LRB-1008/4
MDK:cjs:pg
2003 - 2004 LEGISLATURE
February 19, 2004 - Introduced by Representatives Black, Miller, Berceau, J.
Lehman, Pocan
and Boyle, cosponsored by Senator Risser. Referred to
Committee on Energy and Utilities.
AB854,1,11 1An Act to repeal 196.491 (2) (a) 3m.; to renumber 196.491 (2) (a) 3g. and
2196.491 (2) (a) 3r., 4., 7., 9., 10., 11., 12. and 13.; to renumber and amend
3196.491 (2) (a) (intro.) and 196.491 (2) (a) 3.; to amend 196.491 (title), 196.491
4(1) (d), 196.491 (2) (title), 196.491 (2) (ag), 196.491 (2) (b) (intro.), 196.491 (2) (b)
510., 196.491 (2) (e), 196.491 (2) (f), (g) and (gm), 196.491 (3) (d) 2., 196.491 (3)
6(dm) and 196.491 (3) (g); and to create 196.03 (7), 196.491 (2) (ac) (intro.),
7196.491 (2) (ac) 3e., 196.491 (2) (ac) 11. to 14., 196.491 (2) (ae), 196.491 (3) (d)
83g. and 196.491 (3e) of the statutes; relating to: strategic energy plans
9regarding electricity, certificates of public convenience and necessity for electric
10generation and transmission facilities, approval of electric power purchase
11contracts, and granting rule-making authority.
Analysis by the Legislative Reference Bureau
As described below, this bill does all of the following: 1) changes the
requirements for the Public Service Commission (PSC) to prepare a strategic energy
assessment; 2) changes the requirements for the PSC to grant certificates of public
convenience and necessity (CPCNs) for electric generating facilities and

high-voltage transmission lines; 3) requires the PSC to approve certain power
purchase contracts; and 4) prohibits electric utilities from recovering certain costs
in rates.
Strategic energy assessments. Under current law, every two years, the PSC
must prepare a strategic energy assessment that evaluates the adequacy and
reliability of the state's current and future electrical supply. The assessment must
describe large electric generating facilities and high-voltage transmission lines that
electric utilities plan to construct within three years. Current law defines a "large
electric generating facility" as a facility with a capacity of 100 megawatts or more.
Current law requires the PSC to assess the following in the assessment: 1) the
adequacy and reliability of purchased generation capacity and energy; 2) the
regional bulk-power market; 3) certain effects of competition; and 4) the sufficiency
and price of electric capacity and energy. The assessment must also describe the
following: 1) plans for assuring the ability to transfer electric power into the state;
2) the projected demand for electric energy; 3) activities to discourage inefficient and
excessive power use; and 4) existing and planned generating facilities that use
renewable sources of energy. In addition, the assessment must consider the public
interest in economic development, public health and safety, protection of the
environment, and diversification of sources of energy supplies.
This bill changes the name of the strategic energy assessment to a strategic
energy plan, and requires the PSC to prepare a plan every year or every two years.
As under current law, the plan must evaluate the adequacy and reliability of the
state's current and future electrical supply. However, the bill specifies that the
future periods that must be considered are the next five and ten years. The plan must
include all of the components described above that must be included in an
assessment under current law. In addition, the plan must describe wholesale
merchant plants that any person plans to construct within the next five and ten
years. Current law defines "wholesale merchant plant" to mean electric generating
equipment and associated facilities that do not provide service to retail customers
and that are operated by a public utility affiliate or a person that is not a public
utility.
Also, the bill requires the PSC's plan to do the following in evaluating the
energy supply over the next five years: 1) describe the power purchase contracts into
which electric utilities propose to enter; 2) explain how each electric utility will
satisfy reliability needs at the least cost; 3) identify the specific resources and
facilities that each electric utility will use to satisfy system load and reserve
requirements; and 4) identify the reasonable needs of the public for an adequate
supply of electric energy. In evaluating the energy supply over the next ten years,
the PSC's plan must do the following: 1) evaluate the projected trends for generation,
transmission, load, and conservation; 2) forecast the performance of electricity
markets; 3) evaluate the economic impacts, projected costs (including costs of
externalities), and environmental impacts of the current system for supplying
electricity and of alternatives to that system; and 4) determine the mix of resources
and facilities necessary to satisfy the projected demand for electricity. Regarding the
mix of resources, the PSC must consider renewable and nonrenewable resources,

traditional and nontraditional sources of electric generation, and alternatives to
electric generation. Regarding alternatives, the PSC must consider investments in
energy conservation to the maximum extent that is reasonable.
Under current law, the PSC must comply with certain requirements for
preparing a strategic energy assessment in draft form, holding hearings on the draft,
and issuing a final version of the assessment. The bill does not affect these
requirements, except to refer to a plan, rather than to an assessment.
CPCNs. Under current law, a person may not construct a large electric
generating facility or high-voltage transmission line unless the PSC has issued a
CPCN for the facility. As noted above, a "large electric generating facility" under
current law is defined as a facility with a capacity of 100 megawatts or more.
The bill prohibits the PSC from issuing a CPCN unless a large electric
generating facility or transmission line satisfies a reasonable need of the public for
an adequate supply of electric energy that is identified in the most recent strategic
energy plan prepared by the PSC. In addition, the bill prohibits the PSC from issuing
a CPCN for a wholesale merchant plant unless the plant satisfies the same need.
Current law also requires the PSC to make a finding regarding reasonable need, but
does not relate the requirement to the strategic energy assessment. Also, under
current law, wholesale merchant plants are exempt from the requirement regarding
need.
The bill also prohibits the PSC from issuing a CPCN unless a facility or line does
not have higher costs or greater environmental impacts than other facilities and
lines identified in the most recent strategic energy plan prepared by the PSC.
In addition, under current law, if the PSC does not make a final determination
on an application for a CPCN within 180 days after an application is completed, or
within a court-approved extension of up to an additional 180 days, the PSC is
considered to have issued a CPCN. Under this bill, the PSC must make a final
determination within 360 days after an application is completed. No court approval
is required for the PSC to take the entire 360 days. In addition, the bill eliminates
the requirement that, if the PSC does not meet the deadline, the PSC is considered
to have issued the CPCN.
Power purchase contracts. The bill requires an electric utility to obtain the
PSC's approval before entering into a contract for the purchase of electric power. The
PSC must promulgate rules for such approvals. In addition, the PSC may not
approve such a contract unless the contract satisfies a reasonable need of the public
for an adequate supply of electric energy that is identified in the most recently
prepared strategic energy plan. These requirements do not apply to a municipal
electric utility or a cooperative association.
Prohibition on recovering certain costs in rates. The bill prohibits the
PSC from allowing an electric utility to recover in rates charged to customers any
costs associated with a large electric generating facility, high-voltage transmission
line, or power purchase contract unless the PSC has previously identified the facility,
line, or contact in a strategic energy plan. However, the prohibition does not apply
if the utility demonstrates to the PSC's satisfaction that an unforeseen emergency
prevented such identification.

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:
AB854, s. 1 1Section 1. 196.03 (7) of the statutes is created to read:
AB854,4,82 196.03 (7) The commission may not authorize a public utility to recover in rates
3charged to customers any costs associated with a facility, as defined in s. 196.491 (1)
4(e), or a power purchase contract unless the commission has previously identified the
5facility or power purchase contract in a strategic energy plan under s. 196.491 (2) (ac)
61. or 11. This subsection does not apply if the public utility demonstrates to the
7satisfaction of the commission that an unforeseen emergency has prevented the
8previous identification of the facility or power purchase contract.
AB854, s. 2 9Section 2. 196.491 (title) of the statutes is amended to read:
AB854,4,11 10196.491 (title) Strategic energy assessment plan; electric generating
11facilities and transmission lines.
AB854, s. 3 12Section 3. 196.491 (1) (d) of the statutes is amended to read:
AB854,4,1713 196.491 (1) (d) "Electric utility" means any public utility, as defined in s.
14196.01, which is involved in the generation, distribution and sale of electric energy,
15and any corporation, company, individual or association, and any cooperative
16association, which owns or operates, or plans within the next 3 5 or 10 years to
17construct, own or operate, facilities in the state.
AB854, s. 4 18Section 4. 196.491 (2) (title) of the statutes is amended to read:
AB854,4,1919 196.491 (2) (title) Strategic energy assessment plan.
AB854, s. 5 20Section 5. 196.491 (2) (a) (intro.) of the statutes is renumbered 196.491 (2) (a)
21and amended to read:
AB854,5,4
1196.491 (2) (a) The commission shall prepare a an annual or biennial strategic
2energy assessment plan that evaluates the adequacy and reliability of the state's
3current and future electrical supply. The strategic energy assessment shall do all of
4the following:
and the state's future electrical supply over the next 5 and 10 years.
AB854, s. 6 5Section 6. 196.491 (2) (a) 3. of the statutes is renumbered 196.491 (2) (ac) 1.
6and amended to read:
AB854,5,97 196.491 (2) (ac) 1. Identify and describe the large electric generating facilities
8and high-voltage transmission lines on which an each electric utility plans to
9commence construction within 3 years during the 5-year period.
AB854, s. 7 10Section 7. 196.491 (2) (a) 3g. of the statutes is renumbered 196.491 (2) (ac) 3m.
AB854, s. 8 11Section 8. 196.491 (2) (a) 3m. of the statutes is repealed.
AB854, s. 9 12Section 9. 196.491 (2) (a) 3r., 4., 7., 9., 10., 11., 12. and 13. of the statutes are
13renumbered 196.491 (2) (ac) 3s., 4., 5., 6., 7., 8., 9. and 10.
AB854, s. 10 14Section 10. 196.491 (2) (ac) (intro.) of the statutes is created to read:
AB854,5,1715 196.491 (2) (ac) (intro.) In evaluating the state's future electrical supply over
16the next 5 years, the commission shall do each of the following in a plan under par.
17(a):
AB854, s. 11 18Section 11. 196.491 (2) (ac) 3e. of the statutes is created to read:
AB854,5,2019 196.491 (2) (ac) 3e. Identify and describe wholesale merchant plants on which
20any person plans to commence construction within the 5-year period.
AB854, s. 12 21Section 12. 196.491 (2) (ac) 11. to 14. of the statutes are created to read:
AB854,5,2322 196.491 (2) (ac) 11. Identify and describe the power purchase contracts that
23each electric utility proposes to enter into during the 5-year period.
AB854,5,2524 12. Explain how each electric utility will satisfy reliability needs at the least
25cost.
AB854,6,4
113. Identify the specific resources and facilities that each electric utility will use
2to satisfy system load and reserve requirements. A resource or facility may not be
3identified unless it is consistent with the mix of resources and facilities determined
4by the commission in par. (ae) 6.
AB854,6,75 14. Identify the reasonable needs of the public for an adequate supply of electric
6energy that an electric utility must show for purposes of satisfying sub. (3) (d) 2. and
7(3e).
AB854, s. 13 8Section 13. 196.491 (2) (ae) of the statutes is created to read:
AB854,6,119 196.491 (2) (ae) In evaluating the state's future electrical supply over the next
1010 years, the commission shall perform the acts described in par. (ac) 3m. to 10. and
11do each of the following in a plan under par. (a):
AB854,6,1512 1. Identify and describe large electric generating facilities and high-voltage
13transmission lines, other than those facilities and lines identified and described
14under par. (ac) 1., on which each electric generating facility plans to commence
15construction during the 10-year period.
AB854,6,1816 2. Identify and describe wholesale merchant plants, other than those plants
17identified and described under par. (ac) 3e., on which any person plans to commence
18construction within the 10-year period.
AB854,6,2019 3. Evaluate the projected trends for generation, transmission, load, and
20conservation.
AB854,6,2121 4. Forecast the performance of electricity markets.
AB854,7,222 5. Evaluate the economic impacts, projected costs, including costs of
23externalities, and environmental impacts of the facilities identified in subds. 1. and
242. and par. (ac) 1. and 3e., the current system for supplying electricity, and
25alternatives to that system. In evaluating economic impacts, the commission shall

1consider the impacts in this state of obtaining fuels and purchasing electric power
2from out-of-state sources.
AB854,7,93 6. Determine the mix of resources and facilities that is necessary to satisfy the
4projected demand for electricity, as well as the timing for initiating the utilization of
5those resources and facilities. In making this determination, the commission shall
6consider renewable and nonrenewable resources and traditional and nontraditional
7sources of electric generation. The commission shall also consider alternatives to
8electric generation, including investments in energy conservation to the maximum
9extent that is reasonable.
AB854, s. 14 10Section 14. 196.491 (2) (ag) of the statutes is amended to read:
AB854,7,1311 196.491 (2) (ag) The commission shall promulgate rules that establish
12procedures and requirements for reporting information that is necessary for the
13commission to prepare strategic energy assessments plans under par. (a).
AB854, s. 15 14Section 15. 196.491 (2) (b) (intro.) of the statutes is amended to read:
AB854,7,1915 196.491 (2) (b) (intro.) On or before July 1, 2000, and on or before July 1 of each
16even-numbered year thereafter
No later than July 1 of the year in which the
17commission prepares a strategic energy plan under par. (a)
, the commission shall
18issue a draft of the biennial strategic energy assessment that it prepares under par.
19(a)
plan to each of the following:
AB854, s. 16 20Section 16. 196.491 (2) (b) 10. of the statutes is amended to read:
AB854,7,2221 196.491 (2) (b) 10. The clerk of each city, village, town and county that, as
22determined by the commission, is affected by the assessment plan.
AB854, s. 17 23Section 17. 196.491 (2) (e) of the statutes, as affected by 2003 Wisconsin Act
2433
, is amended to read:
AB854,8,4
1196.491 (2) (e) Any state agency, as defined in s. 560.9810 (1), county,
2municipality, town or person may submit written comments to the commission on a
3strategic energy assessment plan within 90 days after copies of the draft are issued
4under par. (b).
AB854, s. 18 5Section 18. 196.491 (2) (f), (g) and (gm) of the statutes are amended to read:
AB854,8,116 196.491 (2) (f) Section 1.11 (2) (c) shall not apply to a strategic energy
7assessment plan prepared under par. (a) but the commission shall prepare a single
8environmental assessment on the strategic energy assessment plan, which shall
9include a discussion of generic issues and environmental impacts. The commission
10shall make the environmental assessment available to the public at least 30 days
11prior to the hearing under par. (g).
AB854,9,212 (g) No sooner than 30 and no later than 90 days after copies of the draft are
13issued under par. (b), the commission shall hold a hearing on the draft which may
14not be a hearing under s. 227.42 or 227.44. The hearing shall be held in an
15administrative district, established by executive order 22, issued August 24, 1970,
16which the commission determines will be significantly affected by facilities on which
17an electric utility plans to commence construction within 3 5 years. The commission
18may thereafter adjourn the hearing to other locations or may conduct the hearing by
19interactive video conference or other electronic method. Notice of such hearing shall
20be given by class 1 notice, under ch. 985, published in the official state newspaper
21and such other regional papers of general circulation as may be designated by the
22commission. At such hearing the commission shall briefly describe the strategic
23energy assessment plan and give all interested persons an opportunity, subject to
24reasonable limitations on the presentation of repetitious material, to express their
25views on any aspect of the strategic energy assessment plan. A record of the hearing

1shall be made and considered by the commission as comments on the strategic energy
2assessment plan under par. (e).
AB854,9,73 (gm) Based on comments received on a draft, the commission shall prepare a
4final strategic energy assessment plan within 90 days after a hearing under par. (g).
5The commission shall provide copies of the final strategic energy assessment plan to
6any state agency, county, municipality, town or other person who submitted
7comments on the draft under par. (e) and to the persons specified in par. (b).
AB854, s. 19 8Section 19. 196.491 (3) (d) 2. of the statutes is amended to read:
AB854,9,119 196.491 (3) (d) 2. The proposed facility satisfies the reasonable needs of the
10public for an adequate supply of electric energy. This subdivision does not apply to
11a wholesale merchant plant
need identified under sub. (2) (ac) 14.
AB854, s. 20 12Section 20. 196.491 (3) (d) 3g. of the statutes is created to read:
AB854,9,1513 196.491 (3) (d) 3g. The proposed facility does not have higher costs or greater
14environmental impacts than those for other facilities evaluated under sub. (2) (ae)
155. in the strategic energy plan most recently prepared by the commission.
AB854, s. 21 16Section 21. 196.491 (3) (dm) of the statutes is amended to read:
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