AB876: Bill Text

AB876,2,2 An Act to repeal 196.378 (2) (a) 2. f.; to renumber and amend 196.378 (2) (bm) and 196.378 (3) (a) 1.; to amend 196.025 (1) (c) 1., 196.378 (1) (h) 1. g., 196.378 (1) (i), 196.378 (2) (a) 2. d., 196.378 (2) (a) 2. e., 196.378 (2) (b) (intro.), 196.378 (2) (b) 5., 196.378 (2) (c), 196.378 (2) (d) (intro.), 196.378 (2) (e) (intro.), 196.378 (2) (f) (intro.), 196.378 (2) (g) 2., 196.378 (3) (a) 1m., 196.378 (3) (b), 196.378 (3) (c), 196.378 (4m) (a), 196.491 (title), 196.491 (6) and 196.496 (1); and to create 196.378 (1) (ai), 196.378 (1) (ak), 196.378 (1) (df), 196.378 (1) (dh), 196.378 (2) (a) 2. g., h., i. and j., 196.378 (2) (am), 196.378 (2) (b) 1t., 196.378 (2) (bm) 2., 196.378 (3) (a) 1b., 196.378 (3) (a) 1f., 196.378 (3) (a) 1g., 196.379 and 196.491 (7) of the statutes; relating to: renewable portfolio standards and credits; electricity derived from biofuels; electric utility purchases of renewable energy and customer-generated electricity; distributed generation rules; granting rule-making authority; and requiring the exercise of rule-making authority.

Analysis by the Legislative Reference Bureau

This bill does all of the following: 1) makes changes to renewable portfolio standards that apply to electric providers; 2) imposes biofuel requirements on electric providers; 3) requires electric utilities to make certain purchases of renewable energy; and 4) imposes duties on the the Public Service Commission (PSC) regarding distributed generation facilities.

Renewable portfolio standards. Current law generally requires electric utilities and retail electric cooperatives (electric providers) to ensure that, in a given year, a specified percentage of the electricity that the electric provider sells to customers or members is renewable energy. These requirements are commonly referred to as renewable portfolio standards (RPSs), and they include deadlines that apply to an electric provider's renewable energy percentage (REP). An electric provider's REP for a particular year is the percentage that results from dividing the electric provider's renewable resource credits (RRCs) by the total electricity sold by the electric provider in that year. There are two types of RRCs. The first type is based on electricity derived from renewable energy. An electric provider creates one RRC of that type for each megawatt hour of electricity derived from renewable energy that the electric provider sells to customers or members. The second type is based on specified energy-related uses that displace the use of nonrenewable energy. Electric providers, as well as their customers and members, may create the second type of RRC, pursuant to rules promulgated by the PSC. Electric providers may use RRCs that they create, or purchase RRCs created by others, to comply with an REP for a particular year.

Regarding the first type of RRC described above, the bill allows an electric provider to create two RRCs, instead of one RRC, for each megawatt hour of electricity that meets specified requirements. First, the electricity must be generated by either: 1) a facility that generates electricity and thermal energy used for industrial, commercial, heating, or cooling purposes; or 2) a facility that generates electricity from direct radiant energy received from the sun. Second, the electric generating facility must commence operation prior to January 1, 2020. Third, if the electricity is purchased by an electric utility, the purchase must satisfy certain requirements. Fourth, the electric generating facility must be located in this state. Regarding the second type of RRC described above, the bill makes changes to the solar energy-related uses that are eligible to create RRCs, including defining integrated light pipe technology that is eligible to create RRCs.

The bill also makes changes to REPs. For the year 2009, current law prohibited an electric provider from decreasing its REP below its baseline renewable percentage (BRP), which is defined as the average of the electric provider's REP for 2001, 2002, and 2003. For the year 2010, current law required an electric provider to increase its REP at least two percentage points above its BRP. For the years 2011 to 2014, current law prohibits an electric provider from decreasing its REP below the percentage required in 2010. For the year 2015, unless an exception applies, current law requires an electric provider to increase its REP at least six percentage points above its BRP, and for each year thereafter, current law prohibits an electric provider from decreasing its REP below the percentage required in 2015. The exception applies to an electric provider whose BPR exceeds 12 percent and whose REP for the year 2014 exceeds 14 percent. An electric provider who qualifies for the exception must maintain its REP in the years 2015 and thereafter at a level that is at least two percentage points above its BRP.

This bill eliminates the exception that applies in the years 2015 and thereafter. For the year 2015, the bill requires an electric provider to increase its REP at least six percentage points above its BRP, and for the years 2016 to 2019, prohibits an electric provider from decreasing its REP below the percentage required for the year 2015. For the year 2020, the bill requires an electric provider to increase its REP at least sixteen percentage points above its BPR, and for the years 2021 to 2029, prohibits an electric provider from decreasing its REP below the percentage required for the year 2020. For the year 2030, the bill requires an electric provider to increase its REP at least twenty-six percentage points above its BRP, and for each year thereafter, the bill prohibits an electric provider from decreasing its REP below the percentage required for 2030.

The bill also limits an electric provider's use of electricity derived from hydroelectric power to satisfy an REP required in the year 2020 and thereafter. For the years 2020 to 2029, an electric utility may count such electricity for not more than 25 percent of its REP. For the year 2030 and thereafter, an electric utility may count such electricity for not more than 20 percent of its REP.

Biofuels. The bill also requires an electric provider to ensure that a specified percentage of the electricity sold to retail customers or members (retail electricity) is derived from "biofuels," which the bill defines as, with certain exceptions, fuels produced by the anaerobic fermentation of material derived from living organisms. For the years 2020 to 2029, the bill requires an electric provider to ensure that not less than 0.3 percent of its retail electricity is derived from biofuels. For year 2030 and each year thereafter, not less than 0.5 percent must be derived from biofuels. Under the bill, biofuel-derived retail electricity may be used to comply with either the foregoing percentages or an REP described above. However, any biofuel-derived retail electricity that is used to comply with the foregoing percentages may not be used also to comply with an REP. The bill also establishes a goal that, by December 31, 2030, 0.5 percent of all electric energy consumed in the state is renewable energy derived from biofuels. No later than June 1, 2031, the PSC must submit a report to the legislature stating whether the state has met that goal and, biennially thereafter, must submit reports until the goal is achieved.

Electric utility purchases of renewable energy. With certain exceptions, this bill requires the PSC to issue an order directed at each retail electric utility that requires the utility to offer to purchase the renewable energy generated at renewable facilities within the utility's service territory that are constructed after the effective date of the PSC's order. The bill defines "renewable facility" as an electric generating facility that derives energy from: 1) photovoltaic energy; 2) wind power; 3) gas made from renewable resources; or 4) any other renewable resource specified by rule by the PSC. In addition, to qualify as a "renewable facility," the facility must be a small-scale facility, as defined by rule by the PSC. The PSC's orders must specify standard purchase terms for each type of renewable facility, including terms for prices paid for renewable energy, payment schedules, and maximum limits on generating capacity. In specifying terms for renewable energy prices, the PSC must consider production costs, reasonable rates of return on investment, and state and federal incentives available to facility owners and operators. The PSC's orders may also include other conditions, including the following: 1) requirements for adjusting the standard purchase terms based on changes in operating costs; and 2) different prices for renewable energy generated at renewable facilities of the same type that have different generating capacities. The PSC's orders must also prescribe for each type of renewable facility a standardized agreement incorporating the applicable terms and conditions.

The bill allows the PSC to limit a requirement of a utility to purchase renewable energy under an order described above. The PSC may base a limit on the number of renewable facilities, the total installed generating capacity of renewable facilities, or the total amount of renewable energy that must be purchased. However, a limit must be consistent with the purpose of the bill's requirements regarding the orders, which the bill specifies is to maximize the development and deployment of distributed renewable energy generation technologies used at renewable facilities without unreasonable impacts on rates.

The bill also allows the PSC to exempt small and large retail electric utilities from certain of the above requirements. Under the bill, a small utility is one that had retail electric sales of less than 2,500,000 megawatt hours in 2013, and a large utility is one that had retail electric sales of 2,500,000 megawatt hours or more in 2013. For a small or large utility, the PSC may exempt the utility from the requirement to purchase renewable energy from particular types of renewable facilities. For a large utility, the PSC may exempt the utility from all of the above requirements. However, a large utility is not eligible for either of the foregoing exemptions unless the PSC finds that the utility's voluntary initiatives are consistent with the purpose of the bill's requirements regarding the orders, as described above.

The bill also does the following: 1) requires the PSC to periodically review its orders and, as appropriate, revise the standardized agreements prescribed in the orders; 2) specifies that a utility that purchases renewable energy as directed in an order acquires the RRCs associated with the renewable energy, unless otherwise specified by the parties; and 3) allows a utility and owner or operator of a renewable facility to agree to renewable energy purchases on terms and conditions that differ from those specified in an order.

The bill also requires an electric utility to purchase electricity generated from renewable resources by certain customers at specified prices. The duty is limited to customers whose electric generation capacity does not exceed two megawatts. For customer-generated electricity that does not exceed the amount of electricity that the electric utility sells to a customer, the utility must pay a price equal to the retail electricity price the utility charges the customer. For customer-generated electricity in excess of that amount, the electric utility must pay prices set by the PSC by order that reflect certain wholesale prices. Payments must be calculated and made for each billing cycle, but are subject to adjustment based on annual calculations. The PSC must issue orders specifying requirements for the purchases, and the orders must limit annual purchases to an amount not exceeding one percent of annual electricity sales by all electric utilities.

Distributed generation facilities. Under current law, the PSC must promulgate rules establishing standards for the connection of distributed generation facilities to electric distribution facilities. Current law defines "distributed generation facility" as an electric generating facility that: 1) satisfies certain location requirements; and 2) has a capacity of no more than 15 megawatts. Under this bill, an electric generating facility is a distributed generation facility if it satisfies the location requirements and has a capacity of no more than 20 megawatts. The bill also requires the PSC to review the service rules and practices of electric utilities to determine whether they promote the development of distributed generation facilities, and to report its findings to the legislature. In addition, the PSC must promulgate rules to prohibit any service rules or practices that do not promote, or that impede, the development of distributed generation facilities.

For further information see the state 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:

AB876,1 Section 1. 196.025 (1) (c) 1. of the statutes is amended to read:

AB876,5,8 196.025 (1) (c) 1. In a proceeding in which an investor-owned electric public utility is a party, the commission shall not order or otherwise impose any renewable resource requirements on the investor-owned electric public utility if the commission has fulfilled all of its duties under s. 196.378 and the commission has informed the utility under s. 196.378 (2) (c) that, with respect to the most recent report submitted under s. 196.378 (2) (c), the utility is in compliance with the requirements of s. 196.378 (2) (a) 2. and (am) 2.

AB876,2 Section 2. 196.378 (1) (ai) of the statutes is created to read:

AB876,6,2 196.378 (1) (ai) 1. Except as provided in subd. 2., "biofuel" means a fuel produced by the anaerobic fermentation of any material derived from any living organism, regardless of the degree or nature of processing or modification that the material has undergone.

AB876,6,4 2. "Biofuel" does not include a fuel produced by the anaerobic fermentation of any of the following:

AB876,6,5 a. Fossil fuels or any material derived from fossil fuels.

AB876,6,6 b. Mixed refuse.

AB876,3 Section 3. 196.378 (1) (ak) of the statutes is created to read:

AB876,6,9 196.378 (1) (ak) "Biofuel credit" means a renewable resource credit that is based on electricity generated from a biofuel.

AB876,4 Section 4. 196.378 (1) (df) of the statutes is created to read:

AB876,6,12 196.378 (1) (df) "Hydroelectric renewable resource" means a renewable resource specified in par. (h) 1. m.

AB876,5 Section 5. 196.378 (1) (dh) of the statutes is created to read:

AB876,6,15 196.378 (1) (dh) "Integrated light pipe technology" means a lighting system that combines the following:

AB876,6,16 1. A light pipe.

AB876,6,19 2. An electric lighting system with controls that detect ambient light and adjust the amount of light produced by the system to maintain a preset level of lighting in an occupied space.

AB876,6 Section 6. 196.378 (1) (h) 1. g. of the statutes is amended to read:

AB876,6,21 196.378 (1) (h) 1. g. Biomass or biofuel.

AB876,7 Section 7. 196.378 (1) (i) of the statutes is amended to read:

AB876,6,25 196.378 (1) (i) "Renewable resource credit" means a credit calculated in accordance with sub. (3) (a) 1f. or the rules promulgated under sub. (3) (a) 1. 1d., 1m., and 2.

AB876,8 Section 8. 196.378 (2) (a) 2. d. of the statutes, as affected by 2013 Wisconsin Act .... (Assembly Bill 594), is amended to read:

AB876,7,5 196.378 (2) (a) 2. d. Except as provided in subd. 2. f., for For the year 2015, each electric provider shall increase its renewable energy percentage so that it is at least 6 percentage points above the electric provider's baseline renewable percentage.

AB876,9 Section 9. 196.378 (2) (a) 2. e. of the statutes, as affected by 2013 Wisconsin Act .... (Assembly Bill 594), is amended to read:

AB876,7,11 196.378 (2) (a) 2. e. Except as provided in subd. 2. f., for each year after 2015 For the years 2016, 2017, 2018, and 2019, each electric provider may not decrease its renewable energy percentage below   the electric provider's renewable energy percentage required under subd. 2. d.

AB876,10 Section 10. 196.378 (2) (a) 2. f. of the statutes, as created by 2013 Wisconsin Act .... (Assembly Bill 594), is repealed.

AB876,11 Section 11. 196.378 (2) (a) 2. g., h., i. and j. of the statutes are created to read:

AB876,7,17 196.378 (2) (a) 2. g. For the year 2020, each electric provider shall increase its renewable energy percentage so that it is at least 16 percentage points above the electric provider's baseline renewable percentage.

AB876,7,20 h. For the years 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, and 2029, each electric provider may not decrease its renewable energy percentage below the electric provider's renewable energy percentage required under subd. 2. g.

AB876,7,23 i. For the year 2030, each electric provider shall increase its renewable energy percentage so that it is at least 26 percentage points above the electric provider's baseline renewable percentage.

AB876,8,3 j. For each year after 2030, each electric provider may not decrease its renewable energy percentage below the electric provider's renewable energy percentage required under subd. 2. i.

AB876,12 Section 12. 196.378 (2) (am) of the statutes is created to read:

AB876,8,12 196.378 (2) (am) 1. No later than June 1, 2031, the commission shall prepare a report stating whether, by December 31, 2030, the state has met a goal of 0.5 percent of all electric energy consumed in the state being renewable energy derived from biofuels. If the goal has not been achieved, the report shall indicate why the goal was not achieved and how it may be achieved, and the commission shall prepare similar reports biennially thereafter until the goal is achieved. The commission shall submit reports under this subdivision to the governor and the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2).

AB876,8,15 2. Except as provided in pars. (e), (f), and (g), each electric provider shall ensure that, of the electricity it sells in a year to retail customers or members, the percentage that is derived from biofuels is not less than the following:

AB876,8,17 a. For the years 2020, 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, and 2029, 0.3 percent.

AB876,8,18 b. For the year 2030 and each year thereafter, 0.5 percent.

AB876,13 Section 13. 196.378 (2) (b) (intro.) of the statutes is amended to read:

AB876,8,21 196.378 (2) (b) (intro.) For purposes of determining compliance with par. (a) pars. (a) 2. and (am) 2.:

AB876,14 Section 14. 196.378 (2) (b) 1t. of the statutes is created to read:

AB876,8,23 196.378 (2) (b) 1t. Notwithstanding subds. 1m. and 1o.:

AB876,9,3 a. An electric provider may not, in a year, count electricity derived from hydroelectric renewable resources for more than 25 percent of the renewable energy percentage required under par. (a) 2. g. or h.

AB876,9,6 b. An electric provider may not, in a year, count electricity derived from hydroelectric renewable resources for more than 20 percent of the renewable energy percentage required under par. (a) 2. i. or j.

AB876,15 Section 15. 196.378 (2) (b) 5. of the statutes is amended to read:

AB876,9,13 196.378 (2) (b) 5. An electric provider that purchases renewable energy from a renewable energy supplier may use an allocated share of the renewable energy sold by the renewable energy supplier to comply with a requirement under par. (a) 2. or (am) 2. or to create a credit under sub. (3) (a), provided that the cost of the renewable energy is included in the price the electric provider paid the renewable energy supplier.

AB876,16 Section 16. 196.378 (2) (bm) of the statutes is renumbered 196.378 (2) (bm) 1. and amended to read:

AB876,9,21 196.378 (2) (bm) 1. Each electric provider shall annually retire renewable resource credits sufficient to satisfy the electric provider's renewable energy percentage required under par. (a) 2. An electric provider may retire biofuel credits under this subdivision, except that an electric provider may not include biofuel credits it retires under subd. 2. in the renewable resource credits it retires under this subdivision.

AB876,17 Section 17. 196.378 (2) (bm) 2. of the statutes is created to read:

AB876,9,24 196.378 (2) (bm) 2. Each electric provider shall annually retire biofuel credits sufficient to satisfy the electric provider's obligation under par. (am) 2.

AB876,18 Section 18. 196.378 (2) (c) of the statutes is amended to read:

AB876,10,15 196.378 (2) (c) No later than April 15 annually, or another annual date specified by the commission by rule, an electric provider shall submit a report to the commission that identifies the electric provider's renewable energy percentage for the previous year and describes the electric provider's compliance with par. (a) 2. pars. (a) 2. and (am) 2. and the electric provider's implementation plans for future compliance. Reports under this paragraph may include certifications from renewable energy suppliers regarding the sources and amounts of renewable energy supplied to the electric provider. The commission may specify the documentation that is required to be included with reports submitted under this paragraph. The commission may require that electric providers submit the reports in a proceeding, initiated by the commission under this section relating to the implementation of s. 1.12, or in a proceeding for preparing a strategic energy assessment under s. 196.491 (2). No later than 90 days after the commission's receipt of an electric provider's report, the commission shall inform the electric provider whether the electric provider is in compliance with par. (a) 2. pars. (a) 2. and (am) 2.

AB876,19 Section 19. 196.378 (2) (d) (intro.) of the statutes is amended to read:

AB876,10,21 196.378 (2) (d) (intro.) The commission shall allow an electric utility to recover from ratepayers the cost of providing total renewable energy to its retail customers in amounts that equal or exceed the percentages specified in par. (a). pars. (a) 2. and (am) 2. Subject to any approval of the commission that is necessary, an electric utility may recover costs under this paragraph by any of the following methods:

AB876,20 Section 20. 196.378 (2) (e) (intro.) of the statutes is amended to read:

AB876,11,4 196.378 (2) (e) (intro.) An electric provider, or a wholesale supplier for its members, may request that the commission grant a delay for complying with a deadline specified in par. (a) 2. or (am) 2. The commission shall hold a hearing on the request and, if requested by the electric provider or wholesale supplier, treat the matter as a contested case. The commission shall grant a delay if the commission determines that the applicant has demonstrated good faith efforts to comply with the deadline and that any of the following applies:

AB876,21 Section 21. 196.378 (2) (f) (intro.) of the statutes is amended to read:

AB876,11,14 196.378 (2) (f) (intro.) A wholesale electric cooperative for its members or a municipal electric company for its members may delay compliance with a deadline specified in par. (a) 2. or (am) 2. for any reason specified in par. (e) 1. to 4. A wholesale electric cooperative or a municipal electric company that delays compliance with a deadline specified in par. (a) 2. or (am) 2. shall inform the commission of the delay and the reason for the delay, and shall submit information to the commission demonstrating that, notwithstanding good faith efforts by the wholesale electric cooperative or municipal electric company and its members, the members cannot meet the deadline for the stated reason.

AB876,22 Section 22. 196.378 (2) (g) 2. of the statutes is amended to read:

AB876,11,23 196.378 (2) (g) 2. An energy consumer advocacy group may request that the commission grant to an electric provider that serves one or more members of the group a delay for complying with a deadline specified in par. (a) 2. or (am) 2. The commission shall hold a hearing on the request and, if requested by the energy consumer advocacy group, treat the matter as a contested case. The commission shall grant a delay if the commission determines that the utility has demonstrated good faith efforts to comply with the deadline and that any of the conditions in par. (e) 1. to 4. apply.

AB876,23 Section 23. 196.378 (3) (a) 1. of the statutes is renumbered 196.378 (3) (a) 1d. and amended to read:

AB876,12,16 196.378 (3) (a) 1d. Each Except as provided in subd. 1f., each megawatt hour of an electric provider's total renewable energy creates one renewable resource credit for the electric provider. Subject to subd. 2., an electric provider that exceeds its renewable energy percentage required under sub. (2) (a) 2. may, in the applicable year, bank any excess renewable resource credits or any portion of any excess renewable resource credit for use in a subsequent year or sell any excess renewable resource credits or any portion of any excess renewable resource credit to any other electric provider at any negotiated price. An electric provider that creates or purchases a renewable resource credit or portion may use the credit or portion, as provided under par. (c), to establish compliance with sub. (2) (a) 2. or (am) 2. The commission shall promulgate rules that establish requirements for the creation and use of a renewable resource credit created on or after January 1, 2004, including calculating the amount of a renewable resource credit, and for the tracking of renewable resource credits by a regional renewable resource credit tracking system. The rules shall specify the manner for aggregating or allocating credits under this subdivision or sub. (2) (b) 4. or 5.

AB876,24 Section 24. 196.378 (3) (a) 1b. of the statutes is created to read:

AB876,12,18 196.378 (3) (a) 1b. The legislature finds all of the following:

AB876,12,20 a.   It is essential to the health and safety and economic well-being of Wisconsin that the state maintain a highly reliable electric system at all times.

AB876,12,22 b. Historically, Wisconsin has relied on imports of electricity from other states for about 15 percent of the state's electricity needs.

AB876,13,2 c. It is essential to the health and safety and economic well-being of Wisconsin that the state take actions to mitigate global climate change from emissions of greenhouse gasses. Central to such mitigation efforts is reducing reliance on electricity produced from fossil fuels through policies such as the requirements under sub. (2) (a) 2.

AB876,13,6 d. To balance the competing imperatives of maintaining the reliability of the electric system and reducing dependence on electricity produced from fossil fuels, it is essential that Wisconsin encourages the production of electricity from renewable facilities in this state under subd. 1f. c.

AB876,25 Section 25. 196.378 (3) (a) 1f. of the statutes is created to read:

AB876,13,10 196.378 (3) (a) 1f. Each megawatt hour of electricity of an electric provider's total renewable energy creates 2 renewable resource credits for the electric provider if all of the following apply:

AB876,13,14 a. The facility that generated the electricity commenced operation prior to January 1, 2020, and is either a cogeneration production plant, as defined in s. 79.005 (1g), or a facility that generates electricity from direct radiant energy received from the sun.

AB876,13,19 b. If the electric provider is an electric utility that purchased the electricity, the terms and conditions of the purchase conformed with the standard purchase terms and conditions specified in the order directed to the electric utility under s. 196.379 (3) (a) that was in effect at the time of the purchase or the terms and conditions of the purchase were mutually agreed as provided under s. 196.379 (3) (b) 3.