Amendment ASA2-AB389

AB389-ASA2,39,7 1. Subject to the approval of the commission under s. 196.491 (3), construct and own transmission facilities, including high-voltage transmission lines, as defined in s. 196.491 (1) (f), in the transmission area or in any other area of the state in which transmission facilities that have been contributed to the transmission company are located. This subdivision does not affect the right or duty of an electric utility that is not located in the transmission area or that has not contributed its transmission facilities to the transmission company to construct or own transmission facilities.

AB389-ASA2,39,10 2. Subject to any approval required under state or federal law, purchase or acquire transmission facilities in addition to the transmission facilities contributed under sub. (5) (b).

AB389-ASA2,39,14 (c) Organization. The articles of organization, as defined in s. 183.0102 (1), of a transmission company that is organized as a limited liability company under ch. 183 or the bylaws of a transmission company that is organized as a corporation under ch. 180 shall provide for each of the following:

AB389-ASA2,39,20 1. That the transmission company has no less than 5 nor more than 14 managers or directors, except that the articles of organization or bylaws may allow the requirements of this subdivision to be modified upon a unanimous vote of the managers or directors during the 10-year period after the organizational start-up date or upon a two-thirds vote of the board of directors or managers after such 10-year period.

AB389-ASA2,39,25 2. That at least 4 managers or directors of the transmission company have staggered 4-year terms, are elected by a majority vote of the security holders and are not directors, employes or independent contractors of a person engaged in the production, sale, marketing, transmission or distribution of electricity or natural gas or of an affiliate of such a person.

AB389-ASA2,40,3 3. That, during the 10-year period after the organizational start-up date, each of the following is satisfied, subject to the limitation on the number of managers or directors under subd. 1.:

AB389-ASA2,40,8 a. Each nontransmission utility security holder that owns 10% or more of the outstanding voting securities of the transmission company may appoint one manager or director of the transmission company for a one-year term, except that the requirements of this subd. 3. a. may be modified upon a unanimous vote of the managers or directors.

AB389-ASA2,40,15 b. Each group of nontransmission utility security holders that, as a group, owns 10% or more of the outstanding voting securities of the transmission company may appoint one manager or director of the transmission company for a one-year term if the group has entered into a written agreement regarding the appointment and the group files the agreement with the secretary of the transmission company, except that the requirements of this subd. 3. b. may be modified upon a unanimous vote of the managers or directors.

AB389-ASA2,40,19 c. Each person that receives at least 5% of the voting securities of the transmission company under sub. (6) (a) or (b) may appoint one manager or director of the transmission company for a one-year term if the person continues to hold at least a 5% equity interest in the transmission company during the one-year term.

AB389-ASA2,40,21 d. Each transmission utility security holder may appoint one manager or director of the transmission company for a one-year term.

AB389-ASA2,41,7 4. That, during the 5-year period after the organizational start-up date, no public utility affiliate that contributes transmission facility assets to the transmission company under sub. (5) (b) and no affiliate of such a public utility affiliate may increase its percentage share of the outstanding securities of the transmission company prior to any initial issuance of securities by the transmission company to any 3rd party other than a 3rd party exercising its right to purchase securities under sub. (6) (b), except that this subdivision does not apply to securities that are issued by the transmission company in exchange for transmission facilities that are contributed in addition to the transmission facilities that are contributed under sub. (5) (b) and except that the requirements of this subdivision may be modified upon a unanimous vote of the managers or directors.

AB389-ASA2,41,11 5. That, beginning 3 years after the organizational start-up date, any holder of 10% or more of the securities of the transmission company may require the transmission company to comply with any state or federal law that is necessary for the security holder to sell or transfer its shares.

AB389-ASA2,41,14 (d) Commission jurisdiction. The transmission company is subject to the jurisdiction of the commission except to the extent that it is subject to the exclusive jurisdiction of the federal energy regulatory commission.

AB389-ASA2, s. 53 Section 53. 196.485 (4) (a) (intro.) of the statutes is amended to read:

AB389-ASA2,41,19 196.485 (4) (a) (intro.) A Except as provided in par. (am), a transmission utility may not transfer control over, or divest its interest in, its transmission facilities to an independent system operator or independent transmission owner unless, to the satisfaction of the commission, each of the following requirements is satisfied:

AB389-ASA2, s. 54 Section 54. 196.485 (4) (am) of the statutes is created to read:

AB389-ASA2,42,3 196.485 (4) (am) Each transmission utility in the transmission area that is a public utility shall become a member of the Midwest independent system operator no later than June 30, 2000, and shall transfer operational control over its transmission facilities to the Midwest independent system operator. Each such transmission utility that has not contributed its transmission facilities to the transmission company shall elect to become part of the single zone for pricing purposes within the Midwest independent system operator and any phase-in plan prepared under sub. (3m) (a) 4.

AB389-ASA2, s. 55 Section 55. 196.485 (5) of the statutes is created to read:

AB389-ASA2,42,8 196.485 (5) Public utility affiliates. (a) Asset cap exception. Section 196.795 (6m) (e) does not apply to the eligible assets of a nonutility affiliate in a holding company system unless each public utility affiliate in the holding company system does each of the following:

AB389-ASA2,42,12 1. Petitions the commission and the federal energy regulatory commission to approve the transfer of operational control of all the public utility affiliate's transmission facilities in this state and in Iowa, Michigan, Minnesota and Illinois to the Midwest independent system operator.

AB389-ASA2,42,19 2. Files with the commission an unconditional, irrevocable and binding commitment to contribute, no later than June 30, 2000, all of the transmission facilities that the public utility affiliate owns or operates in this state on the effective date of this subdivision .... [revisor inserts date], and land rights, to the transmission company. A filing under this subdivision shall specify a date no later than June 30, 2000, on which the public utility affiliate will complete the contribution of transmission facilities.

AB389-ASA2,42,25 3. Files with the commission an unconditional, irrevocable and binding commitment to contribute, and to cause each entity into which it merges or consolidates or to which it transfers substantially all of its assets to contribute, any transmission facility in this state the ownership or control of which it acquires after the effective date of this subdivision .... [revisor inserts date], and land rights, to the transmission company.

AB389-ASA2,43,6 4. Notifies the commission in writing that the public utility affiliate has become a member of the Midwest independent system operator, has agreed to transfer its transmission facilities to the Midwest independent system operator and has committed not to withdraw its membership prior to the date on which the public utility affiliate contributes transmission facilities to the transmission company under par. (b).

AB389-ASA2,43,11 5. Petitions the commission and the federal energy regulatory commission to approve the contributions specified in subds. 2. and 3. and agrees in such a petition not to withdraw the petition in the event that the commission or the federal energy regulatory commission conditions its approval on changes that are consistent with state or federal law.

AB389-ASA2,43,19 (b) Contribution of transmission facilities. 1. A public utility affiliate may not contribute a transmission facility to the transmission company until the commission has reviewed the terms and conditions of the transfer to determine whether the transfer satisfies the requirements of this subsection and has issued an order approving or modifying the terms and conditions of the transfer. An order under this subdivision that modifies the terms and conditions of a transfer may allow a public utility affiliate to recover in retail rates any adverse tax consequences of the transfer as a transition cost.

AB389-ASA2,43,22 2. The transmission company and a public utility affiliate that files a commitment to contribute transmission facilities under par. (a) 2. shall structure the transfer of the transmission facilities in a manner that satisfies each of the following:

AB389-ASA2,44,2 a. The structure of the transfer avoids or minimizes the material adverse tax consequences to the public utility affiliate that result from the transfer and avoids or minimizes material adverse consequences on public utility rates that do not arise out of combining the transmission company's facilities into a single zone in the Midwest independent system operator.

AB389-ASA2,44,4 b. To the extent practicable, the structure of the transfer satisfies the requirements of the Internal Revenue Service for a tax-free transfer.

AB389-ASA2,44,10 3. The requirements under subd. 2. b. shall, if practicable, be satisfied by the transmission company's issuance of a preferred class of securities that provides the fixed-cost portion of the resulting capital structure of the transmission company. The transmission company shall issue preferred securities under this subdivision on a basis that does not dilute the voting rights of the initial security holders relative to the value of their initial contributions.

AB389-ASA2,45,3 4. If the transfer of transmission assets under this paragraph results in a capital structure of the transmission company in which the percentage of common equity is materially higher than that of the public utility affiliates who made the transfer, or if the cost of the fixed-cost portion of the capital structure of the transmission company is materially higher than that of the public utility affiliates who made the transfer, the public utility affiliates shall enter into a contract with the transmission company under which the public utility affiliates agree to accept from the transmission company a return on common equity based upon the equity rate of return approved by the federal energy regulatory commission and upon an imputed capital structure that assigns to a portion of the public utility affiliates' common equity holdings an imputed debt return that is consistent with the requirements of this subdivision. A contract under this subdivision shall specify that the public utility affiliates shall be required to accept the return on common equity described in this subdivision only until such time that the federal energy regulatory commission determines that the actual capital structure and capital costs of the transmission company are appropriate and consistent with industry practice for a regulated public utility that provides electric transmission service in interstate commerce.

AB389-ASA2,45,8 5. If, at the time that a public utility affiliate files a commitment under par. (a) 2., the public utility affiliate has applied for or obtained a certificate of public convenience and necessity under s. 196.491 (3) or a certificate under s. 196.49 for the construction of transmission facilities, the public utility affiliate shall do each of the following:

AB389-ASA2,45,10 a. Proceed with diligence with respect to obtaining the certificate and, except as provided in subd. 6., constructing the transmission facilities.

AB389-ASA2,45,15 b. If the commission determines that the cost of the transmission facilities is reasonable and prudent, transfer the transmission facilities to the transmission company at net book value when construction is completed in exchange for additional securities of the transmission company on a basis that is consistent with the securities that were initially issued to the public utility affiliate.

AB389-ASA2,45,23 6. If the construction of a transmission facility specified in subd. 5. a. is not completed within 3 years after a certificate is issued for the transmission facility under s. 196.49 or 196.491 (3), the transmission company may assume responsibility for completing construction of the transmission facility. If the transmission company assumes responsibility for completing construction under this subdivision, the transmission company shall carry out any obligation under any contract entered into by the public utility with respect to the construction until the contract is modified or rescinded by the transmission company to the extent allowed under the contract.

AB389-ASA2,45,25 7. Any transmission facilities that are contributed to the transmission company shall be valued at net book value at the time of the transfer.

AB389-ASA2,46,10 (bm) Lease of transmission facilities. If a public utility affiliate is not able to contribute its transmission facilities to the transmission company as required under par. (b) due to merger-related accounting requirements, the public utility affiliate shall transfer the transmission facilities to the transmission company under a lease for the period of time during which the accounting requirements are in effect and, after such requirements are no longer in effect, contribute the transmission facilities to the transmission company under par. (b). A public utility affiliate that transfers transmission facilities under a lease under this paragraph does not qualify for the asset cap exception under par. (a) unless, during the term of the lease, the public utility affiliate does not receive any voting interest in the transmission company.

AB389-ASA2,46,13 (c) Contribution of land rights. 1. A public utility affiliate that commits to contributing land rights to the transmission company under par. (a) 2. shall do each of the following:

AB389-ASA2,46,21 a. Except as provided in subd. 2., if the land right is assigned to a transmission account for rate-making purposes and is not jointly used for electric and gas distribution facilities by the public utility affiliate, the public utility affiliate shall convey or assign at book value all of its interest in the land right to the transmission company, except that any conveyance or assignment under this subd. 1. a. shall be subject to the rights of any joint user of the land right and to the right of the public utility affiliate to nondiscriminatory access to the real estate that is subject to the land right.

AB389-ASA2,47,6 b. If the land right is jointly used, or is intended to be jointly used, for electric and gas distribution facilities by the public utility affiliate, the public utility affiliate shall enter into a contract with the transmission company that grants the transmission company a right to place, maintain, modify or replace the transmission company's transmission facilities on the real property that is subject to the land right during the life of the transmission facilities and the life of any replacements of the transmission facilities. A right granted in a contract under this subd. 1. b. shall be paramount to the right of any other user of the land right, except that a right granted in such a contract shall be on par with the right of the public utility affiliate to use the land right for electric or gas distribution facilities.

AB389-ASA2,47,12 2. If a public utility affiliate is prohibited from making a conveyance or assignment described in subd. 1. a., the public utility affiliate shall enter into a contract with the transmission company that grants the transmission company substantially the same rights as under such a conveyance or assignment. For purposes of a contract under this subdivision, a land right shall be valued at book value, not at market value.

AB389-ASA2,47,18 3. The commission shall resolve any dispute over the contribution of a land right under subd. 1. or 2., including a dispute over the valuation of such a land right, unless a federal agency exercises jurisdiction over the dispute. During the pendency of any dispute that is before the commission or a federal agency, the transmission company shall be entitled to use the land right that is the subject to the dispute and shall be required to pay any compensation that is in dispute into an escrow account.

AB389-ASA2, s. 56 Section 56. 196.485 (6) of the statutes is created to read:

AB389-ASA2,47,22 196.485 (6) Electric utilities, transmission dependent utilities and retail electric cooperatives. No later than the first day of the 12th month beginning after the first public utility affiliate files a commitment under sub. (5) (a) 2.:

AB389-ASA2,48,2 (a) An electric utility, other than a public utility affiliate, may transfer all of its integrated transmission facilities to the transmission company on the same terms and conditions as a contribution of transmission facilities and land rights by a public utility affiliate under sub. (5) (b) and (c).

AB389-ASA2,48,9 (b) A transmission-dependent utility or retail electric cooperative may purchase equity interests in the transmission company at a price that is equivalent to net book value and on terms and conditions that are comparable to those for public utility affiliates that have contributed transmission facilities to the transmission company. A purchaser under this paragraph may contribute funds to the transmission company that are no more than the value of its prorated shares based on firm electric usage in this state in 1999.

AB389-ASA2, s. 57 Section 57. 196.485 (6m) of the statutes is created to read:

AB389-ASA2,48,15 196.485 (6m) Dividends, profits and gains. The commission may not treat any dividend received by a transmission utility from the transmission company or any gain or profit of a transmission utility from the sale or other disposition of securities issued by the transmission company as a credit against the retail revenue requirements of the transmission utility.

AB389-ASA2, s. 58 Section 58. 196.485 (7) of the statutes is created to read:

AB389-ASA2,48,19 196.485 (7) Enforcement. A wholesale or retail customer of a public utility affiliate may petition the circuit court for Dane County for specific performance of a commitment filed under sub. (5) (a) 2. or 3.

AB389-ASA2, s. 59 Section 59. 196.485 (8) of the statutes is created to read:

AB389-ASA2,48,25 196.485 (8) Penalties. A public utility affiliate that fails to complete the contribution of transmission facilities to the transmission company by the completion date specified in the filing under sub. (5) (a) 2. shall forfeit $25,000 for each day that completion of the contribution is delayed if the transmission company is legally able to accept the contribution.

AB389-ASA2, s. 60 Section 60. 196.487 of the statutes is created to read:

AB389-ASA2,49,2 196.487 Reliability of electric service. (1) Definitions. In this section:

AB389-ASA2,49,3 (a) "Public utility affiliate" has the meaning given in s. 196.795 (1) (L).

AB389-ASA2,49,4 (b) "Transmission company" has the meaning given in s. 196.485 (1) (ge).

AB389-ASA2,49,13 (2) Commission order. If the commission determines that a public utility affiliate or the transmission company is not making investments in the facilities under its control that are sufficient to ensure reliable electric service, the commission shall order the public utility affiliate or transmission company to make adequate investments in its facilities that are sufficient to ensure reliable electric service. An order under this subsection shall require the public utility affiliate or transmission company to provide security in an amount and form that, to the satisfaction of the commission, is sufficient to ensure that the public utility affiliate or transmission company expeditiously makes any investment that is ordered.

AB389-ASA2,49,16 (3) Cost recovery. The commission shall allow a public utility affiliate that is subject to an order under sub. (2) to recover in its retail electric rates the costs that are prudently incurred in complying with the order.

AB389-ASA2, s. 61 Section 61. 196.491 (3) (d) 3r. of the statutes is created to read:

AB389-ASA2,49,22 196.491 (3) (d) 3r. For a high-voltage transmission line that is proposed to increase the transmission import capability into this state, existing rights-of-way are used to the extent practicable and the routing and design of the high-voltage transmission line minimizes environmental impacts in a manner that is consistent with achieving reasonable electric rates.

AB389-ASA2, s. 62 Section 62. 196.491 (3) (d) 3t. of the statutes is created to read:

AB389-ASA2,50,4 196.491 (3) (d) 3t. For a high-voltage transmission line that is designed for operation at a nominal voltage of 345 kilovolts or more, the high-voltage transmission line provides usage, service or increased regional reliability benefits to the wholesale and retail customers or members in this state and the benefits of the high-voltage transmission line are reasonable in relation to the cost of the high-voltage transmission line.

AB389-ASA2, s. 63 Section 63. 196.491 (3) (gm) of the statutes is created to read:

AB389-ASA2,50,20 196.491 (3) (gm) The commission may not approve an application filed after the effective date of this paragraph .... [revisor inserts date], under this section for a certificate of public convenience and necessity for a high-voltage transmission line that is designed for operation at a nominal voltage of 345 kilovolts or more unless the approval includes the condition that the applicant shall pay the fees specified in sub. (3g) (a). If the commission has approved an application under this section for a certificate of public convenience and necessity for a high-voltage transmission line that is designed for operation at a nominal voltage of 345 kilovolts or more that was filed after April 1, 1999, and before the effective date of this paragraph .... [revisor inserts date], the commission shall require the applicant to pay the fees specified in sub. (3g) (a). For any application subject to this paragraph, the commission shall determine the cost of the high-voltage transmission line, identify the counties, towns, villages and cities through which the high-voltage transmission line is routed and allocate the amount of investment associated with the high-voltage transmission line to each such county, town, village and city.

AB389-ASA2, s. 64 Section 64. 196.491 (3g) of the statutes is created to read:

AB389-ASA2,51,4 196.491 (3g) Fees for certain high-voltage transmission lines. (a) A person who receives a certificate of public convenience and necessity for a high-voltage transmission line that is designed for operation at a nominal voltage of 345 kilovolts or more under sub. (3) shall pay the department of administration an annual impact fee as specified in the rules promulgated by the department of administration under s. 16.969 (2) (a) and shall pay the department of administration a one-time environmental impact fee as specified in the rules promulgated by the department of administration under s. 16.969 (2) (b).

AB389-ASA2,51,8 (b) A person that pays a fee under par. (a) may not use the payment to offset any other mitigation measure that is required in an order by the commission under sub. (3) regarding the certificate of public convenience and necessity specified in par. (a).

AB389-ASA2, s. 65 Section 65. 196.491 (3m) (b) 2. of the statutes is amended to read:

AB389-ASA2,51,14 196.491 (3m) (b) 2. The analytical process specified in subd. 1. b. shall, to the extent practicable, be consistent with the analytical process described in the merger enforcement policy of the federal department of justice and the federal trade commission regarding horizontal acquisitions and mergers that are subject to 15 USC 1, 18 or 45, as defined in s. 196.485 (1) (dr).

AB389-ASA2, s. 66 Section 66. 196.494 (3) of the statutes is amended to read:

AB389-ASA2,51,24 196.494 (3) No later than December 31, 2004, the The commission may shall, under this subsection, issue an order requiring an electric utility to construct or procure, on a competitive basis, the construction of transmission facilities specified by the commission in its order if the commission determines that, based on the results of the study under sub. (2), such construction is necessary to relieve a constraint on a transmission system and the construction will materially benefit the customers of the electric utility or other electric utilities or of an independent system operator, as defined in s. 196.485 (1) (d), or independent transmission owner, as defined in s. 196.485 (1) (dm).

AB389-ASA2, s. 67 Section 67. 196.494 (5) of the statutes is created to read:

AB389-ASA2,52,6 196.494 (5) The governor may, on behalf of this state, enter into an interstate compact that establishes a joint process for the states in the upper midwest region of the United States to determine the need for and siting of regional electric transmission facilities that may affect electric service in this state. The governor may not enter into a compact under this subsection unless the compact includes requirements and procedures for establishing each of the following:

AB389-ASA2,52,8 (a) Compliance with each state's environmental and siting standards for transmission facilities.

AB389-ASA2,52,9 (b) A regional need determination for transmission facilities.

AB389-ASA2,52,11 (c) A mechanism for resolving conflicts between the states regarding the siting of transmission facilities.

AB389-ASA2, s. 68 Section 68. 196.52 (3) (a) of the statutes is amended to read:

AB389-ASA2,53,17 196.52 (3) (a) In this subsection, "contract or arrangement" means a contract or arrangement providing for the furnishing of management, supervisory, construction, engineering, accounting, legal, financial or similar services and any contract or arrangement for the purchase, sale, lease or exchange of any property, right, or thing, or for the furnishing of any service, property, right, or thing, other than management, supervisory, construction, engineering, accounting, legal, financial or similar services, but "contract or arrangement" does not include a contract or arrangement under which a transmission utility, as defined in s. 196.485 (1) (i), sells or transfers securities, as defined in s. 196.485 (1) (fe), that have been issued by a transmission company, as defined in s. 196.485 (1) (ge). Except as provided under par. (b), unless and until the commission gives its written approval, any contract or arrangement is not valid or effective if the contract or arrangement is made between a public utility and an affiliated interest after June 7, 1931. Every public utility shall file with the commission a verified copy of any contract or arrangement, a verified summary of any unwritten contract or arrangement, and any contract or arrangement, written or unwritten, which was in effect on June 7, 1931. The commission shall approve a contract or arrangement made or entered into after June 7, 1931, only if it shall clearly appear and be established upon investigation that it is reasonable and consistent with the public interest. The commission may not approve any contract or arrangement unless satisfactory proof is submitted to the commission of the cost to the affiliated interest of rendering the services or of furnishing the property or service to each public utility or of the cost to the public utility of rendering the services or of furnishing the property or service to each affiliated interest. No proof is satisfactory under this paragraph unless it includes the original (or verified copies) of the relevant cost records and other relevant accounts of the affiliated interest, or an abstract of the records and accounts or a summary taken from the records and accounts if the commission deems the abstract or summary adequate. The accounts shall be properly identified and duly authenticated. The commission, where reasonable, may approve or disapprove a contract or arrangement without submission of the cost records or accounts.

AB389-ASA2, s. 69 Section 69. 196.795 (1) (g) 1. of the statutes is amended to read:

AB389-ASA2,53,21 196.795 (1) (g) 1. As a beneficial owner, to take, hold or acquire 5% or more of the outstanding voting securities of a public utility, other than a transmission company, with the unconditional power to vote those securities.

AB389-ASA2, s. 70 Section 70. 196.795 (1) (g) 2. of the statutes is amended to read:

AB389-ASA2,54,2 196.795 (1) (g) 2. To exchange or convert 50% or more of the outstanding voting securities of a public utility, other than a municipality or other political subdivision or a transmission company, for or into the voting securities of a company organized, created, appointed or formed by or at the direction of the public utility or of a subsidiary of such company.

AB389-ASA2, s. 71 Section 71. 196.795 (1) (h) 3. of the statutes is created to read:

AB389-ASA2,54,4 196.795 (1) (h) 3. "Holding company" does not include a transmission company.

AB389-ASA2, s. 72 Section 72. 196.795 (1) (p) of the statutes is created to read:

AB389-ASA2,54,7 196.795 (1) (p) "Transmission company" has the meaning given in s. 196.485 (1) (ge).

AB389-ASA2, s. 73 Section 73. 196.795 (5) (i) 1. of the statutes is amended to read:

AB389-ASA2,54,12 196.795 (5) (i) 1. Shall consider the public utility affiliate as a wholly independent corporation and shall impute a capital structure to the public utility affiliate and establish a cost of capital for the public utility affiliate on a stand-alone basis;

AB389-ASA2, s. 74 Section 74. 196.795 (5) (p) 1., 2., 3. and 4. of the statutes are renumbered 196.795 (6m) (b) 1., 2., 3. and 4.

AB389-ASA2, s. 75 Section 75. 196.795 (5) (pm) 1. (intro.) of the statutes is repealed.