November 4, 1997 - Introduced by Representatives Seratti, La Fave, Kreibich,
Sykora, Vrakas, Musser, Zukowski, Walker, Gunderson, Lazich, Robson,
Goetsch, Powers, Skindrud, Staskunas, Plouff, Schafer, Hanson,
Ziegelbauer, Harsdorf, Ward
and Lorge, cosponsored by Senators Weeden,
Farrow, Schultz
and Cowles. Referred to Committee on Utilities Oversight.
AB587,1,10 1An Act to repeal 196.59, 196.795 (5) (dr), 196.795 (5) (q) 2. a., 196.795 (5) (q) 2.
2b., 196.795 (5) (q) 2. c., 196.795 (5) (q) 3. and 196.795 (7) (a) 2.; to renumber and
3amend
196.795 (5) (q) 2. (intro.); to amend 70.112 (4), 196.374 (1), 196.52 (3)
4(a), 196.52 (3) (b) 1., 196.52 (3) (c) 1., 196.52 (3) (c) 2., 196.52 (4) (a), 196.795 (1)
5(b), 196.795 (5) (f), 196.795 (5) (q) 1. (intro.), 196.795 (7) (a) 3., 196.795 (9m),
6198.12 (5) and 198.12 (6); and to create 196.035, 196.52 (3) (am) 1. and 196.52
7(3) (d) of the statutes; relating to: nonutility activities by public utilities and
8public utility affiliates, subsidies between utility and nonutility affiliates,
9utility energy conservation programs and duties, granting rule-making
10authority and providing a penalty.
Analysis by the Legislative Reference Bureau
Nonutility activities by public utilities and their affiliates
Under current law, public utilities in a holding company system may not
provide any nonutility product or service in a manner that unfairly discriminates
against any competing provider of the product or service. Gas and electric utilities
are required to keep separate accounts to show any profit or loss resulting from the

sale of appliances or other merchandise. The public service commission (PSC) may
not take the profit or loss into consideration in arriving at any rate to be charged for
service by the public utility.
This bill repeals these provisions and imposes the following restrictions on a
public utility that is engaged in the production, transmission, delivery or furnishing
of heat, light, power or natural gas to the public: 1) the public utility may not engage
in an activity related to the sale or service of appliances; and 2) the public utility may
perform energy conservation, plumbing, electrical, heating, ventilating, air
conditioning or sheet metalworking contracting services only in or on real property
in which the public utility has an ownership or leasehold interest or in or on real
property, excluding an improvement, in which the public utility has an easement.
However, the bill's restrictions do not apply to activities that are required under
federal law or services that such a public utility provides to an affiliated interest
pursuant to a contract approved by the PSC. In addition, such a public utility is
required to engage in appliance work that is necessary to avoid endangering property
or human health or life.
The bill also restricts the ability of affiliates to engage in certain nonutility
activities. Under current law, certain contracts or arrangements between public
utilities and affiliated interests may not be entered into without written approval
from the PSC. Under this bill, if such a contract or arrangement involves an activity
related to the sale or service of an appliance or the performance of energy
conservation, plumbing, electrical, heating, ventilating, air conditioning or sheet
metalworking contracting services, the PSC may approve the contract only if the
activity or services are performed in or on real property in which the public utility
has an ownership or leasehold interest or in or on real property, excluding an
improvement, in which the public utility has an easement. Current law also provides
that no nonutility activity of a public utility holding company or a nonutility affiliate
may be materially subsidized by the consumers of the affiliated public utility. This
bill amends this prohibition to prohibit any such subsidy, regardless of whether the
subsidy is material.
Current law generally prohibits a public utility in a holding company system,
a subsidiary of such a public utility or any joint venture that has such a public utility
as a member or partner, from doing appliance service work or appliance retail sales,
if the appliance would use, as its primary energy source, energy supplied by the
public utility. Current law contains a number of exceptions from this provision,
including exceptions for certain work done as part of certain energy conservation
programs, work done in response to circumstances which reasonably appear to the
public utility affiliate or its subsidiary to endanger human health or life or property,
certain work performed by certain independent contractors who are not in the
holding company system of the public utility, and certain work determined by the
PSC not to be anticompetitive. This bill repeals all of these exceptions from the
prohibition on appliance service work or retail sales, although the bill continues to
allow work to be done on appliances that are located in facilities that are owned or
operated by the public utility or its subsidiary.

Also under current law, various requirements apply to the relationship between
a public utility in a holding company system and the other companies in the system.
This bill imposes a $2,000 forfeiture against any company in such a system, including
a public utility, that violates these requirements. Each day of violation is considered
a separate violation for purposes of determining the amount of a forfeiture.
Energy conservation activities
Current law requires a public utility to spend at least 0.5% of its total annual
operating revenues on programs designed to promote and accomplish energy
conservation, except that the PSC may require a utility to spend an annual amount
that is more or less than 0.5% of its annual operating revenues if, after notice and
hearing, the PSC finds that the expenditure of such amount is in the public interest.
The PSC may also prescribe all or part of any of these energy conservation programs.
The PSC is required to authorize every utility to recover from the utility's ratepayers
any prudent energy conservation expenditure authorized by the PSC. This bill
provides that a utility or an affiliate of the utility may not provide energy
conservation services to consumers. Instead, the energy conservation program of a
public utility is required to promote energy conservation services provided by
persons that are not public utilities or affiliated interests of public utilities.
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:
AB587, s. 1 1Section 1. 70.112 (4) of the statutes is amended to read:
AB587,4,52 70.112 (4) Special property and gross receipts taxes or license fees. All
3special property assessed under ss. 76.01 to 76.26 and property of any light, heat and
4power company taxed under s. 76.28, telephone company, car line company, and
5electric cooperative association that is used and useful in the operation of the
6business of such company or association. If a general structure for which an
7exemption is sought under this section is used and useful in part in the operation of
8any public utility assessed under ss. 76.01 to 76.26 or of the business of any light,
9heat and power company taxed under s. 76.28, telephone company, car line company
10or electric cooperative association and in part for nonoperating purposes of the public
11utility or company or association, that general structure shall be assessed for

1taxation under this chapter at the percentage of its full market value that fairly
2measures and represents the extent of its use for nonoperating purposes. Nothing
3provided in this subsection shall exclude any real estate or any property which is
4separately accounted for under s. 196.59 from special assessments for local
5improvements under s. 66.64.
AB587, s. 2 6Section 2. 196.035 of the statutes is created to read:
AB587,4,8 7196.035 Certain nonutility activities and services. (1) Definitions. In
8this section:
AB587,4,99 (a) "Affiliated interest" has the meaning given in s. 196.52 (1).
AB587,4,1010 (b) "Appliance" has the meaning given in s. 196.795 (1) (b).
AB587,4,1311 (c) "Public utility" means a public utility that is engaged in the production,
12transmission, delivery or furnishing of heat, light, power or natural gas either
13directly or indirectly to or for the use of the public.
AB587,4,14 14(2) In general. Except as provided in subs. (3) to (5):
AB587,4,1615 (a) A public utility may not engage in an activity related to the sale or service
16of appliances.
AB587,4,2117 (b) A public utility may engage in the performance of an energy conservation,
18plumbing, electrical, heating, ventilating, air conditioning or sheet metalworking
19contracting service only if the service is performed in or on real property in which the
20public utility has an ownership or leasehold interest or in or on real property,
21excluding an improvement, in which the public utility has an easement.
AB587,5,2 22(3) Emergency appliance service work. A public utility shall engage in
23appliance service work in response to circumstances that reasonably appear to the
24public utility to endanger property or human health or life. The commission shall

1promulgate rules setting standards for a public utility to use in determining whether
2property or human health or life is endangered.
AB587,5,4 3(4) Federal law. A public utility may engage in activities required under
4federal law.
AB587,5,7 5(5) Contracts or arrangements with affiliated interests. A public utility
6may provide services to an affiliated interest pursuant to a contract or arrangement
7approved under s. 196.52.
AB587, s. 3 8Section 3. 196.374 (1) of the statutes is amended to read:
AB587,5,219 196.374 (1) In this section "utility" means a class A gas or electric utility, as
10defined by the commission. Every utility shall spend annually at least 0.5% of its
11total annual operating revenues on programs designed to promote and accomplish
12energy conservation. The commission may require a utility to spend annually for the
13purpose of promoting and accomplishing energy conservation, an amount which is
14more or less than 0.5% of its annual operating revenues if, after notice and hearing,
15the commission finds that the expenditure of such amount is in the public interest.
16Except as provided in s. 196.035 (2) (b), a utility or an affiliated interest of a utility,
17as defined in s. 196.52 (1), may not provide energy conservation services to
18consumers, either directly or through a contract or any other arrangement with
19another person. Programs under this section shall promote energy conservation
20services by persons that are not public utilities or affiliated interests of public
21utilities.
AB587, s. 4 22Section 4. 196.52 (3) (a) of the statutes is amended to read:
AB587,6,423 196.52 (3) (a) In this subsection, "contract or arrangement" means a contract
24or arrangement providing for the furnishing of management, supervisory,
25construction, engineering, accounting, legal, financial, research, development or

1similar services and any contract or arrangement for the purchase, sale, lease or
2exchange of any property, right, or thing, or for the furnishing of any service,
3property, right, or thing, other than management, supervisory, construction,
4engineering, accounting, legal, financial or similar services.
AB587,6,13 5(am) Except as provided under par. (b), unless and until the commission gives
6its written approval, any contract or arrangement is not valid or effective if the
7contract or arrangement is made between a public utility and an affiliated interest
8after June 7, 1931. Every public utility shall file with the commission a verified copy
9of any contract or arrangement, a verified summary of any unwritten contract or
10arrangement, and any contract or arrangement, written or unwritten, which was in
11effect on June 7, 1931. The commission shall may approve a contract or arrangement
12made or entered into after June 7, 1931, only if it shall clearly appear and be
13established upon
all of the following conditions are met:
AB587,7,2 142. After investigation, it is established that it the contract or arrangement is
15reasonable and consistent with the public interest and does result in a violation of
16s. 196.795 (5) (f)
. The commission may not approve any contract or arrangement
17unless satisfactory proof is submitted to the commission of the cost to the affiliated
18interest of rendering the services or of furnishing the property or service to each
19public utility or of the cost to the public utility of rendering the services or of
20furnishing the property or service to each affiliated interest. No proof is satisfactory
21under this paragraph subdivision unless it includes the original (or verified copies )
22of the relevant cost records and other relevant accounts of the affiliated interest, or
23an abstract of the records and accounts or a summary taken from the records and
24accounts if the commission deems the abstract or summary adequate. The accounts
25shall be properly identified and duly authenticated. The commission, where

1reasonable, may approve or disapprove a contract or arrangement without
2submission of the cost records or accounts.
AB587, s. 5 3Section 5. 196.52 (3) (am) 1. of the statutes is created to read:
AB587,7,104 196.52 (3) (am) 1. If the contract or arrangement involves an activity related
5to the sale or service of appliances, as defined in s. 196.795 (1) (b), or the performance
6of energy conservation, plumbing, electrical, heating, ventilating, air conditioning or
7sheet metalworking contracting services, the activity or service is performed in or on
8real property in which the public utility has an ownership or leasehold interest or in
9or on real property, excluding an improvement, in which the public utility has an
10easement.
AB587, s. 6 11Section 6. 196.52 (3) (b) 1. of the statutes is amended to read:
AB587,7,2012 196.52 (3) (b) 1. The requirement for written approval under par. (a) (am) shall
13not apply to any a contract or arrangement that is not specified in par. (am) 1. if the
14amount of consideration involved is not in excess of $25,000 or 5% of the equity of the
15public utility, whichever is smaller, and does not apply to a telecommunications
16utility contract or arrangement. Regularly recurring payments under a general or
17continuing arrangement which aggregate a greater annual amount may not be
18broken down into a series of transactions to come within the exemption under this
19paragraph. Any transaction exempted under this paragraph shall be valid or
20effective without commission approval under this section.
AB587, s. 7 21Section 7. 196.52 (3) (c) 1. of the statutes is amended to read:
AB587,7,2322 196.52 (3) (c) 1. May not waive the requirement of the submission of cost
23records or accounts under par. (a) (am);
AB587, s. 8 24Section 8. 196.52 (3) (c) 2. of the statutes is amended to read:
AB587,8,3
1196.52 (3) (c) 2. Shall review the accounts of the affiliated interest as they relate
2to the contract or arrangement prior to the commission approving or disapproving
3the contract or arrangement under par. (a) (am); and
AB587, s. 9 4Section 9. 196.52 (3) (d) of the statutes is created to read:
AB587,8,85 196.52 (3) (d) Within 18 months after the effective date of this paragraph ....
6[revisor inserts date], each public utility and affiliated interest that have entered
7into a contract or arrangement specified in par. (am) 1. before the effective date of this
8paragraph .... [revisor inserts date], shall terminate the contract or arrangement.
AB587, s. 10 9Section 10. 196.52 (4) (a) of the statutes is amended to read:
AB587,8,1610 196.52 (4) (a) In any proceeding, whether upon the commission's own motion
11or upon application or complaint, involving the rates or practices of any public utility,
12the commission may exclude from the accounts of the public utility any payment or
13compensation to or from an affiliated interest for any services rendered or property
14or service furnished under an existing contract or arrangement with an affiliated
15interest under sub. (3) (a) (am) unless the public utility establishes the
16reasonableness of the payment or compensation.
AB587, s. 11 17Section 11. 196.59 of the statutes is repealed.
AB587, s. 12 18Section 12. 196.795 (1) (b) of the statutes is amended to read:
AB587,8,2419 196.795 (1) (b) "Appliance" means any equipment, device or system used
20directly for lighting, cooking, drying, water tempering, space heating, space cooling
21or space ventilation. "Appliance" does not include equipment or devices which
22monitor or control the primary energy supply or source for any equipment used
23directly for cooking, drying, water tempering, space heating, space cooling or space
24ventilation
.
AB587, s. 13 25Section 13. 196.795 (5) (dr) of the statutes is repealed.
AB587, s. 14
1Section 14. 196.795 (5) (f) of the statutes is amended to read:
AB587,9,72 196.795 (5) (f) No nonutility activity of any holding company or nonutility
3affiliate may be subsidized materially by the consumers of any public utility affiliate
4with which the holding company or nonutility affiliate is in the holding company
5system. No public utility activity of any holding company or public utility affiliate
6may be subsidized materially by the nonutility activities of the holding company or
7any of its nonutility affiliates.
AB587, s. 15 8Section 15. 196.795 (5) (q) 1. (intro.) of the statutes is amended to read:
AB587,9,199 196.795 (5) (q) 1. (intro.) No nonutility affiliate or joint venture or partnership
10with a nonutility affiliate as a member or partner may, in the service territory of a
11public utility affiliate with which it is in a holding company system, sell at retail,
12lease, install, maintain or service any appliance that uses as its primary energy
13source energy supplied by that public utility affiliate under rates and tariffs
14approved by the commission, if the appliance is, or is intended to be, located in any
15building used primarily for residential occupancy or in any commercial building
16unless the building is
that is not owned or operated by the holding company or by its
17nonutility affiliates or, unless the commission determines, after notice and hearing,
18that the selling at retail, leasing, installing, maintaining or servicing of the appliance
19will not do any of the following:
AB587, s. 16 20Section 16. 196.795 (5) (q) 2. (intro.) of the statutes is renumbered 196.795 (5)
21(q) 2. and amended to read:
AB587,9,2522 196.795 (5) (q) 2. Except as provided under subd. 3., no No public utility
23affiliate or its subsidiary or joint venture or partnership having a utility affiliate or
24its subsidiary as a member or partner may, in the service territory of the public utility
25affiliate,
sell at retail, lease, install, maintain or service any appliance that uses as

1its primary energy source energy supplied by that public utility affiliate under rates
2and tariffs approved by the commission,
unless the appliance is located in facilities
3owned or operated by that public utility affiliate or its subsidiary or unless the
4appliance is sold, leased, installed, maintained or serviced:
.
AB587, s. 17 5Section 17. 196.795 (5) (q) 2. a. of the statutes is repealed.
AB587, s. 18 6Section 18. 196.795 (5) (q) 2. b. of the statutes is repealed.
AB587, s. 19 7Section 19. 196.795 (5) (q) 2. c. of the statutes is repealed.
AB587, s. 20 8Section 20. 196.795 (5) (q) 3. of the statutes is repealed.
AB587, s. 21 9Section 21. 196.795 (7) (a) 2. of the statutes is repealed.
AB587, s. 22 10Section 22. 196.795 (7) (a) 3. of the statutes is amended to read:
AB587,10,1211 196.795 (7) (a) 3. Conduct a business that is functionally related to the
12provision of utility service or to
the development or acquisition of energy resources.
AB587, s. 23 13Section 23. 196.795 (9m) of the statutes is amended to read:
AB587,10,2114 196.795 (9m) (title) Private cause of action and forfeiture. Any company in
15a holding company system which does, causes or permits to be done any prohibited
16action under sub. (5) (c) to (dr) (dm), (f), (h), (k), (n), (q), (r) or (s), or fails to comply
17with any term, limitation or condition imposed under sub. (2) (e) or (f) consistent with
18sub. (5) (c) to (dr) (dm), (f), (h), (k), (n), (q), (r) or (s), is liable to any person injured
19thereby in treble the amount of damages sustained in consequence of the prohibited
20action or failure to act and shall forfeit $2,000 for each violation or failure to comply.
21Each day of violation or failure to comply is a separate violation or failure to comply
.
AB587, s. 24 22Section 24. 198.12 (5) of the statutes is amended to read:
AB587,10,2523 198.12 (5) Chapter 196 applies. Any utility operated by a district shall be held
24to be a "public utility" within the meaning of that term as used in and subject to ss.
25196.01 to 196.53 and 196.59 196.595 to 196.76.
AB587, s. 25
1Section 25. 198.12 (6) of the statutes is amended to read:
AB587,11,202 198.12 (6) Utilities, acquire, construct, operate; water power; sale of
3service; use of streets.
The district shall have power and authority to own, acquire
4and, subject to the restrictions applying to a municipality under s. 196.50 (4), to
5construct any utility or portion thereof to operate, in whole or in part, in the district,
6and to own, acquire and, subject to ss. 196.01 to 196.53 and 196.59 196.595 to 196.76
7where applicable, to construct any addition to or extension of any such utility, and
8to own, acquire and construct any water power and hydroelectric power plant, within
9or without the district, to be operated in connection with any such utility, and to
10operate, maintain and conduct such utility and water power and hydroelectric power
11plant and system both within and without the district, and to furnish, deliver and
12sell to the public and to any municipality and to the state and any state institution
13heat, light and power service and any other service, commodity or facility which may
14be produced or furnished thereby, and to charge and collect rates, tolls and charges
15for the same. For said purposes the district is granted and shall have and exercise
16the right freely to use and occupy any public highway, street, way or place reasonably
17necessary to be used or occupied for the maintenance and operation of such utility
18or any part thereof, subject, however, to such local police regulations as may be
19imposed by any ordinance adopted by the governing body of the municipality in
20which such highway, street, way or place is located.
AB587, s. 26 21Section 26. Initial applicability.
AB587,11,2422 (1) Contracts or arrangements with affiliates. The treatment of section
23196.52 (3) (a) and (am) 1. of the statutes first applies to contracts or arrangements
24entered into, renewed, extended or modified on the effective date of this subsection.
AB587,12,3
1(2) Forfeitures. The treatment of section 196.795 (9m) of the statutes first
2applies to violations or failures to comply that occur on the effective date of this
3subsection.
AB587,12,44 (End)
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