LRB-3793/1
MDK:klm/kjf/amn/ahe
2015 - 2016 LEGISLATURE
December 1, 2015 - Introduced by Representatives August, Zepnick, Sanfelippo,
Murphy, Kleefisch, Knodl and Skowronski, cosponsored by Senator Lasee.
Referred to Committee on Energy and Utilities.
AB554,1,5 1An Act to renumber and amend 66.0817 (3) and 196.795 (6m) (a) 3.; to
2consolidate, renumber and amend
66.0817 (4) and (5); and to create
366.0817 (5m) of the statutes; relating to: out-of-state sewer and water
4affiliates of public utility holding companies and the sale or lease of municipal
5water or sewer public utilities to investor-owned public utilities.
Analysis by the Legislative Reference Bureau
This bill changes how the assets of out-of-state sewer and water affiliates are
treated under a current law that limits the extent to which a public utility holding
company (holding company) can invest in nonutility affiliates. The bill also makes
changes to the procedure that applies under current law for the sale or lease of a
water or sewer utility by a city, village, or town (municipality) to an investor-owned
public utility.
Holding companies. Current law imposes certain requirements on a holding
company, which is a company that controls 5 percent or more of the outstanding
voting securities of a public utility that is not a telecommunications utility. A public
utility that is controlled by a holding company is called a public utility affiliate.
Other affiliates that the holding company controls are called nonutility affiliates.
Current law limits nonutility investments by prohibiting the sum of the assets
of each nonutility affiliate of the holding company from exceeding limits that are
based on specified percentages of the assets of the public utility affiliates. Current
law includes a test for determining whether an out-of-state affiliate is treated like

a public utility affiliate or nonutility affiliate for purposes of the limits on nonutility
investments. Under the test, if an out-of-state affiliate is incorporated in another
state and satisfies all of the following requirements, it is treated like a public utility
affiliate: 1) it provides heat, light, power, or natural gas for public use in another
state; 2) it is an "affiliated interest," as defined under current law, of a public utility
in this state; and 3) it is operated on an integrated system basis with that public
utility. If an out-of-state affiliate does not satisfy the foregoing requirements, it is
treated like a nonutility affiliate.
This bill allows an out-of-state affiliate that provides sewer service or water
for public use to satisfy the first requirement itemized above and exempts such an
affiliate from satisfying the third requirement. As a result, if an out-of-state sewer
or water affiliate is incorporated in another state and satisfies the test as affected by
the bill, its assets are treated like public utility affiliate assets for purposes of the
limits on nonutility investments.
Sales and leases. Under current law, for any type of municipal utility, the
municipality must adopt an ordinance or resolution authorizing a proposed sale or
lease and submit the proposal to the Public Service Commission (PSC) for approval.
If the PSC determines that the interests of the municipality and its residents will be
best served by the sale or lease, the PSC must fix the price and other terms. If the
PSC does so, the proposal must then be approved by a majority of the municipality's
residents in a referendum. The notice for the referendum must include the price and
terms fixed by the PSC. If a majority of the municipality's residents approve the
proposal, the municipality may consummate the sale or lease with the proposed
purchaser or lessee on the terms fixed by the PSC and at a price not less than the price
fixed by the PSC. However, the municipality may also consummate the purchase or
lease with any other person with whom better terms approved by the PSC can be
made. If the municipality does not consummate the sale or lease within one year of
the referendum, or the time is not extended by the PSC, the proceedings are void.
The bill applies to the proposed sale or lease of a municipal water or sewer
utility and does not affect proposals involving other types of utilities. Also, the bill
applies only to sales or leases to investor-owned public utilities. Under the bill, a
referendum on the proposed sale or lease is not required unless, within 30 days after
the municipality adopts the ordinance or resolution required under current law, a
petition requesting the referendum is filed with the municipal clerk. The petition
must be signed by a number of the municipality's qualified electors that is at least
25 percent of the votes cast in the municipality for governor in the last general
election. If a petition is not filed within that deadline, no referendum is required and
the municipality must submit the proposal to the PSC. If a referendum is held due
to the filing of a petition within the deadline and a majority approves the proposal,
the municipality must submit the proposal to the PSC for approval.
Under the bill, the PSC has similar authority regarding the proposal as under
current law. If the PSC approves the proposal, the municipality may consummate
the sale or lease with the proposed purchaser or lessee on the terms fixed by the PSC
and at a price not less than the price fixed by the PSC. Finally, the bill provides that
if the municipality does not consummate the sale or lease within one year after

submitting the proposal to the PSC for approval, or the time is not extended by the
PSC, the proceedings are void.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB554,1 1Section 1. 66.0817 (3) of the statutes is renumbered 66.0817 (3) (a) and
2amended to read:
AB554,3,73 66.0817 (3) (a) The Except as provided in sub. (5m), the municipality shall
4submit the preliminary agreement when executed to the department of
5transportation or public service commission, which shall determine whether the
6interests of the municipality and its residents will be best served by the sale or lease,
7and if it so determines, shall fix the price and other terms.
AB554,2 8Section 2. 66.0817 (4) and (5) of the statutes are consolidated, renumbered
966.0817 (3) (b) and amended to read:
AB554,3,2110 66.0817 (3) (b) After the price and other terms are fixed under sub. (3) par. (a),
11the proposal shall be submitted to the electors of the municipality. The notice of the
12referendum shall include a description of the plant and a summary of the
13preliminary agreement and of the price and terms as fixed by the department of
14transportation or public service commission. If a majority voting on the question
15votes for the sale or lease, the board or council may consummate the sale or lease,
16upon the terms and at a price not less than fixed by the department of transportation
17or public service commission, with the proposed purchaser or lessee or any other with
18whom better terms approved by the department of transportation or public service
19commission can be made. (5) Unless the sale or lease is consummated within one
20year of the referendum, or the time is extended by the department of transportation
21or public service commission, the proceedings are void.
AB554,3
1Section 3. 66.0817 (5m) of the statutes is created to read:
AB554,4,192 66.0817 (5m) If the preliminary agreement is for the sale or lease of a public
3utility that furnishes water or sewer service to an investor-owned public utility, the
4proposal shall be submitted to the electors of the municipality if, within 30 days after
5the adoption of a resolution or ordinance under sub. (1), a petition conforming to the
6requirements of s. 8.40 requesting such submission, signed by a number of qualified
7electors equal to at least 25 percent of the votes cast in the municipality for governor
8at the last general election, is filed in the office of the municipal clerk. If a petition
9is not filed within that time, or if a referendum is held and a majority voting on the
10question votes for the sale or lease, the municipality shall submit the preliminary
11agreement to the public service commission, which shall determine whether the
12interests of the municipality and its residents will be best served by the sale or lease.
13If the public service commission determines those interests are best served by the
14sale or lease, the commission shall fix the price and other terms. The municipality
15may consummate the sale or lease, upon the terms, and at a price not less than, fixed
16by the public service commission, with the proposed purchaser or lessee. Unless the
17sale or lease is consummated within one year of submission of the preliminary
18agreement to the public service commission, or the time is extended by the
19commission, the proceedings are void.
AB554,4 20Section 4. 196.795 (6m) (a) 3. of the statutes is renumbered 196.795 (6m) (a)
213. (intro.) and amended to read:
AB554,4,2522 196.795 (6m) (a) 3. (intro.) "Foreign affiliate" means a person that is engaged
23in the production, transmission, delivery or furnishing of sewer service, heat, light,
24power, water, or natural gas either directly or indirectly to or for use of the public in
25another state, and that satisfies all of the following:
AB554,5,1
1a. The person is incorporated under the laws of another state, that.
AB554,5,3 2b. The person is an affiliated interest, as defined in s. 196.52 (1), of a public
3utility and that.
AB554,5,7 4c. The person is operated on an integrated system basis, as determined by the
5commission, with the public utility under subd. 3. b., except that this subd. 3. c. does
6not apply if the person is engaged in the production, transmission, delivery, or
7furnishing of water or sewer service
.
AB554,5 8Section 5. Initial applicability.
AB554,5,109 (1) The treatment of section 66.0817 (3) and (5m) of the statutes first applies
10to preliminary agreements that are executed on the effective date of this subsection.
AB554,5,1111 (End)
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