SB459: Bill Text

LRB-3616/2

MDK:wlj&lmk&cjs:pg

2005 - 2006 LEGISLATURE

2005 Senate BILL 459

November 29, 2005 - Introduced by Committee on Energy, Utilities and Information Technology. Referred to Committee on Energy, Utilities and Information Technology.

SB459,2,19 An Act to repeal 16.957 (2) (b) 2., 16.957 (2) (c) 2n., 16.957 (2) (d) 3., 16.957 (2) (d) 4. b. and c., 16.957 (3) (title), 16.957 (4) (b), 16.957 (4) (c) (title), 16.957 (4) (c) (intro.), 16.957 (4) (c) 2., 16.957 (4) (c) 3., 16.958, 20.505 (3) (rr), 20.505 (3) (s), 25.17 (1) (ai), 25.97, 101.027 (1) (b), 196.374 (1) (b), 196.374 (4), 196.378 (1) (bm), 196.378 (1) (e), 196.378 (2) (b) 3., 196.86, 285.48 (3) (d) 3. and 285.48 (3) (d) 4.; to renumber 16.957 (4) (c) 1. a. and b. and 196.374 (1) (a); to renumber and amend 16.957 (2) (b) 1., 16.957 (3) (a), 16.957 (4) (am), 16.957 (4) (c) 1. (intro.), 196.374 (1) (c), 196.378 (1) (n) and 196.378 (3) (a); to consolidate, renumber and amend 16.957 (2) (d) 4. (intro.), a. and d., 16.957 (3) (b) and (c) and 101.027 (1) (intro.) and (a); to amend 16.957 (1) (c), 16.957 (1) (h), 16.957 (1) (L), 16.957 (1) (o) 1m., 16.957 (1) (o) 3., 16.957 (2) (intro.), 16.957 (2) (a) (intro.), 16.957 (2) (b) (title), 16.957 (2) (c) (intro.), 16.957 (2) (c) 1., 16.957 (2) (c) 2., 16.957 (2) (c) 2m., 16.957 (2) (c) 4., 16.957 (2) (d) 2., 16.957 (4) (a), 16.957 (4) (c) 1. c., 16.957 (5) (b) 1., 16.957 (5) (b) 2., 16.957 (5) (c), 16.957 (5) (d) 1. a., 16.957 (5) (d) 1. b., 16.957 (5) (d) 2. (intro.), 16.957 (5) (d) 2. a., 16.957 (5) (d) 2. b., 16.957 (5) (d) 3. (intro.), 16.957 (5) (d) 3. a., 16.957 (5) (d) 3. b., 16.957 (5) (e) (intro.), 16.957 (5) (e) 1., 16.957 (5) (e) 2., 25.96, 76.28 (1) (d), 76.48 (1g) (d), 77.54 (44), 79.005 (4) (d), 101.027 (2), 101.027 (3) (a) 1., 101.027 (3) (a) 2., 101.027 (3) (b) 1., 101.027 (3) (b) 2., 196.374 (title), 196.374 (2) (intro.), 196.374 (3), 196.378 (1) (a), 196.378 (1) (g), 196.378 (1) (i), 196.378 (2) (c), 196.378 (3) (b), 285.48 (1) (c), 285.48 (2), 285.48 (4) (a) and 285.48 (4) (b); to repeal and recreate 196.378 (2) (a) and 196.378 (2) (e); and to create 13.94 (1) (r), 16.75 (12), 16.855 (10s), 16.957 (1) (hm), 16.957 (1) (qg), 16.957 (1) (rm), 16.957 (2) (bg), 16.957 (2) (br) (title), 16.957 (2) (d) 5., 20.924 (1) (j), 71.26 (1) (g), 196.374 (1) (title), 196.374 (1) (an), 196.374 (1) (ar), 196.374 (1) (aw), 196.374 (1) (be), 196.374 (1) (bm), 196.374 (1) (bs), 196.374 (2) (title), 196.374 (3m), 196.374 (3r), 196.374 (4m), 196.374 (5), 196.374 (7), 196.378 (1) (fm), 196.378 (1) (n) 2., 196.378 (3) (a) 2., 196.378 (3) (c) and 196.378 (4m) of the statutes; relating to: administration and funding of programs for utility public benefits; renewable energy requirements for utilities and retail electric cooperatives; energy efficiency requirements for state construction; revising and reviewing the state energy conservation code; state use of renewable energy resources; anaerobic digestor research; and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill does all of the following: 1) makes changes to the "public benefits program"; 2) makes changes to renewable energy requirements that apply to electric utilities and cooperatives; 3) creates requirements for certain state agencies to generate or purchase renewable energy; 4) imposes energy efficiency standards on certain state contracts; 5) makes changes to the state energy conservation code; and 6) requires a funding request for anaerobic digestor research.

Public benefits program

Under current law, the Department of Administration (DOA) is required to establish programs for providing energy assistance to low-income households (low-income programs), for energy conservation and efficiency services (energy efficiency programs), and for encouraging the development and use of renewable energy resources (renewable resource programs). Collectively, these programs are commonly referred to as the public benefits program. DOA is required to contract with nonprofit corporations, community action agencies, or local units of government to provide services under the low-income programs, and to contract with nonprofit corporations to administer the energy efficiency and renewable resource programs. There are three sources of funding for the public benefits program.

The first funding source consists of monthly public benefits fees that DOA collects from nonmunicipal electric utilities, which must charge the fees to their customers. Municipal electric utilities and retail electric cooperatives (municipal utilities and cooperatives) are also required to charge monthly public benefits fees to their customers or members. Every three years, a municipal utility or cooperative may elect to contribute all or a specified portion of the public benefits fees to DOA. A municipal utility or cooperative that does not elect to contribute all of the public benefits fees to DOA must spend specified portions of the fees on its own low-income, energy efficiency, and renewable resource programs. DOA deposits all public benefits fees received from nonmunicipal electric utilities, municipal utilities, and cooperatives into the utility public benefits fund.

Regarding the first funding source, current law requires DOA to promulgate rules for determining the amount of monthly public benefits fees that electric utilities must charge customers. There are two portions to the amount. One portion is the amount needed in a fiscal year for the low-income programs. Current law specifies a formula for DOA to use to determine this portion. The other portion is the amount needed in a fiscal year for the energy efficiency and renewable resource programs. Under current law, the amount for this portion is the difference between $20 million and 50 percent of the estimated public benefits fees charged by municipal utilities and cooperatives in a fiscal year. However, under certain circumstances, DOA may reduce the amount for this portion. With respect to municipal utilities and cooperatives, current law requires them to charge monthly public benefits fees that ensure that they collect an annual average of $16 per meter.

The second funding source consists of contributions made by nonmunicipal gas and electric utilities. Under current law, the Public Service Commission (PSC) is required to determine the amount that a gas or electric utility spent on low-income, conservation, renewables, and environmental research and development programs in 1998. Each year, a gas or electric utility must spend a decreasing portion of the amount spent on each type of program and contribute an increasing portion of such amount to the PSC for deposit in the utility public benefits fund.

The third funding source consists of voluntary contributions made by customers of nonmunicipal electric utilities and municipal utilities and members of cooperatives. The voluntary contributions are also deposited into the utility public benefits fund.

The bill makes the following changes to the public benefits program:

In general. Regarding the first funding source described above, the bill eliminates DOA's role in determining the amounts needed to fund energy efficiency and renewable resource programs, and requires the PSC to determine such amounts. The bill makes no changes to DOA's determination of the amount needed for low-income programs. The bill makes no substantive changes to the second funding source described above. The bill makes no substantive changes to the requirements under current law regarding municipal utilities and cooperatives. The bill requires the PSC to contract with a fiscal agent to collect the funding for the public benefits program (fiscal agent).

Funding. Regarding the first funding source described above, the bill requires the PSC to determine the amount needed for energy efficiency and renewable resource programs, which must be an amount equal to the amount that would be generated under current law under the portion of the public benefits fee for energy efficiency and renewable resource programs that are described above. The PSC must also determine the amount that each nonmunicipal electric utility must collect from ratepayers to collect the total amount needed for low-income programs, as determined by DOA. Nonmunicipal electric utilities must pay the amounts collected from ratepayers to the fiscal agent. Nonmunicipal electric utilities must also pay to the fiscal agent the contributions under the second funding source described above.

For municipal utilities and cooperatives, the bill makes no changes, except that, if a municipal utility or cooperative elects to contribute monthly public benefits fees, rather than administer its own programs, the municipal utility or cooperative must pay the fees to the fiscal agent. Likewise, the bill requires voluntary contributions described under the third funding source above to be paid to the fiscal agent.

The fiscal agent must deposit any funding it receives for low-income programs in the utility public benefits fund. With respect to any funding that the fiscal agent receives for energy efficiency and renewable resource programs, the fiscal agent must hold such funding in trust exclusively for the payment of grants as directed by DOA.

Program administration. The bill makes no changes to the low-income programs administered by DOA under current law. With respect to energy efficiency and renewable resource programs, as under current law, DOA must contract with nonprofit corporations to administer the programs. In addition, the bill requires DOA to direct the fiscal agent to pay grants for the programs. However, the bill requires the PSC to oversee the measurement and evaluation of the programs. Also, the PSC must contract with an independent auditor to evaluate the programs and submit annual reports to the legislature regarding the audits.

Utility-administered programs. The bill allows nonmunicipal electric utilities to administer their own public benefits programs in their service territories, but only with the approval of the PSC. For energy efficiency and renewable resource programs, the PSC may, under certain circumstances, allow a nonmunicipal electric utility to retain a portion of the amount it is otherwise required to pay to the fiscal agent.

Other changes. The bill also does all of the following:

1. The bill allows the fiscal agent to collect from nonmunicipal electric utilities the amounts needed for the fiscal agent's expenses, as specified in the contract with the PSC.

2. The bill requires nonmunicipal electric utilities to identify on customer bills the amounts collected for the public benefits program. In addition, nonmunicipal electric utilities must provide an annual statement to customers identifying the costs and benefits of the program.

3. The bill requires the PSC to ensure in rate-making orders that nonmunicipal electric utilities recover from ratepayers the following: 1) the payments that the utilities make to the fiscal agent; and 2) the amounts spent on public benefits programs administered by the utilities.

4. The bill requires the PSC to ensure that the funding required for energy efficiency and renewable resource programs is equitably divided among nonmunicipal electric utilities so that similarly situated ratepayers contribute equivalent amounts.

5. The bill eliminates provisions under current law regarding the air quality improvement fund. (The fund was created in the same act as the public benefits program. The conditions necessary for depositing money into the fund and paying grants from the fund have never occurred.)

Renewable portfolio standard

Under current law, electric utilities and cooperates must comply with deadlines for providing electricity derived from renewable resources, as defined under current law, to their customers and members in specified percentages of their total retail electric sales. The percentages and deadlines are as follows: 1.2 percent by December 31, 2005; 1.55 percent by December 31, 2007; 1.9 percent by December 31, 2009; and 2.2 percent by December 31, 2011. The percentages may be satisfied by providing such electricity directly to customers and members or by purchasing renewable resource credits from other electric utilities and cooperatives. The foregoing requirements are commonly referred to as the renewable portfolio standard.

The bill eliminates the deadlines described above and creates new deadlines that are based on the percentage of an electric utility's or cooperative's total retail sales in 2004 that were derived from renewable energy resources. (In general, the bill does not affect the definition of renewable resources under current law.) By December 31, 2010, each electric utility and cooperative must increase its percentage so that it is at least two percentage points above the 2004 percentage. By December 31, 2015, each electric utility and cooperative must increase its percentage so that it is at least six percentage points above the 2004 percentage. In addition, by December 31, 2015, each electric utility and cooperative must have a percentage that is sufficient to ensure that the average percentage for all electric utilities and cooperatives is at least 10 percent. The bill requires electric utilities and cooperatives to submit annual reports to the PSC identifying their percentage for the previous year and describing their compliance with the foregoing requirements and their plans for future compliance. No later than 90 days after the PSC receives a report from an electric utility or cooperative, the PSC must inform the electric utility or cooperative whether the electric utility or cooperative is compliance with the foregoing requirements.

Under the bill, an electric utility or cooperative may request that the PSC grant a delay for complying with the foregoing deadlines. The PSC may grant the delay, but only if the electric utility or cooperative demonstrates good faith efforts to comply and makes an additional demonstration regarding any of the following: 1) undesirable impacts on the reliability of the electric utility's or cooperative's system; 2) excessive increases in rates; 3) delays in obtaining required approvals; or 4) transmission constraints.

The bill changes certain requirements under current law for calculating an electric utility or cooperative's percentage. Under current law, an electric utility of cooperative can include in the percentage electricity derived from renewable energy facilities owned or operated by the electric utility or cooperative. Under the bill, if an electric utility or cooperative is part of an interconnected multistate system serving this state, the electric utility or cooperative may also include electricity derived from renewable energy facilities in that system, even if they are not owned or operated by the electric utility or cooperative. The bill also changes the requirements for energy derived from hydroelectric plants. Under current law, hydroelectric plants with a capacity of less than 60 megawatts are considered renewable energy resources. However, if such a plant was in service before January 1, 1998, no more than 0.6 percent of an electric utility's or cooperative's percentage may be attributable to such a plant. The bill eliminates this restriction. As result, any electricity derived from a hydroelectric power plant with a capacity of less than 60 megawatts, even if the plant was in service before January 1, 1998, may be included in the percentage.

The bill also makes certain changes to credits. Under current law, an electric utility or cooperative that exceeds a required percentage may create a credit that the electric utility or cooperative may use to satisfy a percentage in a subsequent year or sell to another electric utility or cooperative that the purchasing electric utility or cooperative may use to satisfy a percentage. Current law requires the PSC to promulgate rules for calculating and using credits.

The bill provides that any credit created under current law may not be used after December 31, 2011. The bill also provides that any credit created after the effective date of the bill may not be used four years after it is created, except that the PSC may promulgate rules specifying a different time period. The PSC may promulgate such rules if a different time period is necessary for consistency with any regional credit trading program that applies in this state. The bill also creates new requirements for calculating the amount of a credit created after January 1, 2004, from a facility that was placed in service before January 1, 2004. Under the bill, the PSC must promulgate rules that provide that the amount of such a credit is limited to the incremental increase in output from the facility that is due to capacity improvements made after January 1, 2004.

The bill also requires the PSC to promulgate rules that allow a wholesale customer of an electric utility or cooperative to use an allocated portion of a credit purchased by the electric utility or cooperative. However, the rules must provide that the wholesale customer may use the allocated portion only if the cost of renewable energy resources is included in wholesale rates paid by the wholesale customer. The PSC's rules must specify the manner for making the allocation. Current law does not address whether wholesale customers can use credits in such a manner.

State agency use of renewable energy

The bill requires DOA to establish goals for specified state agencies to generate or purchase electric energy derived from renewable resources. ("Renewable resources" has the same meaning as "renewable resources" under the renewable portfolio standard described above.) The agencies that are subject to the goals are: DOA, the Department of Corrections, the Department of Health and Family Services, the Department of Natural Resources, the Department of Public Instruction, the Department of Veterans Affairs, the State Fair Park Board, and the Board of Regents of the University of Wisconsin System. The goals apply to electric energy generated or purchased by the state for power, heating, or cooling purposes for all state owned or leased buildings occupied, operated, or used by the foregoing agencies.

The bill requires DOA to establish goals for each agency that are designed to accomplish the following goals: 1) that the percentage of electric energy generated or purchased by all of the above agencies for the above purposes that is derived from renewable resources (which the bill defines as the "renewable percentage") by December 31, 2006, is at least 10 percent; and 2) that the renewable percentage by December 31, 2011, is at least 20 percent. In determining whether the goals are accomplished, DOA must calculate renewable percentages based on the annual average for the three years prior to the foregoing deadlines. However, notwithstanding these goals, the bill provides that no agency is required to generate or purchase electric energy derived from renewable resources if the generation or purchase is not technically feasible or cost-effective. The bill requires DOA to submit an annual report to the governor and legislature regarding the attainment of the goals during the preceding year.

The bill also requires, in each fiscal year, that DOA determine the costs incurred by the agencies in complying with the goals that are in excess of the costs the agencies would have incurred in the absence of such goals. DOA must certify the amount that it determines to the PSC. The PSC must require the fiscal agent described above to collect from nonmunicipal electric utilities the amount certified or $1,000,000, whichever is less, and deposit the amount collected in the utility public benefits fund. In each fiscal year, DOA must transfer the amount collected from the utility public benefits fund to the general fund. However, if an agency's utility costs are paid from a segregated fund, DOA must reduce the transfer to the general fund by an amount that DOA determines is attributable to such utility costs, and transfer the amount of the reduction from the utility public benefits fund to the segregated fund.

Energy efficiency standards under state contracts

The bill requires DOA to prescribe and annually review and revise as necessary energy efficiency standards for equipment installed under state construction projects. The equipment subject to the standards is equipment relating to heating, ventilation, air conditioning, water heating or cooling, lighting, refrigeration, or any function that consumes energy. The standards must meet or exceed the following: 1) U.S. Environmental Protection Agency guidelines; 2) guidelines that apply to a federal energy management program for federal energy consumption; and 3) standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (society).

For equipment that is subject to the guidelines, DOA must ensure that specifications for the equipment under any contract administered by DOA meet the standards. If there is no standard for the type of equipment purchased under a contract, or if equipment that meets a standard is not reasonably available, DOA must ensure that the equipment that is selected maximizes energy efficiency to the extent technically and economically feasible. The bill includes requirements for DOA to determine whether or not equipment meeting a standard is reasonably available, as well as for determining whether the energy efficiency of equipment selected is economically feasible.

The bill also prohibits the Building Commission from entering into a lease or other contract that provides for construction of a building, structure, or facility to be initially occupied by the state and that contains an option for the state to purchase the building, structure, or facility, unless the lessor or seller agrees that all energy-consuming equipment to be installed meets the standards described above.

Energy Conservation Code

Under current law, the Department of Commerce (department) is required to promulgate an Energy Conservation Code for the purpose of energy conservation in public buildings and places of employment and to review that code. In conducting the review, the department must consider incorporating into the Energy Conservation Code design requirements from the most current national energy efficiency design standards that are generally acceptable and used by engineers and the construction industry, including a 1989 version of a standard adopted by the society. The department must promulgate rules that revise that code to improve energy conservation whenever the society revises its standards for the energy efficient design of new buildings and whenever five years have elapsed since the last review of that code.

This bill eliminates the reference to the 1989 version of the standards described above, and refers instead to the International Energy Conservation Code. The bill also changes the five-year revision requirement to a three-year requirement. In addition, the bill requires the department, notwithstanding the foregoing requirements, to begin a review of the Energy Conservation Code on the effective date of the bill and to complete that review and submit proposed rules changing the Energy Conservation Code to improve energy conservation to the Legislative Council Staff by no later than the first day of the 18th month beginning after the effective date of the bill. In conducting the review, the department must consider incorporating the most recent national standards of the society.

Anaerobic digestor research

The bill requires the Department of Agriculture, Trade and Consumer Protection to include, as part of its 2007-09 biennial budget request, a proposal to provide additional funding for the research and development of anaerobic digestors at farms participating in the Discovery Farms Program under the Wisconsin Agricultural Stewardship Initiative.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.