural gas delivered to retail customers. Similar to the electricity programs, utilities are responsible for implementing 75% of the energy efficiency measures, and DCEO is responsible for 25%, administered through the EEPs fund.

Energy Year Natural Gas Incremental Sales Reduction Total Natural Gas Savings
2012 0.2% 0.2%
2013 0.4% 0.6%
2014 0.6% 1.2%
2015 0.8% 2.0%
2016 1.0% 3.0%
2017 1.2% 4.2%
2018 1.4% 5.6%
2019 1.5% 7.1%


For both natural gas and electric utilities, failure to submit an energy reduction plan will result in a fine of $100,000 for each day until the plan is filed. This penalty is deposited in the Energy Efficiency Trust Fund and may not be recovered by rate payers. Plans are due on September 1 every three years. If an electric utility fails to comply with its plan after 2 years, it must make a contribution to the Low-Income Home Energy Assistance Program (LIHEAP). Large utilities (those with more than 2,000,000 customers on December 31, 2005) must contribute $665,000, and medium utilities (those with between 100,000 and 2,000,000 customers) must contribute $335,000. Utilities that fail to meet their plans again after the third year must make another contribution to the fund ($665,000 for large utilities and $335,000 for medium utilities). After three years of non-compliance, the Illinois Power Agency (IPA) shall assume control over energy efficiency incentive programs. For natural gas utilities that fail to meet their efficiency plans after three years, large utilities (those with more than 1,500,000 customers on December 31, 2008) must pay $600,000 into LIHEAP, medium utilities (those with 500,000-1,500,000 customers on December 31, 2008) must pay $400,000, and small utilities (those with 100,000-500,000 customers on December 31, 2008) must pay $200,000. If a utility fails to meet the standard for 2 consecutive 3-year planning periods, the ICC will transfer responsibility of the utility's energy efficiency programs to an independent administrator.

Rate Impact Cap
Energy efficiency measures must satisfy the Total Resource Cost (TRC) Test. In addition, in 2008 through 2011, annual per kilowatt-hour charges are limited based on the previous year's rates. Beginning in 2012, the estimated average net increase due to the cost of efficiency measures to 2.015% of the amount paid per kWh by customers in EY 2007 or the incremental amount per kWh paid for the measures in 2011, whichever is greater. 

*The term EY refers to compliance period or “energy year” for the standard, which runs from June - May and is defined by the year in which an energy year ends.

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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

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