James Buchen, Executive Director, Wisconsin Utility Investors

The Wisconsin Legislature began it’s 2021-22 session in January 2021 and spent the first six months of the year working on the State Budget and several other policy initiatives. The Budget, as introduced by Governor Evers in February, contained a variety of energy related provisions, some of which may have had an impact on utility shareholders. As the Budget worked its way through the Legislative process the Joint Finance Committee voted to remove these provisions and they were not included in the final version of the Budget which passed in late June 2021.

The Legislature held a number of floor periods during the fall of 2021 and the first two months of 2022 during which individual bills were considered. It concluded its last general floor period in early March upon which any bill that did not pass both houses in identical form is considered dead for the session. To receive further consideration proposals would have to be reintroduced during the next legislative session that begins in January 2023. 

The primary issues that WUI monitored or actively lobbied on during the 2021-22 legislative session are outlined below along with their final disposition.

State Budget Proposals (SB 111/AB 68)
The Wisconsin State Budget is the legal framework for State taxing and spending for the two-year period beginning July 1, 2021, running through June 30, 2023. The initial proposal was developed by the Governor based on recommendations from the various state agencies. Beyond taxing and spending provisions the Budget also contained many individual policy initiatives requested by agencies and the Governor which accounts for its relative length at 1846 pages. Once introduced, the Budget is treated as any other piece of legislation and must ultimately pass both houses in identical form, whereupon the Governor can exercise line-item vetoes before signing the bill into law. As introduced the bills contained a number of energy related provisions including:

  • Focus on Energy Contribution Rate – The Governor’s Budget would have increased the required energy utility contribution to fund the energy efficiency program known as Focus on Energy, from the current 1.2% of operating revenues to 2.4% of revenues. This amounts to a $100 million increase for the program.
  • Social Cost of Carbon – The Governor’s Budget would have required the Public Service Commission (PSC) to consider the social cost of carbon in approving utility construction projects, such as those for electric generation and transmission lines.
  • Increase Pipeline Safety Penalty – The Governor’s Budget would increase the penalty for violation of PSC regulation on the production, transmission and distribution of natural gas from a maximum of $25,000 to a maximum of $200,000 per instance (each day of violation).

It would also increase the cap for a single violation from $500,000 to $2,000,000. These along with dozens of other proposed policy initiative included in the Governor's original budget were removed from the bill by vote of the Legislature’s Joint Finance Committee and were not included in the final version of the Budget that passed at the end of June.

 PSC Update (AB 27, 2021 Wisconsin Act 27)
Last Session, legislation that would update various PSC regulations and procedures was developed jointly by the Chairs of the Legislature’s Energy Committees, the PSC and Wisconsin’s utilities. Unfortunately, the agreed-on bill failed to pass before the Legislature adjourned for the year. The bill was reintroduced this Session as AB 27. 

The bill passed both houses and was signed into law by Governor Evers as 2021 Wisconsin Act 24. WUI lobbied in support of this legislation. The substance of the new law serves to:

  • Eliminate various unnecessary filings;
  • Update obsolete thresholds;
  • Adjust PSC procedures to improve the regulatory process;
  • Provide a permanent source of funding for the Citizens Utility Board as it intervenes on behalf of rate payers

• Solar Deregulation (SB 490/AB 527)
Legislation was introduced that would have exempted entities that own or operate “community solar” generating facilities from traditional utility regulation. The effect of the bills would have been to shift significant costs to non-participating electric customers and give access to Wisconsin’s energy grid to developers of such projects at no cost to them.

Under Senate Bill 490/AB 527, third party solar developers would have become exempt from public utility regulation and would have been allowed to develop solar generating facilities of up to 5 MW in size at no risk.

Under Senate Bill 490/AB527:

  • An electric utility (and its customers) would be required to purchase all of the output from a “community solar” generating facility at expensive subsidized rates – guaranteed for at least 25 years. The subsidy would be paid for by other non-participating customers.
  • “Subscribers” of the “community solar” facility would receive bill credits at subsidized rates established by the Public Service Commission.
  • If a customer’s credits exceed their monthly bill, the excess would be carried over to the next month’s bill in perpetuity.
  • If the “community solar” facility was not fully subscribed, the utility and its customers would pay the subscribers additional bill credits for the unsubscribed output of the facility at the utility’s retail rate.

Under this structure, non-regulated “community solar” facilities would be allowed to produce energy and sell it to utility customers for a premium price, risk free, upending the well-functioning utility regulatory model. Meanwhile, the local utility would be required to maintain the grid and infrastructure to support the facilities, including providing reliable power during times when the facility is not producing power.

Under current law, persons that provided energy to the public, directly or indirectly, are considered utilities subject to regulation by the PSC. This regulatory system is designed to protect consumer interests while providing reliable energy at a reasonable cost. In addition, the system ensures that utilities have the necessary capital to finance the construction and maintenance of a large scale, reliable, low cost energy system by providing investors with a fair rate of return on their investments.

Wisconsin utilities are committed to prudently expanding renewable energy generation including substantial investment in solar energy. They have established many flexible options to provide solar energy in a way that serves customer needs, including programs that involve community partners such as municipalities, businesses and universities.

Utility scale solar generation is the most cost-effective way to enjoy the benefits of no carbon emission electricity without the adverse consequences of a scheme that would raise costs for most utility customers.

The utilities and WUI opposed this legislation. Both bills failed to receive a public hearing in either house and failed to pass before the end of the session. 

 Electric Vehicle Charging (SB 573/AB 588)
Legislation was introduced that would have created an exemption from utility regulation for electric vehicle charging stations owned by third parties that charge a parking fee or a demand-based fee for use of the charging equipment. The bill would have also placed restrictions on the ability of governmental units’ ability to establish fee for service charging stations.

The bills were intended to facilitate the development of a network of electric vehicle charging stations throughout Wisconsin. It was expected that existing gasoline service stations would be the first to take advantage of this new law.

The utilities and WUI monitored developments on this legislation. SB 573 passed both houses but picked up an amendment in the Assembly that the Senate did not concur in and the bill died at the end of the session. 

 Deregulation of Renewable Generation (SB 702/AB 731)
Legislation was introduced that would have created an exemption from utility regulation for entities that own, operate, manage, control or lease renewable energy generating equipment placed on a premises owned or occupied by another person. The exemption would have applied to the following types of renewable generation:

  • Renewable fuel cells;
  • Tidal wave action;
  • Solar, thermal electric or photovoltaic energy;
  • Wind power;
  • Geothermal technology;
  • Biomass;
  • Synthetic gas or fuel pellets;
  • Fuel produced by pyrolysis of organic or waste material;
  • Heat that is a byproduct of manufacturing;
  • Hydroelectric power.

The bills would have also prohibited a utility from refusing to connect its electric distribution facilities to the electric generating equipment of an unregulated entity so long as the capacity of the unregulated generation is no more than 15 megawatts.  

Utilities are concerned that “third party ownership” systems will result in significant cost shifting to the majority of customers who do not choose to install rooftop systems. They will be forced to bear all the grid maintenance costs. Also, the proposal does not provide any consumer protection – unregulated third parties would have no obligation to serve customers when issues arise. It’s also important to note that utility scale solar is far more efficient and cost effective than rooftop solar generation.

The utilities and WUI are opposed to SB 702/AB731. The bills failed to receive a public hearing in either house and failed to pass before the end of the session.

 Transmission Line Expansion Rights (SB 838/AB 892)
Legislation was introduced earlier this year, at the request of the American Transmission Company, that would provide a right of first refusal for incumbent transmission line owners when building new lines. The purpose of this proposal is to maintain Wisconsin based regulatory oversight of the approval process.

Without this legislation new transmission line projects could be subject to a new, complex and often contentious Federal approval process that could lead to significant delays and loss of Wisconsin based regulatory authority. This legislation will ensure that we continue to have a Wisconsin focused approach to transmission line planning and approval.

The bills were supported by Wisconsin’s utilities and a variety of unions and business groups. Most midwestern states have adopted similar legislation including Minnesota, Iowa and Michigan.

WUI supported SB 838 and AB 892 because any expansion of Wisconsin’s transmission infrastructure should continue to be based on Wisconsin’s needs and circumstances and be subject to PSC approval and oversight. The bills received public hearings in both houses but failed to pass before the end of the session.