AB940: Bill Text

LRB-5131/2

MDK:kmg&jlg&kaf:jf

1997 - 1998 LEGISLATURE

1997 Assembly BILL 940

March 19, 1998 - Introduced by Representatives Hoven, Gard, Johnsrud, Ott, Riley and Plale, cosponsored by Senators Welch, Rude and Farrow, by request of Governor Tommy G. Thompson. Referred to Committee on Utilities Oversight.

AB940,2,16 An Act to repeal 32.03 (5) (b) 3., 32.07 (1m), 66.073 (10) (b), 196.491 (1) (a), 196.491 (2) (a) 1. and 2., 196.491 (2) (a) 5. and 6., 196.491 (2) (a) 8., 196.491 (2) (c) and (d), 196.491 (2) (i) to (m), 196.491 (2m) (title), 196.491 (3) (d) 1., 196.491 (3) (f) and (ff), 196.491 (3) (g) 2., 196.491 (3) (hm), 196.491 (4) (a) (intro.), 196.491 (4) (a) 3. and 196.492; to renumber 66.073 (10) (a), 196.377 and 196.491 (4) (a) 1. and 2.; to renumber and amend 32.02 (5), 196.39, 196.491 (2) (am), 196.491 (2m), 196.491 (3) (a) and 196.491 (4) (b); to consolidate, renumber and amend 196.491 (3) (g) (intro.) and 1.; to amend 30.025 (1), 30.025 (4), 30.44 (3m) (title), 30.44 (3m) (a), 30.44 (3m) (b), 30.44 (3m) (d), 30.45 (1r), 32.03 (5) (a), 32.03 (5) (b) 1., 32.03 (5) (b) 2., 32.06 (7), 32.07 (1), 32.075 (3) (a) 2., 32.09 (2m), 86.16 (1), 182.017 (1), 196.24 (3), 196.491 (title), 196.491 (1) (d), 196.491 (1) (e), 196.491 (1) (g), 196.491 (2) (a) 3., 196.491 (2) (a) 3m., 196.491 (2) (a) 4., 196.491 (2) (a) 7., 196.491 (2) (b) 8., 196.491 (2) (e), 196.491 (2) (f), 196.491 (2) (g), 196.491 (3) (b), 196.491 (3) (d) (intro.), 196.491 (3) (d) 2., 196.491 (3) (d) 3., 196.491 (3) (e), 196.491 (3) (j), 196.491 (3) (k), 196.493 (1), 196.493 (2) (intro.), 196.53, 196.795 (7) (a) 1. b. and 289.29 (5); to repeal and recreate 196.491 (2) (title), 196.491 (2) (a) (intro.) and 196.491 (2) (b) (intro.); and to create 32.02 (5) (a), 196.03 (5m), 196.377 (title), 196.377 (2), 196.39 (2), 196.485, 196.491 (1) (am), 196.491 (1) (bm), 196.491 (1) (w), 196.491 (2) (a) 3g., 196.491 (2) (a) 3r., 196.491 (2) (a) 9. to 13., 196.491 (2) (ag), 196.491 (2) (b) 9. and 10., 196.491 (2) (gm), 196.491 (3) (a) 2., 196.491 (3) (a) 3. b., 196.491 (3) (d) 7., 196.491 (3) (g) 1m., 196.491 (3m), 196.491 (4) (c), 196.491 (5), 196.494 and 196.795 (5) (pm) of the statutes; relating to: strategic energy assessments, certification requirements applicable to certain projects proposed by public utilities, certificates of public convenience and necessity for certain electric generating facilities and high-voltage transmission lines, independent system operator or transmission owner of electric transmission system, certain out-of-state retail electric sales, ownership and operation of wholesale merchant plants, service standards for electric generation, transmission or distribution facilities, regional transmission planning and granting rule-making authority.

Analysis by the Legislative Reference Bureau

The bill eliminates the requirement under current law for certain public utilities and cooperative associations to submit advance plans for approval by the public service commission (PSC) and requires instead that the public service commission (PSC) prepare a strategic energy assessment. In addition, the bill makes changes to the requirements pertaining to the certificates of public convenience and necessity that a person must obtain in order to construct certain electric generating facilities and transmission lines. The bill also imposes various other requirements regarding each of the following: 1) the electric transmission system; 2) the ownership and operation of certain electric generating facilities that do not provide retail electric service, which the bill defines as "wholesale merchant plants", by affiliates of public utilities; 3) the construction of electric generating capacity by certain public utilities; and 4) various other requirements.

Strategic energy assessment

Under current law, certain public utilities and cooperative associations are required to submit biennial advance plans to the PSC that include certain information about their plans to construct the following: 1) "large electric generating facilities", which are defined as facilities with a capacity of between 12 and 300 megawatts; 2) "bulk electric generating facilities", which are defined as facilities with a capacity of 300 megawatts or more; and 3) "high-voltage transmission lines", which are defined as lines that are longer than one mile and that operate at 100 kilovolts or more. After holding a hearing on a plan, the PSC may approve a plan if the PSC finds that that plan will provide a reasonably adequate supply of electrical energy to meet the needs of the public and that the plan satisfies certain other criteria. A public utility or cooperative association must also submit an advance plan to the Lower Wisconsin State Riverway Board (board) if it intends to construct, modify or relocate a high-voltage transmission line in the Lower Wisconsin State Riverway (riverway). The board must approve the plan if it determines that the high-voltage transmission line will not impair, to the extent practicable, the scenic beauty or natural value of the riverway.

This bill eliminates the requirements pertaining to advance plans and requires instead that the PSC prepare a biennial strategic energy assessment that evaluates the adequacy and reliability of the state's current and future energy supply. In addition, the bill requires a person to obtain a permit from the board in order to construct, modify or relocate a high-voltage transmission line in the riverway. The board may not issue the permit unless it makes the same determination as under current law.

The strategic energy assessment must identify and describe large electric generating facilities on which public utilities, cooperative associations and certain other persons plan to begin construction within 3 years. The strategic energy assessment must also include information about high-voltage transmission lines on which a public utility or cooperative association plans to begin construction in the next 18 months. In addition, the strategic energy assessment must describe all of the following: 1) any plans for assuring that there is an adequate ability to transfer electric power into the state and the eastern part of the state that is served by the Mid-America Interconnected Network, Inc. (MAIN), which is an electric industry reliability council for a portion of the midwestern United States; 2) the projected demand for electric power; 3) activities to discourage inefficient and excessive power use; 4) existing and planned generating facilities that use renewable energy sources; 5) the extent to which the regional bulk-power market is contributing to the adequacy and reliability of the state's electrical supply; 6) the extent to which effective competition is contributing to a reliable, low-cost and environmentally sound source of electricity; and 7) whether sufficient electric capacity and energy is available at a reasonable price. The PSC must promulgate rules for reporting information that is necessary for the PSC to prepare the strategic energy assessment.

Certificates of public convenience and necessity

Under current law, a person may not begin constructing a large or bulk electric generating facility or high-voltage transmission line without obtaining a certificate of public convenience and necessity (certificate) from the PSC. A person that is not a public utility or cooperative association is exempt from this requirement if the person reasonably anticipates that the person will consume no less than 70% of the aggregate kilowatt hours output from electric generating facilities in manufacturing processes at the site where the facilities are located. Before filing an application for a certificate for a large or bulk electric generating facility, a person must provide an engineering plan to the department of natural resources (DNR), which must provide the person with a list of DNR permits and approvals that, based on the engineering plan, appear to be required for the facility. In consultation with the PSC, DNR may specify whether any permits or approvals must be obtained before the PSC may issue the certificate.

Also under current law, the PSC must take final action on an application for a certificate, and DNR must take final action on an application for the permits and approvals, within specified deadlines that depend on whether the application concerns a large or bulk electric generating facility or a high-voltage transmission line. After holding a public hearing on an application for a certificate, the PSC must issue the certificate if it makes certain determinations, including the following: 1) the proposed facility or line is necessary to satisfy the reasonable needs of the public; 2) the design and location are in the public interest; 3) the proposed facility or line will not have an undue adverse impact on environmental values; and 4) the proposed facility or line will not unreasonably interfere with orderly land use and development plans. However, the PSC may not issue a certificate until DNR issues the specified permits and approvals.

This bill changes the types of facilities that are subject to the above requirements and changes the procedure for issuing a certificate by the PSC and the permits and approval by DNR. The bill requires a person to obtain a certificate from the PSC before beginning construction of "large electric generating facilities", which the bill defines as facilities with a capacity of 100 megawatts or more. Also, the bill exempts a person from the requirement to obtain a certificate for construction activities related to high-voltage transmission lines that operate at less than 230 kilovolts if the construction activities take place entirely within an existing right-of-way.

The bill requires a person to file an application for a certificate within 6 months before beginning construction. The PSC must notify the applicant about whether an application is complete within 30 days after filing and a person may refile an incomplete application. If the PSC does not determine whether an application is complete within the 30-day deadline, the application is considered to be complete. At the same time that a person applies for a certificate, the person must provide DNR with an engineering plan and, within 30 days after receiving the plan, DNR must provide the person with a list of permits and approvals that appear to be applicable. Within 20 days after DNR provides the list, the person must apply for the permits and approvals. DNR is subject to a similar 30-day deadline in which DNR must notify an applicant about whether an application is complete. DNR must complete action on the permits and approvals within 90 days after an application is determined or considered to be complete.

Within 180 days after an application for a certificate is determined or considered to be complete, the PSC must take final action on the application, unless the circuit court for Dane County grants an extension or unless another state is also taking action on the same or a related application. After holding a public hearing, the PSC may issue a certificate only if it makes the same determinations under current law described above. Also, the PSC must determine that the proposed large electric generating facility or high-voltage transmission line will not have a material adverse impact on competition in the relevant wholesale electric service market. Such a determination is not required under current law. Finally, the PSC may not issue a certificate until DNR has issued the permits and approvals identified in the list provided by DNR.

Electric transmission system

The bill imposes various requirements regarding the electric transmission system. Under the bill, if a public utility or cooperative association has not, by June 30, 2000, transferred control over its electric transmission facilities to a federally approved independent system operator (ISO), the PSC may order such a utility or cooperative association to apply for federal approval to do any of the following: 1) transfer control over its transmission facilities to an ISO that has federal approval to operate in a region that includes this state; 2) transfer control over its transmission facilities to an ISO that has not yet received federal approval but is intended to operate in such a region; or 3) divest its interest in its transmission facilities to an independent transmission owner (ITO) that satisfies certain requirements. In addition, by June 30, 2000, the PSC is required to order public utilities to separately account for cost of retail electric transmission service and to take all of its retail transmission service from an ISO or ITO.

Subject to the certificate of public convenience and necessity requirements described above, the bill requires an ITO or, when ordered by an ISO, certain public utilities and cooperative associations to construct new electric transmission facilities if the ITO or ISO determines a need for such facilities. The bill also imposes certain requirements on an ITO's or ISO's operation of transmission facilities.

Also under the bill, the PSC must submit a study to the legislature by September 1, 1998, that identifies constraints on the regional electric transmission system that adversely affect the reliability of service provided to customers in this state. Based on the results of the study, the PSC may, no later than December 31, 2004, order public utilities to construct transmission facilities that are necessary to relieve constraints on the transmission system.

Wholesale merchant plants

In general, the bill prohibits an affiliate of a public utility from owning or operating a wholesale merchant plant unless the public utility has transferred control over its transmission facilities to an ISO or ITO and the PSC finds that the ownership or operation of the wholesale merchant plant by the affiliate will not have a substantially adverse anticompetitive effect on electricity markets. In addition, the PSC is required to review sales to public utilities of electricity that is generated from wholesale merchant plants owned or operated by affiliates. If the PSC finds that such a sale is not in the public interest, the PSC may take remedial action that includes disallowing the public utility's costs related to the sale in a rate-setting proceeding. Also, the bill prohibits any such sale of electricity on an uninterruptible basis that is for a period of 3 years or more. Finally, an affiliate that applies for a certificate of public convenience and necessity for a wholesale merchant plant is exempt from the requirement that the PSC determine that the plant satisfies the reasonable needs of the public.

Electric generating capacity

The bill requires nonmunicipal utilities that provide retail electric service in the area served by MAIN to construct an aggregate total of 50 megawatts of new electric capacity that is generated from renewable energy sources by December 31, 2000. Also, the bill requires certain of such utilities that have issued requests for proposals for additional electric generating capacity to enter into contracts for the capacity by July 31, 1998, and the bill shortens the regulatory approval deadlines that would otherwise apply to the additional capacity.

Other

The bill imposes various other requirements, including the following:

1. The bill requires the PSC to promulgate rules that require the PSC, in setting rates, to reduce the revenue requirement of a public utility by an amount that reflects the fixed capital costs of electric generating facilities within the state that are incurred to make sales to customers outside the state whom the public utility does not have a duty to serve.

2. The bill requires the PSC to promulgate rules establishing standards for inspecting, maintaining and repairing certain electric generation, transmission and distribution facilities.

3. The bill makes certain changes to the calculation of nonutility assets in a public utility holding company system for purposes of determining whether the total amount of such assets complies with specified limits under current law.

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:

AB940, s. 1 Section 1. 30.025 (1) of the statutes is amended to read:

AB940,7,6 30.025 (1) Any electric utility, as defined in s. 196.491 (1) (d), proposing to construct a facility, as defined in s. 196.491 (1) (e), which facility is to be located adjacent to a waterway in such a manner as to require one or more permits to be issued under this chapter and ch. 31 may, in lieu of separate application for permits under those chapters, submit an engineering plan together with any additional information required by the department. Such plan shall be filed with the department within 20 days after an application for a certificate of public convenience and necessity is filed with the public service commission under s. 196.491 (3). The department may require supplemental information to be furnished thereafter.

AB940, s. 2 Section 2. 30.025 (4) of the statutes is amended to read:

AB940,7,11 30.025 (4) The permit may be issued upon stated conditions deemed necessary to assure compliance with the criteria designated under sub. (3). The department shall grant or deny the application within the time limit applicable under s. 196.491 (3) (f) (a) 3. b.

AB940, s. 3 Section 3. 30.44 (3m) (title) of the statutes is amended to read:

AB940,7,13 30.44 (3m) (title) Utility facilities ; high-voltage transmission lines.

AB940, s. 4 Section 4. 30.44 (3m) (a) of the statutes is amended to read:

AB940,7,17 30.44 (3m) (a) A person shall apply to and receive a permit from the board before constructing, modifying or relocating a utility facility or high-voltage transmission line that is in the riverway.

AB940, s. 5 Section 5. 30.44 (3m) (b) of the statutes is amended to read:

AB940,7,22 30.44 (3m) (b) A person may not be issued a permit for an activity in par. (a) unless the performance standard in par. (c) is met and, for a high-voltage transmission line, the board finds that the activity will not impair, to the extent practicable, the scenic beauty or natural value of the riverway.

AB940, s. 6 Section 6. 30.44 (3m) (d) of the statutes is amended to read:

AB940,8,2 30.44 (3m) (d) The use of an aboveground utility facility shall not be a basis for the board to determine that all reasonable efforts will not be taken to minimize the visual impact. The board may not require a high-voltage transmission line to be placed underground in order to make the finding specified in par. (b).

AB940, s. 7 Section 7. 30.45 (1r) of the statutes is amended to read:

AB940,8,6 30.45 (1r) No person may construct, modify or relocate a high-voltage transmission line unless it has been approved under s. 30.44 (3m) or 196.491 (3) (d) 3m. or 196.492.

AB940, s. 8 Section 8. 32.02 (5) of the statutes is renumbered 32.02 (5) (b) and amended to read:

AB940,8,12 32.02 (5) (b) Any Wisconsin corporation engaged in the business of transmitting or furnishing heat, power or electric light for the public or any foreign transmission provider for the construction and location of its lines or for ponds or reservoirs or any dam, dam site, flowage rights or undeveloped water power.