1999 - 2000 LEGISLATURE
June 15, 1999 - Introduced by Senator Moen, cosponsored by Representative
Hoven, by request of Governor Tommy G. Thompson. Referred to Committee
on Health, Utilities, Veterans and Military Affairs.
SB196,3,2
1An Act to repeal 196.485 (3) (bm) and 196.795 (5) (pm) 1. (intro.);
to renumber
2196.025, 196.485 (1) (dm) 1., 196.795 (5) (p) 1., 2., 3. and 4., 196.795 (5) (pm) 1.
3a., 196.795 (5) (pm) 1. b. and 196.795 (5) (pm) 1. c.;
to renumber and amend
4196.485 (1) (dm) 3., 196.795 (5) (pm) 2. and 196.795 (5) (pm) 3.;
to amend 76.28
5(1) (d), 76.28 (1) (e) (intro.), 76.28 (2) (c) (intro.), 76.28 (2) (d), 196.31 (1) (intro.),
6196.31 (1) (a), 196.485 (1) (dm) (intro.), 196.485 (2) (a) (intro.), 196.485 (4) (a)
7(intro.), 196.491 (3m) (b) 2., 196.494 (3), 196.52 (3) (a), 196.795 (1) (g) 1., 196.795
8(1) (g) 2., 196.795 (5) (i) 1., 196.795 (11) (b) and 200.01 (2);
to repeal and
9recreate 196.374 and 196.485 (title); and
to create 15.107 (17), 16.957, 16.969,
1020.505 (1) (ge), 20.505 (1) (gs), 20.505 (10), 25.17 (1) (xm), 25.96, 76.28 (1) (e) 5.,
1176.28 (1) (j), 76.28 (2) (e), 196.025 (2), 196.025 (3), 196.025 (4), 196.025 (5),
12196.192, 196.378, 196.485 (1) (am), 196.485 (1) (be), 196.485 (1) (bs), 196.485
13(1) (dm) 2., 196.485 (1) (do), 196.485 (1) (dq), 196.485 (1) (dr), 196.485 (1) (ds),
14196.485 (1) (dt), 196.485 (1) (dv), 196.485 (1) (em), 196.485 (1) (fe), 196.485 (1)
1(ge), 196.485 (1) (gm), 196.485 (1) (j), 196.485 (1m), 196.485 (2) (ar), 196.485 (2)
2(bx), 196.485 (2) (d), 196.485 (3m), 196.485 (4) (am), 196.485 (5), 196.485 (6),
3196.485 (6m), 196.485 (7), 196.485 (8), 196.487, 196.491 (3) (d) 3r., 196.491 (3)
4(d) 3t., 196.491 (3) (gm), 196.491 (3g), 196.494 (5), 196.795 (1) (h) 3., 196.795 (1)
5(p), 196.795 (6m) (title), 196.795 (6m) (a) (intro.), 196.795 (6m) (a) 1., 196.795
6(6m) (a) 2., 196.795 (6m) (a) 4., 196.795 (6m) (b) (title), 196.795 (6m) (e), 196.795
7(11) (c), 196.807 and 285.48 of the statutes;
relating to: control and ownership
8of transmission facilities by a transmission company and a Midwest
9independent system operator, ownership of nonutility assets by a public utility
10holding company, investments in transmission facilities, offers of employment
11to certain public utility and nonutility affiliates employes, fees and approvals
12for certain high-voltage transmission lines, construction of certain electric
13transmission facilities, environmental reviews by the public service
14commission, reports on reliability status of electric utilities, state participation
15in a regional transmission need and siting compact, incentives for development
16of certain generating facilities, study of market power and retail electric
17competition, market-based compensation, rates and contracts for electric
18customers, regulation of certain nitrogen oxide emissions, establishing
19programs for low-income energy assistance, improving energy conservation
20and efficiency markets and encouraging the development and use of renewable
21resources, creating a council on utility public benefits, establishing a utility
22public benefits fund, requiring electric utilities and retail electric cooperatives
23to charge public benefits fees to customers and members, imposing
24requirements on the use of renewable resources by electric utilities and
1cooperatives, requiring the exercise of rule-making authority, making
2appropriations and providing a penalty.
Analysis by the Legislative Reference Bureau
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:
SB196, s. 1
1Section
1. 15.107 (17) of the statutes is created to read:
SB196,7,52
15.107
(17) Council on utility public benefits. There is created a council on
3utility public benefits that is attached to the department of administration under s.
415.03. The council shall consist of the following members appointed for 3-year
5terms:
SB196,7,66
(a) Two members appointed by the governor.
SB196,7,77
(b) Two members appointed by the senate majority leader.
SB196,7,88
(c) One member appointed by the senate minority leader.
SB196,7,99
(d) Two members appointed by the speaker of the assembly.
SB196,7,1010
(e) One member appointed by the assembly minority leader.
SB196,7,1111
(f) One member appointed by the secretary of natural resources.
SB196,7,1212
(g) One member appointed by the secretary of administration.
SB196,7,1313
(h) One member appointed by the chairperson of the public service commission.
SB196, s. 2
14Section
2. 16.957 of the statutes is created to read:
SB196,7,15
1516.957 Utility public benefits. (1) Definitions. In this section:
SB196,7,1616
(bm) "Commission" means the public service commission.
SB196,8,3
1(c) "Commitment to community program" means a program by a municipal
2utility or retail electric cooperative for low-income assistance or an energy
3conservation program by a municipal utility or retail electric cooperative.
SB196,8,54
(cm) "Council" means the council on utility public benefits created under s.
515.107 (17).
SB196,8,86
(d) "Customer application of renewable resources" means the generation of
7electricity from renewable resources that takes place on the premises of a customer
8or member of an electric provider.
SB196,8,99
(e) "Division of housing" means the division of housing in the department.
SB196,8,1010
(f) "Electric provider" means an electric utility or retail electric cooperative.
SB196,8,1211
(g) "Electric utility" means a public utility that owns or operates a retail electric
12distribution system.
SB196,8,1413
(h) "Energy conservation program" means a program for reducing the demand
14for natural gas or electricity or improving the efficiency of its use during any period.
SB196,8,1515
(i) "Fiscal year" has the meaning given in s. 655.001 (6).
SB196,8,1816
(k) "Local unit of government" means the governing body of any county, city,
17town, village or county utility district or the elected tribal governing body of a
18federally recognized American Indian tribe or band.
SB196,8,2119
(L) "Low-income assistance" means assistance to low-income households for
20weatherization and other energy conservation services, payment of energy bills or
21early identification or prevention of energy crises.
SB196,9,222
(m) "Low-income household" means any individual or group of individuals in
23this state who are living together as one economic unit and for whom residential
24electricity is customarily purchased in common or who make undesignated
1payments for electricity in the form of rent, and whose household income is not more
2than 150% of the poverty line as determined under
42 USC 9902 (2).
SB196,9,73
(n) "Low-income need" means the amount obtained by subtracting from the
4total low-income energy bills in a fiscal year the product of 2.2% of the estimated
5average annual income of low-income households in this state in that fiscal year
6multiplied by the estimated number of low-income households in this state in that
7fiscal year.
SB196,9,108
(o) "Low-income need percentage" means the percentage that results from
9dividing the sum of the following by the amount of low-income need in fiscal year
101998-99:
SB196,9,1211
1. The total amount received by the department for low-income funding under
1242 USC 6861 to
6873 and
42 USC 8621 to
8629 in fiscal year 1997-98.
SB196,9,1413
1m. The public benefits fees established for fiscal year 1999-2000 under sub.
14(4) (c) 1.
SB196,9,1515
2. The total amount expended by utilities under s. 196.374.
SB196,9,1716
3. Fifty percent of the public benefits fees established for fiscal year 1999-2000
17that are charged by municipal utilities and retail electric cooperatives.
SB196,9,1918
(p) "Low-income need target" means the product of the low-income need
19percentage multiplied by low-income need in a fiscal year.
SB196,9,2120
(q) "Municipal utility" means an electric utility that is owned wholly by a
21municipality and that owns a retail distribution system.
SB196,9,2222
(qm) "Public utility" has the meaning given in s. 196.01 (5).
SB196,9,2323
(r) "Renewable resource" has the meaning given in s. 196.378 (1) (h).
SB196,9,2524
(s) "Retail capacity" means the total amount of electricity that an electric
25provider is capable of delivering to its retail customers or members and that is
1supplied by electric generating facilities owned or operated by the electric provider
2or any other person. "Retail capacity" does not include any electricity that is not used
3to satisfy the electric provider's retail load obligations.
SB196,10,64
(t) "Retail electric cooperative" means a cooperative association that is
5organized under ch. 185 for the purpose of providing electricity at retail to its
6members only and that owns or operates a retail electric distribution system.
SB196,10,97
(u) "Total low-income energy bills" means the total estimated amount that all
8low-income households are billed for residential electricity, natural gas and heating
9fuel in a fiscal year.