AB389, s. 40 4Section 40. 196.485 (1) (dv) of the statutes is created to read:
AB389,37,105 196.485 (1) (dv) "Organizational start-up date" means, with respect to a
6transmission company that is organized as a limited liability company under ch. 183,
7the date on which the articles of organization become effective under s. 183.0111 or,
8with respect to a transmission company that is organized as a corporation under ch.
9180, the date on which the articles of incorporation become effective under s.
10180.0123.
AB389, s. 41 11Section 41. 196.485 (1) (em) of the statutes is created to read:
AB389,37,1312 196.485 (1) (em) "Retail electric cooperative" means a cooperative that provides
13retail electric service to its members.
AB389, s. 42 14Section 42. 196.485 (1) (fe) of the statutes is created to read:
AB389,37,1815 196.485 (1) (fe) "Security" means, with respect to a transmission company
16organized as a corporation under ch. 180, a share, as defined in s. 180.0103 (15), and,
17with respect to a transmission company organized as a limited liability company
18under ch. 183, a limited liability company interest, as defined in s. 183.0102 (11).
AB389, s. 43 19Section 43. 196.485 (1) (ge) of the statutes is created to read:
AB389,38,220 196.485 (1) (ge) "Transmission company" means a corporation organized under
21ch. 180 or a limited liability company organized under ch. 183 that has as its sole
22purpose the planning, constructing, operating, maintaining and expanding of
23transmission facilities that it owns to provide for an adequate and reliable
24transmission system that meets the needs of all users that are dependent on the

1transmission system and that supports effective competition in energy markets
2without favoring any market participant.
AB389, s. 44 3Section 44. 196.485 (1) (gm) of the statutes is created to read:
AB389,38,64 196.485 (1) (gm) "Transmission dependent utility" means an electric utility
5that is not a transmission utility and that is dependent on the transmission system
6of another person for delivering electricity to the public utility's customers.
AB389, s. 45 7Section 45. 196.485 (1) (j) of the statutes is created to read:
AB389,38,118 196.485 (1) (j) "Transmission utility security holder" means a person that is a
9security holder of a transmission company, is an investor-owned transmission utility
10in the transmission area and has contributed its transmission facilities to the
11transmission company.
AB389, s. 46 12Section 46. 196.485 (1m) of the statutes is created to read:
AB389,38,1713 196.485 (1m) Duty to provide transmission service. (a) The duty of any
14electric utility that has contributed its transmission facilities to the transmission
15company to finance, construct, maintain or operate a transmission facility shall
16terminate on the date, as determined by the commission under sub. (2) (d), that the
17transmission company begins operations.
AB389,38,2218 (b) After beginning operations, the transmission company shall have the
19exclusive duty to provide transmission service in those areas in which transmission
20facilities have been contributed. The duty under this paragraph shall terminate on
21the date, as determined by the commission under sub. (2) (d), that the Midwest
22independent system operator begins operations.
AB389,39,223 (c) After beginning operations, the Midwest independent system operator shall
24have the exclusive duty to provide transmission service in the transmission area and
25shall ensure that each transmission facility in the transmission area that is under

1its operational control is planned, constructed, operated, maintained and controlled
2as part of a single transmission system.
AB389, s. 47 3Section 47. 196.485 (2) (a) (intro.) of the statutes is amended to read:
AB389,39,104 196.485 (2) (a) (intro.) By June 30, 2000, if a transmission utility has not
5transferred control over its transmission facilities to an independent system
6operator that is approved by the applicable federal agency or divested, with approval
7of the applicable federal agency and, for a public utility, the commission, its interest
8in its transmission facilities to an independent transmission owner, the commission
9shall, subject to par. pars. (am) and (ar), order the transmission utility to apply to the
10applicable federal agency to do one of the following:
AB389, s. 48 11Section 48. 196.485 (2) (ar) of the statutes is created to read:
AB389,39,1912 196.485 (2) (ar) The commission shall waive the requirement to issue an order
13against a transmission utility under par. (a) if the transmission utility shows, to the
14satisfaction of the commission, that a transfer of its transmission facilities to the
15Midwest independent system operator may have the effect of jeopardizing the
16tax-exempt status of the transmission utility or its securities under the Internal
17Revenue Code. A waiver under this paragraph shall be in effect until the commission
18determines that the proposed transfer does not have the effect described in this
19paragraph.
AB389, s. 49 20Section 49. 196.485 (2) (bx) of the statutes is created to read:
AB389,40,221 196.485 (2) (bx) If the Midwest system operator fails to commence operations
22or ceases operations, the requirements of this section that apply to the Midwest
23independent system operator shall apply to any other independent system operator
24or regional transmission organization that is authorized under federal law to operate
25in this state. The commission shall require that any transfer of transmission

1facilities to such independent system operator or regional transmission organization
2satisfies the requirements of this section.
AB389, s. 50 3Section 50. 196.485 (2) (d) of the statutes is created to read:
AB389,40,44 196.485 (2) (d) The commission shall determine each of the following:
AB389,40,55 1. The date on which the transmission company begins operations.
AB389,40,76 2. Whether the Midwest independent system operator has begun operations
7and the date on which such operations have begun.
AB389, s. 51 8Section 51. 196.485 (3) (bm) of the statutes is repealed.
AB389, s. 52 9Section 52. 196.485 (3m) of the statutes is created to read:
AB389,40,1110 196.485 (3m) Transmission company. (a) Duties. 1. The transmission company
11shall do each of the following:
AB389,40,1312 a. Apply for any approval under state or federal law that is necessary for the
13transmission company to begin operations no later than November 1, 2000.
AB389,40,2014 b. Subject to any approval required under state or federal law, contract with
15each transmission utility that has transferred transmission facilities to the
16transmission company for the transmission utility to provide reasonable and
17cost-effective operation and maintenance services to the transmission company
18during the 3-year period after the transmission company first begins operations.
19The transmission company and a transmission utility may, subject to any approval
20required under federal or state law, agree to an extension of such 3-year period.
AB389,41,221 c. Assume the obligations of a transmission utility that has transferred
22ownership of its transmission facilities to the transmission company under any
23agreement by the transmission utility to provide transmission service over its
24transmission facilities or credits for the use of transmission facilities, except that the

1transmission company may modify such an agreement to the extent allowed under
2the agreement and to the extent allowed under state or federal law.
AB389,41,83 d. Apply for membership in the Midwest independent system operator as a
4single zone for pricing purposes that includes the transmission area and, upon a
5determination by the commission under sub. (2) (d) that the Midwest independent
6system operator has begun operations, transfer operational control of the
7transmission company's transmission facilities to the Midwest independent system
8operator.
AB389,41,149 e. Remain a member of the Midwest independent system operator, or any
10independent system operator or regional transmission organization that has been
11approved under federal law to succeed the Midwest independent system operator, for
12at least the 6-year transition period that is specified in the agreement conditionally
13approved by the federal energy regulatory commission that establishes the Midwest
14independent system operator.
AB389,41,1615 f. Except as provided in subd. 4., elect to be included in a single zone for the
16purpose of any tariff administered by the Midwest independent system operator.
AB389,41,1717 2. The transmission company may not do any of the following:
AB389,41,2118 a. Sell or transfer its assets to, or merge its assets with, another person, unless
19the assets are sold, transferred or merged on an integrated basis and in a manner
20that ensures that the transmission facilities in the transmission area are planned,
21constructed, operated, maintained and controlled as a single transmission system.
AB389,41,2322 b. Bypass the distribution facilities of an electric utility or provide electric
23service directly to a retail customer.
AB389,42,424 c. Own electric generation facilities or sell, market or broker electric capacity
25or energy in a relevant wholesale or retail market as determined by the commission,

1except that, if authorized or required by the federal energy regulatory commission,
2the transmission company may procure or resell ancillary services obtained from 3rd
3parties, engage in redispatch activities that are necessary to relieve transmission
4constraints or operate a control area.
AB389,42,95 3. Notwithstanding subd. 1. a., the transmission company may not begin
6operations until it provides an opinion to the commission from a nationally
7recognized investment banking firm that the transmission company is able to
8finance, at a reasonable cost, its start-up costs, working capital and operating
9expenses and the cost of any new facilities that are planned.
AB389,42,2310 4. If the transmission charges or rates of any transmission utility in the
11transmission area are 10% or more below the average transmission charges or rates
12of the transmission utilities in the transmission area on the date, as determined by
13the commission, that the last public utility affiliate files a commitment with the
14commission under sub. (5) (a) 2., the transmission company shall, after consulting
15with each public utility affiliate that has filed a commitment under sub. (5) (a) 2.,
16prepare a plan for phasing in a combined single zone rate for the purpose of pricing
17network use by users of the transmission system operated by the Midwest
18independent system operator and shall seek plan approval by the federal energy
19regulatory commission and the Midwest independent system operator. A plan under
20this subdivision shall phase in an average-cost price for the combined single zone in
21equal increments over a 5-year period, except that, under the plan, transmission
22service shall be provided to all users of the transmission system on a single-zone
23basis during the phase-in period.
AB389,42,2424 (b) Powers. The transmission company may do any of the following:
AB389,43,7
11. Subject to the approval of the commission under s. 196.491 (3), construct and
2own transmission facilities, including high-voltage transmission lines, as defined in
3s. 196.491 (1) (f), in the transmission area or in any other area of the state in which
4transmission facilities that have been contributed to the transmission company are
5located. This subdivision does not affect the right or duty of an electric utility that
6is not located in the transmission area or that has not contributed its transmission
7facilities to the transmission company to construct or own transmission facilities.
AB389,43,108 2. Subject to any approval required under state or federal law, purchase or
9acquire transmission facilities in addition to the transmission facilities contributed
10under sub. (5) (b).
AB389,43,1411 (c) Organization. The articles of organization, as defined in s. 183.0102 (1), of
12a transmission company that is organized as a limited liability company under ch.
13183 or the bylaws of a transmission company that is organized as a corporation under
14ch. 180 shall provide for each of the following:
AB389,43,2015 1. That the transmission company has no less than 5 nor more than 14
16managers or directors, except that the articles of organization or bylaws may allow
17the requirements of this subdivision to be modified upon a unanimous vote of the
18managers or directors during the 10-year period after the organizational start-up
19date or upon a two-thirds vote of the board of directors or managers after such
2010-year period.
AB389,43,2521 2. That at least 4 managers or directors of the transmission company have
22staggered 4-year terms, are elected by a majority vote of the security holders and are
23not directors, employes or independent contractors of a person engaged in the
24production, sale, marketing, transmission or distribution of electricity or natural gas
25or of an affiliate of such a person.
AB389,44,3
13. That, during the 10-year period after the organizational start-up date, each
2of the following is satisfied, subject to the limitation on the number of managers or
3directors under subd. 1.:
AB389,44,84 a. Each nontransmission utility security holder that owns 10% or more of the
5outstanding voting securities of the transmission company may appoint one
6manager or director of the transmission company for a one-year term, except that
7the requirements of this subd. 3. a. may be modified upon a unanimous vote of the
8managers or directors.
AB389,44,159 b. Each group of nontransmission utility security holders that, as a group, owns
1010% or more of the outstanding voting securities of the transmission company may
11appoint one manager or director of the transmission company for a one-year term
12if the group has entered into a written agreement regarding the appointment and the
13group files the agreement with the secretary of the transmission company, except
14that the requirements of this subd. 3. b. may be modified upon a unanimous vote of
15the managers or directors.
AB389,44,1916 c. Each person that receives at least 5% of the voting securities of the
17transmission company under sub. (6) (a) or (b) may appoint one manager or director
18of the transmission company for a one-year term if the person continues to hold at
19least a 5% equity interest in the transmission company during the one-year term.
AB389,44,2120 d. Each transmission utility security holder may appoint one manager or
21director of the transmission company for a one-year term.
AB389,45,722 4. That, during the 5-year period after the organizational start-up date, no
23public utility affiliate that contributes transmission facility assets to the
24transmission company under sub. (5) (b) and no affiliate of such a public utility
25affiliate may increase its percentage share of the outstanding securities of the

1transmission company prior to any initial issuance of securities by the transmission
2company to any 3rd party other than a 3rd party exercising its right to purchase
3securities under sub. (6) (b), except that this subdivision does not apply to securities
4that are issued by the transmission company in exchange for transmission facilities
5that are contributed in addition to the transmission facilities that are contributed
6under sub. (5) (b) and except that the requirements of this subdivision may be
7modified upon a unanimous vote of the managers or directors.
AB389,45,118 5. That, beginning 3 years after the organizational start-up date, any holder
9of 10% or more of the securities of the transmission company may require the
10transmission company to comply with any state or federal law that is necessary for
11the security holder to sell or transfer its shares.
AB389,45,1412 (d) Commission jurisdiction. The transmission company is subject to the
13jurisdiction of the commission except to the extent that it is subject to the exclusive
14jurisdiction of the federal energy regulatory commission.
AB389, s. 53 15Section 53. 196.485 (4) (a) (intro.) of the statutes is amended to read:
AB389,45,1916 196.485 (4) (a) (intro.) A Except as provided in par. (am), a transmission utility
17may not transfer control over, or divest its interest in, its transmission facilities to
18an independent system operator or independent transmission owner unless, to the
19satisfaction of the commission, each of the following requirements is satisfied:
AB389, s. 54 20Section 54. 196.485 (4) (am) of the statutes is created to read:
AB389,46,321 196.485 (4) (am) Each transmission utility in the transmission area that is a
22public utility shall become a member of the Midwest independent system operator
23no later than June 30, 2000, and shall transfer operational control over its
24transmission facilities to the Midwest independent system operator. Each such
25transmission utility that has not contributed its transmission facilities to the

1transmission company shall elect to become part of the single zone for pricing
2purposes within the Midwest independent system operator and any phase-in plan
3prepared under sub. (3m) (a) 4.
AB389, s. 55 4Section 55. 196.485 (5) of the statutes is created to read:
AB389,46,85 196.485 (5) Public utility affiliates. (a) Asset cap exception. Section 196.795
6(6m) (e) does not apply to the eligible assets of a nonutility affiliate in a holding
7company system unless each public utility affiliate in the holding company system
8does each of the following:
AB389,46,129 1. Petitions the commission and the federal energy regulatory commission to
10approve the transfer of operational control of all the public utility affiliate's
11transmission facilities in this state and in Iowa, Michigan, Minnesota and Illinois to
12the Midwest independent system operator.
AB389,46,1913 2. Files with the commission an unconditional, irrevocable and binding
14commitment to contribute, no later than June 30, 2000, all of the transmission
15facilities that the public utility affiliate owns or operates in this state on the effective
16date of this subdivision .... [revisor inserts date], and land rights, to the transmission
17company. A filing under this subdivision shall specify a date no later than June 30,
182000, on which the public utility affiliate will complete the contribution of
19transmission facilities.
AB389,46,2520 3. Files with the commission an unconditional, irrevocable and binding
21commitment to contribute, and to cause each entity into which it merges or
22consolidates or to which it transfers substantially all of its assets to contribute, any
23transmission facility in this state the ownership or control of which it acquires after
24the effective date of this subdivision .... [revisor inserts date], and land rights, to the
25transmission company.
AB389,47,6
14. Notifies the commission in writing that the public utility affiliate has become
2a member of the Midwest independent system operator, has agreed to transfer its
3transmission facilities to the Midwest independent system operator and has
4committed not to withdraw its membership prior to the date on which the public
5utility affiliate contributes transmission facilities to the transmission company
6under par. (b).
AB389,47,117 5. Petitions the commission and the federal energy regulatory commission to
8approve the contributions specified in subds. 2. and 3. and agrees in such a petition
9not to withdraw the petition in the event that the commission or the federal energy
10regulatory commission conditions its approval on changes that are consistent with
11state or federal law.
AB389,47,1912 (b) Contribution of transmission facilities. 1. A public utility affiliate may not
13contribute a transmission facility to the transmission company until the commission
14has reviewed the terms and conditions of the transfer to determine whether the
15transfer satisfies the requirements of this subsection and has issued an order
16approving or modifying the terms and conditions of the transfer. An order under this
17subdivision that modifies the terms and conditions of a transfer may allow a public
18utility affiliate to recover in retail rates any adverse tax consequences of the transfer
19as a transition cost.
AB389,47,2220 2. The transmission company and a public utility affiliate that files a
21commitment to contribute transmission facilities under par. (a) 2. shall structure the
22transfer of the transmission facilities in a manner that satisfies each of the following:
AB389,48,223 a. The structure of the transfer avoids or minimizes the material adverse tax
24consequences to the public utility affiliate that result from the transfer and avoids
25or minimizes material adverse consequences on public utility rates that do not arise

1out of combining the transmission company's facilities into a single zone in the
2Midwest independent system operator.
AB389,48,43 b. To the extent practicable, the structure of the transfer satisfies the
4requirements of the Internal Revenue Service for a tax-free transfer.
AB389,48,105 3. The requirements under subd. 2. b. shall, if practicable, be satisfied by the
6transmission company's issuance of a preferred class of securities that provides the
7fixed-cost portion of the resulting capital structure of the transmission company.
8The transmission company shall issue preferred securities under this subdivision on
9a basis that does not dilute the voting rights of the initial security holders relative
10to the value of their initial contributions.
AB389,49,311 4. If the transfer of transmission assets under this paragraph results in a
12capital structure of the transmission company in which the percentage of common
13equity is materially higher than that of the public utility affiliates who made the
14transfer, or if the cost of the fixed-cost portion of the capital structure of the
15transmission company is materially higher than that of the public utility affiliates
16who made the transfer, the public utility affiliates shall enter into a contract with the
17transmission company under which the public utility affiliates agree to accept from
18the transmission company a return on common equity based upon the equity rate of
19return approved by the federal energy regulatory commission and upon an imputed
20capital structure that assigns to a portion of the public utility affiliates' common
21equity holdings an imputed debt return that is consistent with the requirements of
22this subdivision. A contract under this subdivision shall specify that the public
23utility affiliates shall be required to accept the return on common equity described
24in this subdivision only until such time that the federal energy regulatory
25commission determines that the actual capital structure and capital costs of the

1transmission company are appropriate and consistent with industry practice for a
2regulated public utility that provides electric transmission service in interstate
3commerce.
AB389,49,84 5. If, at the time that a public utility affiliate files a commitment under par. (a)
52., the public utility affiliate has applied for or obtained a certificate of public
6convenience and necessity under s. 196.491 (3) or a certificate under s. 196.49 for the
7construction of transmission facilities, the public utility affiliate shall do each of the
8following:
AB389,49,109 a. Proceed with diligence with respect to obtaining the certificate and, except
10as provided in subd. 6., constructing the transmission facilities.
AB389,49,1511 b. If the commission determines that the cost of the transmission facilities is
12reasonable and prudent, transfer the transmission facilities to the transmission
13company at net book value when construction is completed in exchange for additional
14securities of the transmission company on a basis that is consistent with the
15securities that were initially issued to the public utility affiliate.
AB389,49,2316 6. If the construction of a transmission facility specified in subd. 5. a. is not
17completed within 3 years after a certificate is issued for the transmission facility
18under s. 196.49 or 196.491 (3), the transmission company may assume responsibility
19for completing construction of the transmission facility. If the transmission company
20assumes responsibility for completing construction under this subdivision, the
21transmission company shall carry out any obligation under any contract entered into
22by the public utility with respect to the construction until the contract is modified or
23rescinded by the transmission company to the extent allowed under the contract.
AB389,49,2524 7. Any transmission facilities that are contributed to the transmission
25company shall be valued at net book value at the time of the transfer.
AB389,50,10
1(bm) Lease of transmission facilities. If a public utility affiliate is not able to
2contribute its transmission facilities to the transmission company as required under
3par. (b) due to merger-related accounting requirements, the public utility affiliate
4shall transfer the transmission facilities to the transmission company under a lease
5for the period of time during which the accounting requirements are in effect and,
6after such requirements are no longer in effect, contribute the transmission facilities
7to the transmission company under par. (b). A public utility affiliate that transfers
8transmission facilities under a lease under this paragraph does not qualify for the
9asset cap exception under par. (a) unless, during the term of the lease, the public
10utility affiliate does not receive any voting interest in the transmission company.
AB389,50,1311 (c) Contribution of land rights. 1. A public utility affiliate that commits to
12contributing land rights to the transmission company under par. (a) 2. shall do each
13of the following:
AB389,50,2114 a. Except as provided in subd. 2., if the land right is assigned to a transmission
15account for rate-making purposes and is not jointly used for electric and gas
16distribution facilities by the public utility affiliate, the public utility affiliate shall
17convey or assign at book value all of its interest in the land right to the transmission
18company, except that any conveyance or assignment under this subd. 1. a. shall be
19subject to the rights of any joint user of the land right and to the right of the public
20utility affiliate to nondiscriminatory access to the real estate that is subject to the
21land right.
AB389,51,622 b. If the land right is jointly used, or is intended to be jointly used, for electric
23and gas distribution facilities by the public utility affiliate, the public utility affiliate
24shall enter into a contract with the transmission company that grants the
25transmission company a right to place, maintain, modify or replace the transmission

1company's transmission facilities on the real property that is subject to the land right
2during the life of the transmission facilities and the life of any replacements of the
3transmission facilities. A right granted in a contract under this subd. 1. b. shall be
4paramount to the right of any other user of the land right, except that a right granted
5in such a contract shall be on par with the right of the public utility affiliate to use
6the land right for electric or gas distribution facilities.
AB389,51,127 2. If a public utility affiliate is prohibited from making a conveyance or
8assignment described in subd. 1. a., the public utility affiliate shall enter into a
9contract with the transmission company that grants the transmission company
10substantially the same rights as under such a conveyance or assignment. For
11purposes of a contract under this subdivision, a land right shall be valued at book
12value, not at market value.
AB389,51,1813 3. The commission shall resolve any dispute over the contribution of a land
14right under subd. 1. or 2., including a dispute over the valuation of such a land right,
15unless a federal agency exercises jurisdiction over the dispute. During the pendency
16of any dispute that is before the commission or a federal agency, the transmission
17company shall be entitled to use the land right that is the subject to the dispute and
18shall be required to pay any compensation that is in dispute into an escrow account.
AB389, s. 56 19Section 56. 196.485 (6) of the statutes is created to read:
AB389,51,2220 196.485 (6) Electric utilities, transmission dependent utilities and retail
21electric cooperatives.
No later than the first day of the 12th month beginning after
22the first public utility affiliate files a commitment under sub. (5) (a) 2.:
AB389,52,223 (a) An electric utility, other than a public utility affiliate, may transfer all of its
24integrated transmission facilities to the transmission company on the same terms

1and conditions as a contribution of transmission facilities and land rights by a public
2utility affiliate under sub. (5) (b) and (c).
AB389,52,93 (b) A transmission-dependent utility or retail electric cooperative may
4purchase equity interests in the transmission company at a price that is equivalent
5to net book value and on terms and conditions that are comparable to those for public
6utility affiliates that have contributed transmission facilities to the transmission
7company. A purchaser under this paragraph may contribute funds to the
8transmission company that are no more than the value of its prorated shares based
9on firm electric usage in this state in 1999.
AB389, s. 57 10Section 57. 196.485 (6m) of the statutes is created to read:
AB389,52,1511 196.485 (6m) Dividends, profits and gains. The commission may not treat any
12dividend received by a transmission utility from the transmission company or any
13gain or profit of a transmission utility from the sale or other disposition of securities
14issued by the transmission company as a credit against the retail revenue
15requirements of the transmission utility.
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