AB389: Bill Text

This bill does each of the following: 1) establishes programs administered by the department of administration (DOA) for providing energy assistance to low-income households (low-income programs), for conservation and efficiency services (conservation programs) and for encouraging the development and use of renewable energy resources (renewables programs); 2) imposes certain requirements on the generation of electricity from renewable energy resources; 3) creates an exemption from the cap on investments of public utility holding companies in nonutility affiliate assets (asset cap); 4) changes requirements regarding the ownership and operation of the transmission system of the state; 5) imposes employment requirements with respect to the acquisition of certain energy business units; 6) changes the requirements for the approval of certain high-voltage transmission lines; and 7) imposes various other requirements, including changes to the duties of the public service commission (PSC), prohibitions on the authority of the department of natural resources (DNR) regarding nitrogen oxide emissions and requirements for an interstate compact on regional transmission need and siting.

Low-income, conservation and renewables programs

After consulting with a council on utility public benefits that is created under the bill, DOA is required to establish the low-income, conservation and renewables programs. DOA must hold a hearing before establishing the programs.

The bill requires the division of housing in DOA to contract with certain nonprofit or governmental entities for the administration of the low-income programs. DOA must also contract with a nonprofit corporation for the administration of the conservation and renewables programs.

The programs established by DOA are funded by a public benefits fee that DOA collects from nonmunicipal electric public utilities, which must charge the public benefits fees to their customers. Municipal electric public utilities and retail electric cooperatives (municipal utilities and cooperatives) are also required to charge a public benefits fee to their customers or members. Every three years, a municipal utility or cooperative may elect to contribute all or a specified portion of the public benefits fees to DOA for the programs established by DOA. A municipal utility or cooperative that does not elect to contribute all of the public benefits fees to DOA must spend specified portions of the fees on its own "commitment to community programs", which are defined as low-income assistance and conservation programs.

Each municipal utility and cooperative must charge a public benefits fee that is sufficient for the utility or cooperative to collect an annual average of $17 per meter. However, for the period ending on June 30, 2008, the amount of any increase to an electric bill that is based on the public benefits fee charged by a municipal utility or cooperative may not exceed 3% of the total of every other charge billed during that period, or $750 per month, whichever is less.

For nonmunicipal utilities, the bill directs DOA to determine the amount of the public benefits fee, which consists of a portion sufficient to fund the low-income programs and a portion sufficient to fund the conservation and renewables programs. The bill allows DOA to reduce the amount that must be collected for the conservation and renewables programs after fiscal year 2003-04 if DOA determines to reduce or discontinue such programs. The public benefits fee paid by a customer of a nonmunicipal utility is subject to the same limit that applies to a municipal utility or cooperative for the period ending on June 30, 2008.

The bill also requires the PSC to determine the amount that an electric utility spent on low-income, energy conservation and renewables programs in 1998. Under the bill, an electric utility must spend a decreasing portion of such amount and contribute an increasing portion of such amount to the PSC for deposit in a utility public benefits fund, which is used to fund the programs established by DOA under the bill. This requirement replaces a requirement under current law that an electric utility annually spend a specified percentage of its annual operating revenues on energy conservation programs.

Renewable energy resources

Under this bill, specified percentages of the electricity generated by a public utility or retail cooperative must be generated from renewable energy resources. The percentage is calculated on the basis of a public utility's or retail cooperative's total retail energy sales. The bill allows public utilities and retail cooperatives to purchase credits from other public utilities and retail cooperatives that generate electricity from renewable energy resources in excess of the percentages required under the bill.

The bill also includes other requirements, including requirements for calculating the percentages and reporting compliance with the percentages to DOA.

Asset cap

With certain exceptions, current law prohibits the investments of a public utility holding company system (system) in nonutility affiliate assets from exceeding a specified asset cap.

This bill creates a new exception from this prohibition if the public utility affiliates in a system satisfy certain requirements, including the following: 1) petitioning the PSC and the federal energy regulatory commission for approval to transfer operational control of their electric transmission facilities that are located in the midwest region of the United States to a specific independent system operator; and 2) filing a commitment with the PSC to transfer ownership of transmission facilities and related land rights in this state to a transmission company that satisfies specified requirements. If the public utility affiliates satisfy the requirements for the exception, then certain nonutility affiliate assets are not included in calculating whether the system exceeds the asset cap. The assets that are not included in the calculation include the assets of a nonutility affiliate that are used for the following: 1) producing or selling gas, oil, electricity or steam energy; 2) providing energy management, conservation or efficiency products or services; 3) providing energy customer services; 4) recovering or producing energy from waste materials; 5) processing waste materials; 6) manufacturing or selling certain filtration or fluid pumping products; and 7) providing telecommunications services.

Transmission system operation

This bill allows transmission utilities to transfer ownership of their transmission facilities to a transmission company that satisfies certain requirements, including the requirements to apply for approval to begin operations no later than November 1, 2000. The bill requires the transmission utilities that make such a transfer to enter into contracts with the transmission company to provide operation and maintenance with respect to the transmission facilities for a period of at least three years. A transmission utility that is a public utility affiliate in a public utility holding company system must comply with these transfer requirements in order for the system to qualify for the exception from the asset cap that is described above.

The bill also provides that, after the transmission company begins operations, a transmission utility or cooperative that has transferred ownership of its transmission facilities to the transmission company no longer has a duty to provide transmission services. Instead, the transmission company has the exclusive duty to provide transmission service in a specified area of the state. The transmission company's duty terminates when a certain independent system operator begins operations. This independent system operator is a person that has received the conditional approval of the federal energy regulatory commission to provide transmission service in the midwest region of the United States.

Under the bill, after the independent system operator begins operations, it has the exclusive duty to provide transmission service in a specified area of the state and each public utility that provides transmission service in that area must transfer operational control over its transmission facilities to the independent system operator. In addition, as noted above, a public utility affiliate must make such a transfer to qualify for the exception to the asset cap exception described above.

The bill imposes other requirements on the organization, formation and operation of the transmission company.

Under current law, a utility company's property is exempt from the property tax and the utility company pays a license fee that is based on a percentage of the company's gross revenues. Under this bill, the transmission company's property is also exempt from the property tax and the transmission company is required to pay the license fee.

Employment requirements for acquired energy units

The bill imposes certain employment requirements on a person who acquires an energy unit, which is defined as a business unit of a nonutility affiliate in a public utility holding company system or a public utility or cooperative association in which the business unit engages in certain energy-related activities. A person who acquires an energy unit must offer employment to the energy unit's nonsupervisory employes who are necessary for the operation and maintenance of the energy unit. If a nonutility affiliate acquires an energy unit in the same holding company system, the nonutility affiliate must offer employment to all of the energy unit's nonsupervisory employes. A person or nonutility affiliate that is subject to the bill's requirements must, during the 30-month period after the acquisition, offer employment at wage rates that are no less than the wage rates in effect immediately prior to the acquisition. In addition, during the same 30-month period, the terms and conditions of employment, including fringe benefits, must be substantially similar to the terms and conditions in effect immediately prior to the acquisition.

Approval of high-voltage transmission lines

Under current law, with certain exceptions, a person may not construct a high-voltage transmission line, which is defined as a line that is designed for operation at 100 kilovolts or more, unless the PSC issues a certificate of public convenience and necessity (certificate) to the person. The PSC may not issue a certificate unless it makes certain specified findings regarding the high-voltage transmission line.

Under this bill, the PSC may not issue a certificate for a high-voltage transmission line that is proposed to increase transmission capacity into this state unless, in addition to the findings under current law, the PSC also makes specified findings regarding the use of existing rights-of-way and the routing and design of the line. In addition, the PSC may not issue a certificate for a high-voltage transmission line that is designed for operation at 345 kilovolts or more unless the PSC finds that certain benefits are reasonable in relation to the cost of the line.

The bill also imposes fees on persons who are issued certificates for high-voltage transmission lines that are designed for operation at 345 kilovolts or more. Such a person must pay an annual impact fee and a one-time environmental impact fee. The fees are based on the cost of the high-voltage transmission line. The fees must be paid to DOA, which is required to distribute the fees to counties, towns, cities and villages through which the high-voltage transmission line is routed.

Other requirements

The bill imposes the following duties on the PSC:

1. Requires the PSC to promulgate rules for carrying out the PSC's duties under current law regarding the consideration of environmental impact of certain actions.

2. Requires the PSC to promulgate rules requiring certain electric utilities and cooperative associations to submit reports on their electric reliability status.

3. Requires the PSC to study and report to the legislature on the establishment of a program for providing incentives for the development of certain high-efficiency, small-scale electric generating facilities.

4. Requires the PSC to contract for a study and submit a report to the legislature on the potential for horizontal market power of electric generators to frustrate the creation of effectively competitive retail electric markets.

5. Requires the PSC to approve certain market-based rates, individual contract options and market-based compensation for voluntary service interruptions for certain customers of certain electric public utilities.

6. Requires the PSC to order a public utility affiliate or the transmission company described above to make certain investments in its facilities if the PSC determines that the public utility affiliate or transmission company is not making investments that are sufficient to ensure reliable electric service.

The bill allows the governor, on behalf of the state, to enter into an interstate compact on the need for and siting of regional electric transmission facilities. A compact under the bill must include certain requirements, including a mechanism for resolving transmission conflicts between states.

The bill prohibits DNR from establishing certain reductions in nitrogen oxide emissions from electric generating facilities in specified counties.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

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:

AB389, s. 1 Section 1. 15.107 (17) of the statutes is created to read:

AB389,7,5 15.107 (17) Council on utility public benefits. There is created a council on utility public benefits that is attached to the department of administration under s. 15.03. The council shall consist of the following members appointed for 3-year terms:

AB389,7,6 (a) Two members appointed by the governor.

AB389,7,7 (b) Two members appointed by the senate majority leader.

AB389,7,8 (c) One member appointed by the senate minority leader.

AB389,7,9 (d) Two members appointed by the speaker of the assembly.

AB389,7,10 (e) One member appointed by the assembly minority leader.

AB389,7,11 (f) One member appointed by the secretary of natural resources.

AB389,7,12 (g) One member appointed by the secretary of administration.

AB389,7,13 (h) One member appointed by the chairperson of the public service commission.

AB389, s. 2 Section 2. 16.957 of the statutes is created to read:

AB389,7,15 16.957 Utility public benefits. (1) Definitions. In this section:

AB389,7,16 (bm) "Commission" means the public service commission.

AB389,8,3 (c) "Commitment to community program" means a program by a municipal utility or retail electric cooperative for low-income assistance or an energy conservation program by a municipal utility or retail electric cooperative.

AB389,8,5 (cm) "Council" means the council on utility public benefits created under s. 15.107 (17).

AB389,8,8 (d) "Customer application of renewable resources" means the generation of electricity from renewable resources that takes place on the premises of a customer or member of an electric provider.

AB389,8,9 (e) "Division of housing" means the division of housing in the department.

AB389,8,10 (f) "Electric provider" means an electric utility or retail electric cooperative.

AB389,8,12 (g) "Electric utility" means a public utility that owns or operates a retail electric distribution system.

AB389,8,14 (h) "Energy conservation program" means a program for reducing the demand for natural gas or electricity or improving the efficiency of its use during any period.

AB389,8,15 (i) "Fiscal year" has the meaning given in s. 655.001 (6).

AB389,8,18 (k) "Local unit of government" means the governing body of any county, city, town, village or county utility district or the elected tribal governing body of a federally recognized American Indian tribe or band.

AB389,8,21 (L) "Low-income assistance" means assistance to low-income households for weatherization and other energy conservation services, payment of energy bills or early identification or prevention of energy crises.

AB389,9,2 (m) "Low-income household" means any individual or group of individuals in this state who are living together as one economic unit and for whom residential electricity is customarily purchased in common or who make undesignated payments for electricity in the form of rent, and whose household income is not more than 150% of the poverty line as determined under 42 USC 9902 (2).

AB389,9,7 (n) "Low-income need" means the amount obtained by subtracting from the total low-income energy bills in a fiscal year the product of 2.2% of the estimated average annual income of low-income households in this state in that fiscal year multiplied by the estimated number of low-income households in this state in that fiscal year.

AB389,9,10 (o) "Low-income need percentage" means the percentage that results from dividing the sum of the following by the amount of low-income need in fiscal year 1998-99:

AB389,9,12 1. The total amount received by the department for low-income funding under 42 USC 6861 to 6873 and 42 USC 8621 to 8629 in fiscal year 1997-98.

AB389,9,14 1m. The public benefits fees established for fiscal year 1999-2000 under sub. (4) (c) 1.

AB389,9,15 2. The total amount expended by utilities under s. 196.374.

AB389,9,17 3. Fifty percent of the public benefits fees established for fiscal year 1999-2000 that are charged by municipal utilities and retail electric cooperatives.

AB389,9,19 (p) "Low-income need target" means the product of the low-income need percentage multiplied by low-income need in a fiscal year.

AB389,9,21 (q) "Municipal utility" means an electric utility that is owned wholly by a municipality and that owns a retail distribution system.

AB389,9,22 (qm) "Public utility" has the meaning given in s. 196.01 (5).

AB389,9,23 (r) "Renewable resource" has the meaning given in s. 196.378 (1) (h).

AB389,9,25 (s) "Retail capacity" means the total amount of electricity that an electric provider is capable of delivering to its retail customers or members and that is supplied by electric generating facilities owned or operated by the electric provider or any other person. "Retail capacity" does not include any electricity that is not used to satisfy the electric provider's retail load obligations.

AB389,10,6 (t) "Retail electric cooperative" means a cooperative association that is organized under ch. 185 for the purpose of providing electricity at retail to its members only and that owns or operates a retail electric distribution system.

AB389,10,9 (u) "Total low-income energy bills" means the total estimated amount that all low-income households are billed for residential electricity, natural gas and heating fuel in a fiscal year.

AB389,10,12 (v) "Wholesale electric cooperative" means a cooperative association that is organized under ch. 185 for the purpose of providing electricity at wholesale to its members only.

AB389,10,15 (w) "Wholesale supply percentage" means the percentage of a municipal utility's or retail electric cooperative's retail capacity in a fiscal year that is supplied by a wholesale supplier.

AB389,10,18 (x) "Wholesale supplier" means a wholesale electric cooperative or a municipal electric company, as defined in s. 66.073 (3) (d), that supplies electricity at wholesale to a municipal utility or retail electric cooperative.

AB389,10,20 (2) Department duties. In consultation with the council, the department shall do all of the following:

AB389,11,2 (a) Low-income programs. After holding a hearing, establish programs to be administered by the department of administration through the division of housing for awarding grants from the appropriation under s. 20.505 (10) (r) to provide low-income assistance. In each fiscal year, the amount awarded under this paragraph in grants for weatherization and other energy conservation services shall be sufficient to equal 47% of the sum of the following:

AB389,11,4 1. All moneys received from the federal government under 42 USC 6861 to 6873 and 42 USC 8621 to 8629 in a fiscal year.

AB389,11,6 2. All moneys spent in a fiscal year for low-income programs established under s. 196.374.

AB389,11,8 3. All moneys spent in a fiscal year on programs established under this paragraph.

AB389,11,9 4. Fifty percent of the moneys collected in public benefits fees under sub. (5).

AB389,11,12 (b) Energy conservation and efficiency and renewable resource programs. 1. Subject to subd. 2., after holding a hearing, establish programs for awarding grants from the appropriation under s. 20.505 (10) (s) for each of the following:

AB389,11,19 a. Proposals for providing energy conservation or efficiency services. In awarding grants under this subd. 1. a., the department shall give priority to proposals directed at the sectors of energy conservation or efficiency markets that are least competitive and at promoting environmental protection, electric system reliability or rural economic development. In each fiscal year, 1.75% of the appropriation under s. 20.505 (10) (s) shall be awarded in grants for research and development proposals regarding the environmental impacts of the electric industry.

AB389,11,25 b. Proposals for encouraging the development or use of customer applications of renewable resources, including educating customers or members about renewable resources or encouraging uses of renewable resources by customers or members or encouraging research technology transfers. In each fiscal year, the department shall ensure that 4.5% of the appropriation under s. 20.505 (10) (s) is awarded in grants under this subd. 1. b.