AB748: Bill Text

LRB-4767/1

MDK:kmg/jlg/kaf:jf

1997 - 1998 LEGISLATURE

1997 Assembly BILL 748

January 27, 1998 - Introduced by Representatives Gard, R. Potter, Otte, M. Lehman, Musser, Freese, Ward, Dobyns, Schneider, Ainsworth, Hanson, Albers, Huebsch, Hubler, Carpenter, Ziegelbauer, Brandemuehl, Robson, Hebl, Bock, Hasenohrl, Meyer, Baumgart, Gronemus, Boyle, Baldwin, Schafer and R. Young, cosponsored by Senators Moen, Rude, Grobschmidt, Fitzgerald, Jauch, Risser, Wineke, Clausing, Schultz and C. Potter. Referred to Committee on Utilities Oversight.

AB748,2,17 An Act to repeal 32.03 (5) (b) 3., 32.07 (1m), 66.073 (10) (b), 196.491 (1) (a), 196.491 (2) (a) 1. and 2., 196.491 (2) (a) 5. and 6., 196.491 (2) (a) 8., 196.491 (2) (c) and (d), 196.491 (2) (i) to (m), 196.491 (2m) (title), 196.491 (3) (d) 1., 196.491 (3) (f) and (ff), 196.491 (3) (g) 2., 196.491 (4) (a) 3., 196.491 (4) (b) and 196.492; to renumber 66.073 (10) (a); to renumber and amend 196.01 (5), 196.375, 196.491 (2) (am), 196.491 (2m), 196.491 (3) (a) and 196.491 (4) (a) (intro.), 1. and 2.; to consolidate, renumber and amend 196.491 (3) (g) (intro.) and 1.; to amend 30.025 (1), 30.025 (4), 30.44 (3m) (title), 30.44 (3m) (a), 30.44 (3m) (b), 30.44 (3m) (d), 30.45 (1r), 32.03 (5) (a), 32.03 (5) (b) 1., 32.03 (5) (b) 2., 32.06 (7), 32.07 (1), 32.075 (3) (a) 2., 32.09 (2m), 86.16 (1), 182.017 (1), 196.025, 196.375 (title), 196.49 (3) (a), 196.49 (3) (b) (intro.), 2. and 3., 196.491 (title), 196.491 (1) (d), 196.491 (1) (e), 196.491 (1) (f), 196.491 (1) (g), 196.491 (2) (a) 3., 196.491 (2) (a) 3m., 196.491 (2) (a) 4., 196.491 (2) (a) 7., 196.491 (2) (b) 8., 196.491 (2) (e), 196.491 (2) (f), 196.491 (2) (g), 196.491 (3) (b), 196.491 (3) (d) (intro.), 196.491 (3) (d) 2., 196.491 (3) (e), 196.491 (3) (hm), 196.491 (3) (j), 196.491 (3) (k), 196.493 (1), 196.493 (2) (intro.), 196.795 (7) (a) 1. b. and 289.29 (5); to repeal and recreate 196.491 (2) (title), 196.491 (2) (a) (intro.) and 196.491 (2) (b) (intro.); and to create 196.01 (5) (a) 4. and (b) (intro.) and 4., 196.03 (5m), 196.03 (7), 196.375 (2), 196.485, 196.49 (3) (e), 196.491 (1) (am), 196.491 (1) (bm), 196.491 (1) (p), 196.491 (1) (w), 196.491 (2) (a) 3g., 196.491 (2) (a) 3r., 196.491 (2) (a) 9. to 13., 196.491 (2) (ag), 196.491 (2) (b) 9., 196.491 (2) (gm), 196.491 (3) (a) 2., 196.491 (3) (a) 3. b., 196.491 (3) (d) 7., 196.491 (3) (dm) and 196.491 (5) of the statutes; relating to: strategic energy assessments, constraints on electric power transmission, control of certain transmission facilities by an independent system operator, the adequacy of retail electric service supplies, electric generating and transfer capacities, certification requirements applicable to certain projects proposed by public utilities, standards, permits and certificates of public convenience and necessity for certain electric generating facilities and high-voltage transmission lines, certain out-of-state sales of retail electric service, providing an exemption from emergency rule procedures and granting rule-making authority.

Analysis by the Legislative Reference Bureau

Electric generating capacity and supply

The bill requires the public service commission (PSC) to issue an order that is designed to ensure, to the extent practicable, that the aggregate total electric generating capacity that is available to serve retail customers in a specified area of the state is increased by 500 megawatts. The area of the state is the area served by the Mid-America Interconnected Network, Inc., (MAIN) which is an electric industry reliability council for a portion of the midwestern United States. At least 50 megawatts of the increased capacity must be from renewable energy sources. The PSC's order may require a public utility to construct additional electric generating facilities or procure additional electric generating capacity.

The bill also allows the PSC to order a public utility that serves retail electric customers to take measures to ensure that an adequate supply of retail electric service will be available to such customers at reasonable rates. The order may require such a public utility to construct electric generation or transmission facilities, purchase electric capacity and energy, or participate in regional associations, power pools and networks. The PSC is also required to establish mechanisms for the recovery of the costs of such measures.

Electric power transmission

With respect to electric power transmission, the bill requires certain public utilities to transfer control of the operation of their transmission facilities to an independent system operator. The bill also requires the PSC to issue an order to ensure that the state's electric transfer capacity is increased and to study out-of-state constraints on the transmission of electric power to customers in this state.

Independent system operator

This bill requires the PSC to order the public utilities that own transmission equipment in the area of the state served by MAIN to organize a nonprofit corporation to perform the duties of an independent system operator. The independent system operator is required to enter into an agreement, which must be approved by the PSC, with such public utilities under which control over the operation of their transmission facilities is transferred to the independent system operator. The PSC may approve the agreement only if it provides for the reasonable compensation of the public utilities based on their net investment in their transmission facilities.

The bill also requires the independent system operator to make certain efforts to ensure the reliability of the transmission system and facilitate competition in the wholesale electric power market. In addition, the public utilities are required to provide maintenance, construction and operational support to the independent system operator pursuant to contracts with the independent system operator that must be approved by the PSC. Finally, if ordered by the PSC, the independent system operator must transfer control over the transmission facilities to an interstate entity that has equivalent duties with respect to a regional area.

New electric transfer capacity

The bill requires the PSC to issue an order that is designed to ensure, to the extent practicable, that, no later than June 1, 2001, the electric transfer capacity of the area served by MAIN is no less than 3,500 megawatts. "Electric transfer capacity" is defined as the maximum amount of electric power that may be imported into an area on a simultaneous basis and in a reliable manner by way of all available transmission lines or paths.

Study of out-of-state transmission constraints

The bill directs the PSC to conduct a study on relieving transmission constraints in other states that adversely affect the reliability of electric service provided to customers in this state. The PSC must submit a report on the study to the legislature that describes the transmission constraints, the efforts undertaken to relieve the constraints and any recommendations, in the form of proposed legislation or action by the PSC or the governor, for relieving the constraints.

Strategic energy assessment and certificates of public convenience and necessity

The bill eliminates the requirement for certain public utilities and cooperative associations to submit advance plans for approval by the PSC and requires instead that the PSC prepare a strategic energy assessment. In addition, the bill makes changes to the requirements pertaining to the certificates of public convenience and necessity that a person must obtain in order to construct certain electric generating facilities, transmission lines and other projects.

Strategic energy assessment

Under current law, certain public utilities and cooperative associations are required to submit biennial advance plans to the PSC that include certain information about their plans to construct the following: 1) "large electric generating facilities", which are defined as facilities with a capacity of between 12,000 and 300,000 kilowatts; 2) "bulk electric generating facilities", which are defined as facilities with a capacity of 300,000 kilowatts or more; and 3) "high-voltage transmission lines", which are defined as lines that are longer than one mile and that operate at 100 kilovolts or more. After holding a hearing on a plan, the PSC may approve a plan if the PSC finds that that plan will provide a reasonably adequate supply of electrical energy to meet the needs of the public and that the plan satisfies certain other criteria. A public utility or cooperative association must also submit an advance plan to the lower Wisconsin state riverway board (board) if it intends to construct, modify or relocate a high-voltage transmission line in the lower Wisconsin riverway (riverway). The board must approve the plan if it determines that the high-voltage transmission line will not impair, to the extent practicable, the scenic beauty or natural value of the riverway.

This bill eliminates the requirements pertaining to advance plans and requires instead that the PSC prepare an annual strategic energy assessment that evaluates the adequacy and reliability of the state's current and future energy supply. In addition, the bill requires a person to obtain a permit from the board in order to construct, modify or relocate a high-voltage transmission line in the riverway. The board may not issue the permit unless it makes the same determination as under current law.

The strategic energy assessment must identify and describe facilities that generate over 200,000 kilowatts on which public utilities, cooperative associations and certain other persons plan to begin construction within 3 years. The strategic energy assessment must also include information about high-voltage transmission lines on which a public utility or cooperative association plans to begin construction in the next 18 months. In addition, the strategic energy assessment must describe all of the following: 1) any plans for assuring that there is an adequate ability to transfer electric power into the state and the area served by MAIN; 2) the projected demand for electric power; 3) activities to discourage inefficient and excessive power use; 4) existing and planned generating facilities that use renewable energy sources; 5) the extent to which the regional bulk-power market is contributing to the adequacy and reliability of the state's electrical supply; 6) the extent to which effective competition is contributing to a reliable, low-cost and environmentally sound source of electricity; and 7) whether sufficient electric capacity and energy is available at a reasonable price. The PSC must promulgate rules that require public utilities and cooperative associations to report information that is necessary for the PSC to prepare the strategic energy assessment.

The PSC is required to issue a draft version of the strategic energy assessment no later than July 1 of each year. Any state agency, county, municipality, town or person may submit comments on the draft. The PSC must hold a public hearing on the strategic energy assessment and, at least 30 days before the hearing, the PSC must make available to the public an environmental assessment that it prepares on the strategic energy assessment. Within 90 days after the hearing, the PSC must issue a final version of the draft.

Certificates of public convenience and necessity

Under current law, a person may not begin constructing a large or bulk electric generating facility or high-voltage transmission line without obtaining a certificate of public convenience and necessity (certificate) from the PSC. A person that is not a public utility or cooperative association is exempt from this requirement if the person reasonably anticipates that the person will consume no less than 70% of the aggregate kilowatt hours output from electric generating facilities in manufacturing processes at the site where the facilities are located. Before filing an application for a certificate for a large or bulk electric generating facility, a person must provide an engineering plan to the department of natural resources (DNR), which must provide the person with a list of DNR permits and approvals that, based on the engineering plan, appear to be required for the facility. In consultation with the PSC, DNR may specify whether any permits or approvals must be obtained before the PSC may issue the certificate.

Also under current law, the PSC must take final action on an application for a certificate, and DNR must take final action on an application for the permits and approvals, within specified deadlines that depend on whether the application concerns a large or bulk electric generating facility or a high-voltage transmission line. After holding a public hearing on an application for a certificate, the PSC must issue the certificate if it makes certain determinations, including the following: 1) the proposed facility or line is in substantial compliance with the most recent advance plan; 2) the proposed facility or line is necessary to satisfy the reasonable needs of the public; 3) the design and location are in the public interest; 4) the proposed facility or line will not have an undue adverse impact on environmental values; and 5) the proposed facility or line will not unreasonably interfere with orderly land use and development plans. However, the PSC may not issue a certificate until DNR issues the specified permits and approvals.

This bill changes the types of facilities that are subject to the above requirements and changes the procedure for issuing a certificate by the PSC and the permits and approval by DNR. The bill requires a person to obtain a certificate from the PSC before beginning construction of any of the following: 1) "large electric generating facilities", which the bill defines as facilities with a capacity of 50,000 kilowatts or more; and 2) "high-voltage transmission lines", which the bill defines as lines that are longer than 5 miles but that operate at the same voltage as under current law.

The bill requires a person to file an application for a certificate within 6 months before beginning construction. The PSC must notify the applicant about whether an application is complete within 30 days after filing and a person may refile an incomplete application. If the PSC does not determine whether an application is complete within the 30-day deadline, the application is considered to be complete. At the same time that a person applies for a certificate, the person must provide DNR with an engineering plan and, within 30 days after receiving the plan, DNR must provide the person with a list of permits and approvals that appear to be applicable. Within 20 days after DNR provides the list, the person must apply for the permits and approvals. DNR is subject to a similar 30-day deadline in which DNR must notify an applicant about whether an application is complete. DNR must complete action on the permits and approvals within 90 days after an application is determined or considered to be complete.

Within 180 days after an application for a certificate is determined or considered to be complete, the PSC must take final action on the application, unless the circuit court for Dane County grants an extension. After holding a public hearing, the PSC may issue a certificate only if it makes the same determinations under current law described above, except for the first determination regarding compliance with an advance plan. In addition, the PSC does not have to make the 2nd determination regarding need if a large electric generating facility is a "wholesale merchant plant", which the bill defines as electric generating facilities that do not provide service to any retail customer and that are owned by a person who is not a public utility, an affiliate of a public utility, or a cooperative association. Also, the PSC must determine that the proposed large electric generating facility or high-voltage transmission line will not have a material adverse impact on competition in the relevant wholesale electric service market. Such a determination is not required under current law. Finally, the PSC may not issue a certificate until the DNR has issued the permits and approvals identified in the list provided by the DNR.

The bill also changes the exemption from the requirement to obtain a certificate. Under the bill, a person that is not a public utility or cooperative association may qualify for the exemption only if the person is also not a public utility affiliate or otherwise affiliated with a public utility.

Public utility construction projects

Under current law, the PSC may require that a public utility obtain a certificate of public convenience and necessity before it begins certain construction projects. Under this bill, a public utility that provides electric service is exempt from this requirement if the project is not the construction of a nuclear power plant and the cost of the project is less than an amount based on the public utility's annual gross operating revenues. If a public utility's annual gross operating revenues are less $5,000,000, the exemption applies to projects that cost less than $100,000. If such revenues are between $5,000,000 and $250,000,000, the exemption applies to projects that cost less than 2% of the revenues. If such revenues are more than $250,000,000, the exemption applies to projects that cost less than $5,000,000.

Out-of-state electric power sales

The bill requires the PSC, in setting rates, to reduce the revenue requirement of a public utility by an amount that reflects the fixed capital costs of electric generating facilities within the state that are incurred to make sales to customers outside the state whom the public utility does not have a duty to serve. The bill also prohibits a public utility from making such a sale if the sale interferes with the public utility's ability to provide cost-effective, reliable electric service to customers in this state that the public utility has a duty to serve.

Large electric generating facility standards

The bill requires the PSC to promulgate rules establishing standards for the inspection, maintenance, operation and repair of large electric generating facilities that are owned by, or provide service to, public utilities. "Large electric generating facilities" are defined as facilities with a capacity of 50,000 kilowatts or more. The PSC must also promulgate rules establishing penalties for violating the standards.

Other

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB748, s. 1 Section 1. 30.025 (1) of the statutes is amended to read:

AB748,7,10 30.025 (1) Any electric utility, as defined in s. 196.491 (1) (d), proposing to construct a facility, as defined in s. 196.491 (1) (e), which facility is to be located adjacent to a waterway in such a manner as to require one or more permits to be issued under this chapter and ch. 31 may, in lieu of separate application for permits under those chapters, submit an engineering plan together with any additional information required by the department. Such plan shall be filed with the department within 20 days after an application for a certificate of public convenience and necessity is filed with the public service commission under s. 196.491 (3). The department may require supplemental information to be furnished thereafter.

AB748, s. 2 Section 2. 30.025 (4) of the statutes is amended to read:

AB748,8,4 30.025 (4) The permit may be issued upon stated conditions deemed necessary to assure compliance with the criteria designated under sub. (3). The department shall grant or deny the application within the time limit applicable under s. 196.491 (3) (f) (a) 3. b.

AB748, s. 3 Section 3. 30.44 (3m) (title) of the statutes is amended to read:

AB748,8,6 30.44 (3m) (title) Utility facilities ; high-voltage transmission lines.

AB748, s. 4 Section 4. 30.44 (3m) (a) of the statutes is amended to read: