Amendment SSA1-SB168

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2001 - 2002 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO 2001 SENATE BILL 168

June 15, 2001 - Offered by Senator Cowles.

SB168-SSA1,1,3 An Act to amend 196.795 (5) (k) 1.; and to create 196.52 (9) and 196.795 (5) (k) 3. of the statutes; relating to: leased generation contracts between public utilities and affiliated interests.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB168-SSA1, s. 1 Section 1. 196.52 (9) of the statutes is created to read:

SB168-SSA1,1,9 196.52 (9) (a) In this subsection, "leased generation contract" means a contract or arrangement under which an affiliated interest of a public utility agrees to construct or improve electric generating equipment and associated facilities and to lease to the public utility land and such equipment and facilities for operation by the public utility.

SB168-SSA1,1,11 (b) The commission may approve a leased generation contract under sub. (3) only if all of the following apply:

SB168-SSA1,2,3 1. The commission has not issued a certificate under s. 196.49 or a certificate of public convenience and necessity under s. 196.491 (3) before January 1, 2001, for any construction or improvement that is subject to the leased generation contract.

SB168-SSA1,2,6 2. Construction or improvement of the electric generating equipment and associated facilities that is subject to the leased generation contract commences on or after January 1, 2001.

SB168-SSA1,2,9 3. No electric generating equipment and associated facilities, or electric generating equipment, held or used by the public utility for the provision of electric service is transferred to the affiliated interest.

SB168-SSA1,2,11 4. The estimated gross cost of the construction or improvement that is subject to the leased generation contract is at least $10 million.

SB168-SSA1,2,15 5. Any real property that the public utility transfers to the affiliated interest for the purpose of implementing the leased generation contract is transferred at book value which is determined on the basis of the regulated books of account at the time of the transfer.

SB168-SSA1,2,21 6. If the public utility transfers real property to the affiliated interest for the purpose of implementing the leased generation contract, the leased generation contract provides for transferring the real property back to the public utility, on the same terms and conditions as the original transfer, if the commission determines that the construction or improvement that is subject to the leased generation contract has not been completed.

SB168-SSA1,2,23 7. The leased generation contract provides that, upon termination of the contract, all of the following apply:

SB168-SSA1,3,3 a. The public utility shall have the option, subject to commission approval, to extend the contract, or purchase the electric generating equipment and associated facilities that are constructed or improved, at fair market value as determined by a valuation process that is conducted by an independent third party and that is specified in the contract.

SB168-SSA1,3,7 b. If the public utility exercises the option specified in subd. 7. a., the affiliated interest may require the public utility to extend the contract, rather than purchase the equipment and facilities, if the affiliated interest demonstrates to the commission that the extension avoids material adverse tax consequences.

SB168-SSA1,3,10 8. For any gas-fired electric generating equipment and associated facilities that are constructed under the leased generation contract, the term of the lease is 20 years or more.

SB168-SSA1,3,13 9. For any coal-fired electric generating equipment and associated facilities that are constructed under the leased generation contract, the term of the lease is 25 years or more.

SB168-SSA1,3,21 10. The leased generation contract does not take effect until the date on which the affiliated interest commences construction or improvement of the electric generating equipment and associated facilities, except that, if the leased generation contract relates to the construction or improvement of more than one electric generating facility, the leased generation contract does not take effect with respect to the construction or improvement of an individual electric generating facility until the date on which the affiliated interest commences construction or improvement on that electric generating facility.

SB168-SSA1,4,2 (c) Except as provided in par. (d), the commission may not increase or decrease the retail revenue requirements of a public utility on the basis of any income, expense, gain, or loss that is received or incurred by an affiliated interest of the public utility and that arises from the ownership of electric generating equipment and associated facilities by an affiliated interest under a leased generation contract.

SB168-SSA1,4,10 (d) The commission shall allow a public utility that has entered into a leased generation contract that has been approved by the commission under sub. (3) to recover fully in its retail rates that portion of any payments under the leased generation contract that is allocated to the public utility's retail electric service, and that portion of all other costs that is prudently incurred in the public utility's operation and maintenance of the electric generating equipment and associated facilities constructed or improved under the leased generation contract and that is allocated to the public utility's retail electric service.

SB168-SSA1,4,14 (e) Notwithstanding sub. (5) (a), the commission may not modify a leased generation contract approved under sub. (3) except as specified in the leased generation contract or the commission's order approving the leased generation contract.

SB168-SSA1,4,17 (f) The commission shall maintain jurisdiction to ensure that the construction or improvement under a leased generation contract approved under sub. (3) is completed as provided in the leased generation contract.

SB168-SSA1,4,23 (g) Nothing in this subsection prohibits a cooperative association organized under ch. 185, a municipal utility, as defined in s. 196.377 (2) (a) 3., or a municipal electric company, as defined in s. 66.0825 (3) (d), from acquiring an interest in electric generating equipment and associated facilities that are constructed pursuant to a leased generation contract or from acquiring an interest in land on which such electric generating equipment and associated facilities are located.

SB168-SSA1, s. 2 Section 2. 196.795 (5) (k) 1. of the statutes is amended to read:

SB168-SSA1,5,5 196.795 (5) (k) 1. Except as provided under subd. 2. or 3., no public utility affiliate may transfer, sell, or lease to any nonutility affiliate with which it is in a holding company system any real property which, on or after November 28, 1985, is held or used for provision of utility service except by public sale or offering to the highest qualified bidder.

SB168-SSA1, s. 3 Section 3. 196.795 (5) (k) 3. of the statutes is created to read:

SB168-SSA1,5,12 196.795 (5) (k) 3. A public utility affiliate may transfer, at book value determined on the basis of the regulated books of account at the time of the transfer, real property, other than electric generating equipment and associated facilities, or electric generating equipment, that is held or used for the provision of utility service, to a nonutility affiliate for the purpose of implementing a leased generation contract, as defined in s. 196.52 (9) (a), that is approved under s. 196.52 (3).

SB168-SSA1, s. 4 Section 4. Initial applicability.

SB168-SSA1,5,16 (1) The treatment of sections 196.52 (9) and 196.795 (5) (k) 1. and 3. of the statutes first applies to leased generation contracts that are entered into, modified, renewed, or extended on the effective date of this subsection.

SB168-SSA1,5,17 (End)