Analysis by the Legislative Reference Bureau
Under current law, a public utility may not change its rates for electric service
unless the Public Service Commission (PSC) has approved the change in a
rate-making proceeding. This bill allows a public utility that proposes to purchase
or construct an electric generating facility to apply to the PSC for an order that
specifies in advance the rate-making principles that the PSC will apply to facility
costs in future rate-making proceedings.
The bill allows the PSC to issue such an order if the PSC determines both of the
following: 1) that the order will provide a sufficient degree of certainty to the public
utility, investors, and rate payers with respect to future recovery of the facility's
costs; and 2) that the order is otherwise in the public interest. If the PSC issues an
order, the public utility has the option of accepting or waiving acceptance of the order.
If the public utility accepts the order, the rate-making principles specified in the
order are binding on the PSC in all future rate-making proceedings regarding the
public utility. In addition, unlike other orders under current law, the PSC may not
subsequently rescind or alter the order. If the public utility waives acceptance of the
order, the PSC must withdraw the order and consider the costs of the facility in all

future rate-making proceedings in the same manner as the PSC considers costs for
which no such order has been issued.
The bill requires a public utility that applies for an order to describe the public
utility's proposal for recovering the costs of the facility. The proposal must describe
all of the following: 1) the facility's economic useful life; 2) the facility's proposed
return on equity; 3) the facility's proposed financing mechanisms; 4) the proposed
method for determining the costs that may be recovered in rates; 5) any other
proposals or information that the public utility determines are necessary for
providing certainty regarding cost recovery to the public utility, investors, and rate
payers; and 6) any information specified by rule by the PSC.
The bill requires the PSC to hold a hearing on an application for an order. The
hearing requirements depend on whether the public utility has proposed to purchase
or construct the facility. If the public utility proposes to purchase the facility, the PSC
must hold a hearing and determine whether to issue an order within 180 days after
determining that the application for the order is complete. If the public utility
proposes to construct the facility, current law requires the public utility to apply to
the PSC for a certificate approving the construction. Depending on the generating
capacity of the facility, current law may also require the PSC to hold a hearing on the
application for the construction certificate. The bill allows the PSC to hold a hearing
on an application for an order in conjunction with the hearing, if any, that is required
under current law for the construction certificate. In addition, the PSC must
determine whether to issue the order no later than the date the PSC is required to
take final action on the construction certificate.
The bill also does the following: 1) prohibits the PSC from requiring that a
public utility apply for an order under the bill or that a public utility accept or waive
acceptance of the order; and 2) requires the PSC to promulgate rules for
administering the bill's requirements.
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:
AB153, s. 1 1Section 1. 196.37 (3m) of the statutes is created to read:
AB153,2,52 196.37 (3m) If the commission has issued an order to a public utility under s.
3196.371, the commission, in issuing an order under this section regarding the public
4utility, is bound by the rate-making principles specified in the order issued under s.
5196.371.
AB153, s. 2 6Section 2. 196.371 of the statutes is created to read:
AB153,3,3
1196.371 Rate-making principles for electric generation facilities. (1)
2Definition. In this section, "certificate" means a certificate issued under s. 196.49
3(3) or 196.491 (3).
AB153,3,11 4(2) Application. A public utility that proposes to purchase an electric
5generating facility or that applies for a certificate for the construction of an electric
6generating facility may apply to the commission for an order specifying in advance
7the rate-making principles that the commission shall apply to the public utility's
8recovery of facility costs, including the purchase price and any necessary
9modifications or improvements to the facility, in future rate-making proceedings.
10In applying for an order under this section, a public utility shall describe the public
11utility's proposal for cost recovery, including all of the following:
AB153,3,1212 (a) The economic useful life of the facility.
AB153,3,1313 (b) The proposed return on equity for the facility.
AB153,3,1414 (c) The proposed financing mechanisms for the facility.
AB153,3,1615 (d) The proposed method for determining the costs that may be recovered in
16rates.
AB153,3,1917 (e) Any other proposals or information regarding the recovery of facility costs
18that the public utility determines are necessary for providing certainty to the public
19utility, investors, and ratepayers in future rate-making proceedings.
AB153,3,2020 (f) Any other information specified by rule by the commission.
AB153,4,9 21(3) Procedure. (a) The commission shall conduct a hearing on an application
22for an order under this section. The commission may hold the hearing in conjunction
23with a hearing, if any, on the application for the certificate or the commission may
24hold a separate hearing on the application for the order. If the public utility has
25applied for a certificate for the facility, the commission shall determine whether to

1deny an application for an order or to issue an order no later than the date that the
2commission takes final action on the application for the certificate. If the public
3utility has not applied for a certificate, the commission shall determine whether to
4deny an application for an order or to issue an order no later than 180 days after the
5commission determines that the application for the order is complete using the
6method and deadlines specified under s. 196.491 (3) (a) 2. The commission may issue
7an order if the commission determines that the order will provide a sufficient degree
8of certainty to the public utility, investors, and ratepayers with respect to future
9recovery of the facility's costs and that the order is otherwise in the public interest.
AB153,4,1610 (b) If the public utility notifies the commission that the public utility has
11accepted the order, the rate-making principles specified in the order shall be binding
12on the commission in all future rate-making proceedings regarding the public utility.
13If the public utility notifies the commission that the public utility waives acceptance
14of the order, the commission shall withdraw the order and consider the costs of the
15facility in all future rate-making proceedings in the same manner as the commission
16considers costs for which no order has been issued under this section.
AB153,4,1917 (c) The commission may not require a public utility to apply for an order under
18this section and may not require a public utility to accept or waive acceptance of an
19order under this section.
AB153,4,21 20(4) Rules. The commission shall promulgate rules for administering this
21section.
AB153, s. 3 22Section 3. 196.39 (5) of the statutes is created to read:
AB153,4,2323 196.39 (5) This section does not apply to an order issued under s. 196.371.
AB153, s. 4 24Section 4 . Nonstatutory provisions.
AB153,5,11
1(1) Emergency rules. The public service commission shall, using the procedure
2under section 227.24 of the statutes, promulgate the rules required under section
3196.371 (4) of the statutes, as created by this act, for the period before permanent
4rules become effective, but not to exceed the period authorized under section 227.24
5(1) (c) and (2) of the statutes. Notwithstanding section 227.24 (1) (a), (2) (b), and (3)
6of the statutes, the commission is not required to provide evidence that promulgating
7a rule under this subsection as an emergency rule is necessary for the preservation
8of the public peace, health, safety, or welfare and is not required to provide a finding
9of emergency for a rule promulgated under this subsection. The public service
10commission shall promulgate the rules required under this subsection no later than
11the first day of the 4th month beginning after the effective date of this subsection.
AB153,5,1612 (2) Proposed rules. The public service commission shall submit in proposed
13form the rules required under section 196.371 (4) of the statutes, as created by this
14act, to the legislative council staff under section 227.15 (1) of the statutes no later
15than the first day of the 4th month beginning after the effective date of this
16subsection.
AB153, s. 5 17Section 5. Effective dates. This act takes effect on the first day of the 4th
18month beginning after publication, except as follows:
AB153,5,1919 (1) Section 4 (1 ) and (2) of this act takes effect on the day after publication.
AB153,5,2020 (End)
Loading...
Loading...