Energy Efficiency Policies and Practices in Illinois

Utility Sector

Utility sector policies are those policies that directly affect the way that the state's electricity and natural gas utilities do business and serve the energy needs of their customers.  These policies include utility forecasting and planning requirements for energy efficiency, requirements for energy efficiency delivery to customers, regulatory mechanisms to determine utility revenues for energy efficiency services, processes for working collaboratively with other utilities and energy stakeholders to advance energy efficiency, requirements for evaluating energy efficiency programs and portfolios, and policies to promote the development of the next generation of energy grids.

Resource Planning

Illinois' energy procurement process serves essentially the same function as Integrated Resource Planning (IRP) though it isn't strictly a traditional IRP process. Authorized by 220 ILCS 5/16-111.5B, each Illinois utility procuring power must provide the Illinois Power Agency (IPA) with an annual assessment of cost-effective energy efficiency programs or measures that could be included in the procurement plan, which must include an energy efficiency potential study for the utility's service territory.

Under the Public Utilities Act,  beginning in 2012, procurement plans are to include an analysis of the impact of building energy codes or appliance standards, as well as an assessment of opportunities to expand energy efficiency programs that have been offered under plans or to implement additional cost-effective energy efficiency programs.

The IPA must include in the prepared procurement plan energy efficiency programs and measures it determines are cost-effective and the associated annual energy savings goals.  The Commission will approve the energy efficiency programs and measures included in the procurement plan, including the annual energy savings goal, if they determine it fully captures the potential for all achievable cost-effective energy savings.

► Overview of Resource Planning policies in the Midwest

Energy Efficiency Standards


Illinois'  Public Act 095-0481 (Illinois Power Agency Act) enacted an energy efficiency resource standard (EERS) in 2007 for investor owned electric utilities, with efficiency programs beginning in 2008. The Act created 220 ILCS 5/12-103 (renumbered to 220 ILCS 5/8-103 by subsequent legislation), which requires 0.2% electricity savings through efficiency of energy delivered in 2009 and ramps-up to 2.0% by 2015 and every year thereafter. 

Spending for electric energy efficiency programs in Illinois is capped at a maximum rate impact of 2.015% (220 ILCS/5/8-103(d)(5)).  In June 2011, the Illinois Commerce Commission reported to the Illinois General Assembly about the impact of the rate cap on the state's energy efficiency programs. The ICC found that Ameren would be constrained by these spending limits by June 2011 and ComEd by June 2013, and that the budget necessary to hit 2.0% energy savings was nearly two-and-a-half times the capped budget amount.

Natural Gas

Public Act 096-0033 (Illinois Power Agency Act – Amended) created an energy efficiency standard for investor owned natural gas utilities in 2009 and programs under the standard began in 2010. The Act created 220 ILCS 5/8-104, which requires 0.2% natural gas savings through efficiency of energy delivered by 2012 and ramps-up to 1.5% savings by 2019 and every year thereafter.

Spending for natural gas energy efficiency programs in Illinois is capped at a maximum rate impact of 2.0% (220 ILCS/5/8-104(d)).  In June 2011, the Illinois Commerce Commission reported to the Illinois General Assembly about the impact of the rate cap on the state's electric energy efficiency programs, but has not produced a similar report for natural gas energy efficiency.

► Overview of Efficiency Standards policies in the Midwest

Rate Structures & Incentives

Cost Recovery

As authorized by 220 ILCS 5/8 103 (e):

A utility providing approved energy efficiency and demand-response measures in the State shall be permitted to recover costs of those measures through an automatic adjustment clause tariff filed with and approved by the Commission. The tariff shall be established outside the context of a general rate case. Each year the Commission shall initiate a review to reconcile any amounts collected with the actual costs and to determine the required adjustment to the annual tariff factor to match annual expenditures.

Lost Revenue Recovery

There are no policies that specifically support lost revenue recovery mechanisms in Illinois. However revenue-per-customer decoupling pilot programs were approved for North Shore Gas (Docket 07-241) and Peoples Gas (Docket 07-242) in February 2008 as part of their rate cases. 

Utility Incentives

Illinois' energy efficiency statute does not specify any incentives for utilities for successful compliance with energy efficiency standards.

Noncompliance Penalties

Illinois is the only state in the Midwest to have a statutory penalty for noncompliance with energy efficency standards. Under 220 ILCS 5/8 103 (f) states that fail to file a plan can be fined $100,000 per day of noncompliance, and if they fail to meet their energy efficiency goals they will make a contribution to low-income LIHEAP programs (value determined by the size of the utility) , and may have their energy efficiency programs taken away and put under third-party administration.

► Overview of rate structures & incentives in the Midwest

Stakeholder Collaboration

Illinois stakeholder collaboration process was enabled by Public Act 095-0481 (The Illinois Power Agency Act). Known as the Illinois Energy Efficiency Stakeholder Advisory Group (SAG), its participants include representatives from utilities, the Illinois Commerce Commission staff, the Department of Commerce and Economic Opportunity, environmental advocates, and energy efficiency consultants. It is facilitated by Future Energy Enterprises, LLC.

The SAG has a role of sharing information and experience among energy efficiency stakeholders. It developed a Technical Resource Manual for the state's utilities, and discusses EM&V and other technical issues related to energy efficiency programs.  It has met monthly since 2008.

► Overview of stakeholder collaboratives in the Midwest

Program Evaluation

Cost-Effectiveness Tests

Utilities in Illinois are required by statute ( 220 ILCS 5/8-103 (a) ) to use the TRC test to establish the cost-effectiveness of energy efficiency programs. The other tests may be in use by utilities for their internal program design and evaluation purposes but are not required by the Commission.

Net vs. Gross

Illinois utilities report net savings in their program evaluation reports to the Commission. Free-ridership is measured but spillover generally is not, though in a few cases utilities have measured it for some programs.

Technical Resource Manual

The Stakeholder Advisory Group in Illinois headed up the development of a statewide TRM which was finalized in the summer of 2012. The TRM, in Word document format, is available from the SAG website (under the September 11, 2012 meeting materials).

► Overview of efficiency program evaluation in the Midwest

Smart Grid

The Smart Grid Information Clearninghouse identifies the following smart grid projects in Illinois:

Recovery Act-funded smart grid projects that benefit Illinois, as identified on SmartGrid.gov include:

In addition, as authorized by SB 1652 (Public Act 097-0616) Commonwealth Edison has been authorized for a ratepayer-funded, five-year, billion dollar "infrastructure modernization" smart grid deployment program. ComEd obtained approval in late 2012 to delay smart meter deployment until 2015.

► Overview of smart grids in the Midwest



Read the report that accompanies these pages:
Energy Efficiency Policies, Programs, and Practices in the Midwest:
A Resource Guide for Policymakers (2014 Edition)

►more information about the Resource Guide