Chapter 196

196.795(6m)(b)2. 2. For purposes of subd. 1., the assets of each nonutility affiliate shall be determined by doing all of the following:

196.795(6m)(b)2.a. a. Subtracting from the nonutility affiliate’s total assets the amount of the nonutility affiliate’s investment in other utility and nonutility affiliates with which the nonutility affiliate is in a holding company system.

196.795(6m)(b)2.b. b. Multiplying the amount derived under subd. 2. a. by the quotient of the amount of the direct ownership interest in such nonutility affiliate owned by persons who are not with the nonutility affiliate in the holding company system, if such ownership by such persons is greater than one-half of the total ownership interest in such nonutility affiliate, divided by the total ownership interest in such nonutility affiliate.

196.795(6m)(b)2.c. c. Subtracting the amount derived under subd. 2. b. from the amount derived under subd. 2. a.

196.795(6m)(b)3. 3. Within 36 months after it is formed, a holding company formed on or after November 28, 1985, may not have nonutility affiliate assets exceeding 40 percent of the maximum amount allowed under subd. 1.

196.795(6m)(b)4. 4. If the commission establishes a percentage of assets under subd. 1. b. or c. which is greater than 25 percent, any subsequent reduction of such percentage by the commission may not take effect until the last day of the 12th month following issuance of the order establishing the reduction or until a later date which the commission sets and which the commission determines to be reasonable after considering the size of the reduction and which is no later than 36 months following issuance of the order establishing the reduction.

196.795(6m)(c) (c) Wholesale merchant plants. The assets of a wholesale merchant plant shall not be included in the sum of the assets of a public utility affiliate under par. (b) 1. a., b., or c. and shall not be included in a nonutility affiliate’s total assets under par. (b) 2. a. if the requirements specified in s. 196.491 (3m) (a) 1. and 2. are satisfied or if the wholesale merchant plant qualifies for the exemption under s. 196.491 (3m) (e).

196.795(6m)(d) (d) Foreign affiliates. The assets of a foreign affiliate shall be included in the sum of the assets of a public utility affiliate under par. (b) 1. a., b. or c. and shall not be included in a nonutility affiliate’s total assets under par. (b) 2. a.

196.795(6m)(e) (e) Contributor public utility affiliates.

196.795(6m)(e)1. 1. The eligible assets of a nonutility affiliate in a holding company system that includes each of the contributor public utility affiliates in the holding company system shall not be included in the sum of the assets of the public utility affiliates under par. (b) 1. a., b. or c. and shall not be included in the nonutility affiliate’s total assets under par. (b) 2. a.

196.795(6m)(e)2. 2. For purposes of subd. 1., all of the assets of a nonutility affiliate shall be considered eligible assets if each of the following is satisfied:

196.795(6m)(e)2.a. a. The bylaws of the nonutility affiliate or a resolution adopted by its board of directors specifies that the business of the nonutility affiliate is limited to activities involving eligible assets.

196.795(6m)(e)2.b. b. Substantially all of the assets of the nonutility affiliate are eligible assets.

196.795(6m)(e)3. 3. The net book value of transmission facility assets that a contributor public utility affiliate has contributed to a transmission company under s. 196.485 (5) (b) shall be included in the sum of the assets of the public utility affiliate under par. (b) 1. a., b. and c. In determining net book value under this subdivision, accumulated depreciation shall be calculated as if the contributor public utility affiliate had not contributed the assets.

196.795(6m)(e)4. 4. The net book value of generation assets that a contributor public utility affiliate has transferred to a person that is not affiliated with the public utility affiliate pursuant to the order of the commission, a court or a federal regulatory agency shall be included in the sum of the assets of the public utility affiliate under par. (b) 1. a., b. and c. In determining net book value under this subdivision, accumulated depreciation shall be calculated as if the contributor public utility affiliate had not transferred the assets.

196.795(7) (7) Commission investigations.

196.795(7)(a) (a) No sooner than the first day of the 36th month after the formation of a holding company and at least once every 3 years thereafter, the commission shall investigate the impact of the operation of every holding company system formed on or after November 28, 1985, on every public utility affiliate in the holding company system and shall determine whether each nonutility affiliate, except for the nonutility affiliates of a holding company that were affiliates of a holding company that was formed before November 28, 1985, does, or can reasonably be expected to do, at least one of the following:

196.795(7)(a)1. 1. Substantially retain, substantially attract or substantially promote business activity or employment or provide capital to businesses being formed or operating within the wholesale or retail service territory, within or outside this state, of:

196.795(7)(a)1.a. a. Any public utility affiliate.

196.795(7)(a)1.b. b. Any public utility or member of a cooperative association organized under ch. 185 which reports or has reported information to the commission under the rules promulgated under s. 196.491 (2) (ag).

196.795(7)(a)2. 2. Increase or promote energy conservation or develop, produce or sell renewable energy products or equipment.

196.795(7)(a)3. 3. Conduct a business that is functionally related to the provision of utility service or to the development or acquisition of energy resources.

196.795(7)(a)4. 4. Develop or operate commercial or industrial parks in the wholesale or retail service territory of any public utility affiliate.

196.795(7)(am) (am) Funds utilized by a nonutility affiliate for any of the following may not be considered by the commission in making any determination under par. (a):

196.795(7)(am)1. 1. The purchase or sale of securities or other appropriate cash management practices.

196.795(7)(am)2. 2. The establishment and maintenance of cash accounts in banks or other financial institutions.

196.795(7)(ar) (ar) Three years after the formation of a holding company under this section, the commission shall report its findings under par. (a) to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172 (2). Thereafter the commission shall, based on its existing investigative findings, rate reviews and other relevant information, submit to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172 (2), a report on the impact of the holding company, including the benefits and adverse effects on every public utility affiliate in the holding company system and on the investors and consumers of such public utility affiliates, at least once every 2 years. The report shall include any recommendations for legislation relating to the regulation of any part of a holding company system.

196.795(7)(b) (b) The commission, on its own motion, or, at its discretion, upon the complaint of any person, may, after reasonable notice and an opportunity for hearing, conduct an investigation to determine if any practice of a holding company system violates any provision of sub. (5) (b) to (s) or any limitation, term or condition imposed under sub. (2) (e) or (f). If the commission finds after investigation, notice and opportunity for hearing that any practice of any company in a holding company system violates any provision of sub. (5) (b) to (s) or any term, limitation or condition imposed under sub. (2) (e) or (f), the commission, by order or otherwise, shall direct the company to modify or cease the practice. Such order is reviewable under ch. 227. The circuit court of Dane County, by appropriate process including the issuance of a preliminary injunction by suit of the commission, may enforce an order to cease or modify a practice under this paragraph.

196.795(7)(c) (c) The commission, after investigation and a hearing, may order a holding company to terminate its interest in a public utility affiliate on terms adequate to protect the interests of utility investors and consumers and the public, if the commission finds that, based upon clear and convincing evidence, termination of the interest is necessary to protect the interests of utility investors in a financially healthy utility and consumers in reasonably adequate utility service at a just and reasonable price. The circuit court of Dane County may enforce by appropriate process an order establishing a plan of reorganization to terminate a holding company system’s interest in a public utility affiliate. Any such order of the commission issued under this paragraph may be reviewed under ch. 227.

196.795(8) (8) Exemptions.

196.795(8)(a) (a) This section does not apply to any holding company which was organized or created before November 28, 1985, and which was not organized or created by or at the direction of a public utility.

196.795(8)(b) (b) This section does not apply to any telecommunications utility.

196.795(9) (9) Protection of business information. If the commission obtains business information from a holding company system which, if disclosed to the public, would put any nonutility affiliate in the holding company system at a material competitive disadvantage, the information is not subject to s. 19.35 and the commission shall protect such information from public disclosure as if it were a trade secret as defined in s. 134.90 (1) (c).

196.795(9m) (9m) Private cause of action. Any company in a holding company system which does, causes or permits to be done any prohibited action under sub. (5) (c) to (dr), (f), (h), (k), (n), (q), (r) or (s), or fails to comply with any term, limitation or condition imposed under sub. (2) (e) or (f) consistent with sub. (5) (c) to (dr), (f), (h), (k), (n), (q), (r) or (s), is liable to any person injured thereby in treble the amount of damages sustained in consequence of the prohibited action or failure to act.

196.795(10) (10) Commission intervenor authority. The commission may intervene on behalf of this state in any proceeding before any state or federal agency or court before which an application or issue related to this section is pending. The commission may enter into any binding settlement related to any proceeding in which the commission has intervened and may exercise any power or right necessary to accomplish the intervention.

196.795(10m) (10m) Small business protection. In this subsection, “small business” means a business that has had less than $5,000,000 in gross annual sales in the most recent calendar year or fiscal year and that has fewer than 150 employees. The commission shall provide assistance, monitoring, and advocacy in protecting small business interests under this section in any action or proceedings before the commission.

196.795(11) (11) Construction.

196.795(11)(a) (a) This section may not be deemed to diminish the commission’s control and regulation over the operations and assets of any public utility.

196.795(11)(b) (b) This section shall be deemed to legalize and confirm the formation, prior to November 28, 1985, of any holding company, which is not itself a public utility, and shall be deemed to legalize and confirm the operations and issuances of securities of the holding company, except that nothing in this section shall be deemed to prevent the commission from imposing reasonable terms, limitations or conditions on any holding company which are consistent with the requirements of sub. (6m) (c) or (d) or which are consistent with and necessary to satisfy the requirements of sub. (5) (b) to (o) and (q) to (s) or which relate to future investments by the holding company unless the holding company owns, operates, manages or controls a telecommunications utility and does not also own, operate, manage or control a public utility which is not a telecommunications utility.

196.795(11)(c) (c) The commission may not impose upon a holding company the formation of which is considered to be legalized and confirmed under par. (b) any term, limitation or condition under par. (b) that establishes the sum of the holding company’s nonutility affiliate assets at less than 25 percent of the sum of the holding company’s utility affiliate assets. For purposes of this paragraph, any term, limitation or condition on nonutility affiliate assets shall not apply to the ownership, operation, management or control of any eligible asset, as defined under sub. (6m) (a) 2.

196.795 History History: 1985 a. 79; 1985 a. 297 ss. 67, 68, 76; 1985 a. 332; 1987 a. 186; 1987 a. 403 s. 256; 1989 a. 303; 1991 a. 269; 1993 a. 213; 1997 a. 140, 204; 1999 a. 9, 150; 2001 a. 16; 2011 a. 155; 2021 a. 239; s. 35.17 correction in (1) (h) 2., (10m).

196.795 Note NOTE: This section was created by 1985 Act 79. Section 1 of that Act is entitled “Findings and purpose.”

196.795 Annotation The sub. (5) (L) requirement that a public utility holding company must be incorporated in Wisconsin violates the interstate commerce clause of the U. S. constitution. Alliant Energy Corporation v. Bie, 330 F.3d 904 (2003).

196.795 Annotation Subs. (3) and (6m) (b) do not violate the interstate commerce clause of the U. S. constitution. Alliant Energy Corporation v. Bie, 330 F.3d 904 (2003).

196.796 196.796 Real estate activities.

196.796(1) (1) In this section:

196.796(1)(a) (a) “Brownfields facility or site” means any abandoned, idle or underused industrial or commercial facility or site, the use, expansion or redevelopment of which is adversely affected by actual environmental contamination.

196.796(1)(b) (b)

196.796(1)(b)1. 1. “Commercial construction” means the act of building any structure, or that part of any structure, that is not used as a home, residence or sleeping place by one or more persons maintaining a common household to the exclusion of all others.

196.796(1)(b)2. 2. “Commercial construction” does not include any of the following:

196.796(1)(b)2.a. a. Any repair, maintenance, installation or construction of a structure owned or used by or for a public utility, or for a customer of a public utility, if the repair, maintenance, installation or construction is related to furnishing heat, light, water or power to the customer.

196.796(1)(b)2.b. b. Any construction related to the evaluation, control or remediation of hazardous substances; solid, liquid or gaseous wastes; soils; air; or water.

196.796(1)(b)2.c. c. Any construction performed in order to comply with federal, state or local environmental laws, regulations, orders or rules.

196.796(1)(c) (c) “Economic development” means development that is designed to promote job growth or retention, expand the property tax base or improve the overall economic vitality of a municipality, as defined in s. 30.01 (4), or region.

196.796(1)(d) (d) “Engage” means to actively participate in the daily operations or daily business decisions of an entity. “Engage” does not include taking an action necessary to protect an ownership interest in an entity.

196.796(1)(dg) (dg) “Entity” has the meaning given in s. 180.0103 (8).

196.796(1)(dr) (dr) “Financial support” includes investments, loans and grants.

196.796(1)(e) (e) “Holding company system” has the meaning given in s. 196.795 (1) (i).

196.796(1)(f) (f) “Improvements” means any valuable addition made to land, including excavations, gradings, foundations, structures, buildings, streets, parking lots, sidewalks, sewers, septic systems and drainage facilities. “Improvements” does not include any repair, maintenance, installation or construction of structures or facilities owned or used by or for a public utility, or by or for a customer of a public utility, if the repair, maintenance, installation or construction is related to furnishing heat, light, water or power to the customer.

196.796(1)(g) (g) “Nonutility affiliate” means a subsidiary of a public utility or a company in a holding company system that is not a public utility. “Nonutility affiliate” does not include a passively held company.

196.796(1)(gm) (gm) “Passively held company” means an entity that satisfies each of the following:

196.796(1)(gm)1. 1. Less than 50 percent of the ownership interest of the entity is directly or indirectly owned in any chain of successive ownership by a public utility or nonutility affiliate.

196.796(1)(gm)2. 2. The entity engages in property management for a 3rd party, real estate practice, residential real estate development or residential or commercial construction.

196.796(1)(h) (h) “Property management” means any activity associated with the care or maintenance of land or improvements, including business planning and budgeting, accounting, lease administration, tenant relations and retention, security, maintenance of common areas, rent collections, financial reporting, service contract administration and inspections.

196.796(1)(hm) (hm) “Public utility” means every corporation, company, individual or association and their lessees, trustees, or receivers appointed by any court or state or federal agency, that may own, operate, manage, or control all or any part of a plant or equipment, within the state, for the production, transmission, delivery, or furnishing of electricity directly to or for the public, except that “public utility” does not include any municipal utility or municipal electric company, as defined in s. 66.0825 (3) (d), or any cooperative association organized under ch. 185 for the purpose of producing or furnishing heat, light, power, or water to its members only.

196.796(1)(i) (i) “Real estate practice” has the meaning given in s. 452.01 (6).

196.796(1)(j) (j) “Residential construction” means the act of building any structure, or that part of any structure that is used as a home, residence or sleeping place by one or more persons maintaining a common household to the exclusion of all others.

196.796(1)(k) (k) “Residential real estate development” means the act of dividing or subdividing any parcel of land for residential construction or making improvements to facilitate or allow residential construction.

196.796(1)(L) (L) “Third party” means any person other than a public utility or nonutility affiliate.

196.796(2) (2) Prohibited activities. Except as provided in sub. (4), a public utility or nonutility affiliate may not do any of the following in this state:

196.796(2)(a) (a) Engage in real estate practice.

196.796(2)(b) (b) Engage in residential real estate development.

196.796(2)(c) (c) Engage in property management for a 3rd party.

196.796(2)(d) (d) Engage in residential or commercial construction.

196.796(3) (3) Permitted activities.

196.796(3)(a) (a) Subsection (2) does not prohibit a public utility or nonutility affiliate from doing any of the following:

196.796(3)(a)1. 1. Repairing, maintaining, installing or constructing a structure that is owned or used by or for a public utility or nonutility affiliate, or for a customer of a public utility if the repair, maintenance, installation or construction is related to furnishing heat, light, water or power to the customer.

196.796(3)(a)2. 2. Engaging in construction that is specifically related to the evaluation, control or remediation of hazardous substances; solid, liquid or gaseous wastes; soils; air; or water.

196.796(3)(a)3. 3. Engaging in construction that is performed in order to comply with federal, state or local environmental laws, regulations, orders or rules.

196.796(3)(a)4. 4. Consulting or making other financial or business arrangements with one or more 3rd parties who will engage in commercial construction.

196.796(3)(a)5. 5. Consulting or making other financial or business arrangements with one or more 3rd parties who will engage in residential construction or residential real estate development, except that if a public utility or nonutility affiliate contracts for the development of more than one residential construction project or residential real estate development, the public utility or nonutility affiliate may not enter into an exclusive arrangement with a 3rd party for all such residential construction or residential real estate development.

196.796(3)(a)6. 6. Acquiring or disposing of property or interests in property if the acquisition or disposition is related to the operation of a public utility and the acquisition or disposition satisfies one of the following:

196.796(3)(a)6.a. a. The acquisition or disposition is conducted under a contract with a 3rd party that is engaged in real estate practice.

196.796(3)(a)6.b. b. The acquisition or disposition is conducted by an individual engaged in real estate practice or employed by a public utility.

196.796(3)(a)7. 7. Owning a passively held company.

196.796(3)(b) (b) Subsection (2) does not prohibit a public utility that is not subject to the requirements of s. 196.795, or the nonutility subsidiary of such a public utility, from doing any of the following:

196.796(3)(b)1. 1. Engaging in commercial or residential real estate development or construction on property owned or acquired by the public utility or nonutility subsidiary for a public utility purpose if the total annual revenues from the development or construction do not exceed 3 percent of the total operating revenues of the public utility in any year.

196.796(3)(b)2. 2. Providing financial support for the purpose of economic development to 3rd parties that are engaged in an activity specified in sub. (2) (a) to (d). The public utility or nonutility subsidiary may profit directly from that activity only through receipt of profits that are incidental to the economic development project or interest earned on a loan.

196.796(4) (4) Exceptions.