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LEGISLATORS SUGGEST ALTERNATIVES TO POWER LINE

Two Wisconsin lawmakers are calling on state utility regulators to examine the likely effects of a proposed high-voltage transmission line between Madison and Dubuque, Iowa.  Republican Rep. Travis Tranel of Cuba City and Republican Rep. Todd Novak of Dodgeville have asked the Wisconsin Public Service Commission to study possible alternatives before approving the Cardinal-Hickory Creek line.  American Transmission Co., ITC and Dairyland Power will work to build the 102-mile line, which is estimated to cost $500 million. The costs would be shared by consumers in 15 states and one Canadian province. Wisconsin customers would pay for about 15 percent of the cost. The 345-kilovolt line would be the third transmission project in western Wisconsin since 2015.

GOVERNOR WALKER SIGNS BILL RELATING TO RATE DISPUTES

Wisconsin Governor Scott Walker has signed legislation (2017 Wisconsin Act 136) to give utilities a way to resolve disputes over their attempts to raise the rates charged to homeowners and businesses. The measure would allow a utility to reach a settlement with a group representing homeowners or businesses and then let the Public Service Commission decide on approving it. If one group of ratepayers settled with the utility and the other didn’t, the commission would have to take input from all sides but could still approve the settlement. This legislation was supported by WUI and Wisconsin utilities.

NEITZEL TO STEP DOWN AS WISCONSIN DEPARTMENT OF ADMINISTRATION SECRETARY

Former MG&E executive, Scott Neitzel, has announced he will be resigning as Secretary of the Wisconsin Department of Administration, generally thought to be the second most powerful post in state government. Neitzel will be replaced by Ellen Nowak, currently Chairman of the Wisconsin Public Service Commission. Commissioner Lon Roberts has been named the new Commission Chairman. Neitzel has not disclosed his future plans.

2017 – 2018 Legislative Update

The Wisconsin Legislature concluded its last floor period of the year in mid-November and is not expected to be back in session until late January 2018. The Legislature usually concludes it’s work during the second year of the biennium in early spring – March or April, and adjourns so that members can begin campaigning for the fall elections. So far this session, the Legislature has not taken action on any truly high-profile energy or utility issues. While some significant bills have been introduced, they have seen little activity to date. Other less significant matters, that address various minor utility issues, have been addressed by the legislature and signed into law by the Governor.

These circumstances reflect a continuation of the positive political climate that utilities have enjoyed in Wisconsin in recent years – no major legislative threats or challenging new regulations to address.
Outlined below are some of the key issues on which WUI is engaged or is monitoring

SOLAR ENERGY PETITION
The Wisconsin Solar Energy Industries Association petitioned the PSC for a declaratory ruling allowing its members to install electric generating equipment at the residences or facilities of customers, and sell the member generated energy to those customers, outside of the existing utility regulatory framework. The utilities oppose this petition, because of consumer protection and potential subsidy issues. The Commission is currently considering whether to take up the petition and open a docket on the matter.

REGULATORY REFORM
AB 42/
SB15
Makes various changes to the process of adopting and enforcing administrative rules. One provision would require the Legislature to vote to approve any rule that has compliance costs that exceed $10 million. Utilities were concerned that this provision could potentially interfere with implementation of required EPA regulations. The bill was amended to exempt federal air rules from this requirement.
It subsequently passed both houses and was signed into law by the Governor as WI Act 57

LEASED GENERATION CONTRACTS
AB198 / SB115

Allows the Public Service Commission (PSC) to unilaterally modify or terminate existing leased generation contracts entered into by public utilities and their affiliates. Leased generation is used as a means of helping finance major generation infrastructure improvements. Modifying or terminating exiting leased generation contracts could be financially detrimental to both utilities and utility shareholders. Utilities and WUI strongly oppose these bills. They were the main subject of lobbying at the WUI Legislative Day in 2017.
So far, the legislature has taken no action on either bill.

SHAREHOLDER MEETINGS
AB 357/SB 285

Authorizes the board of directors of a corporation to allow shareholders of the corporation to participate in shareholder meetings by remote communication, without being physically present. Utilities supported these bills.
SB 285 passed both houses and was signed into law as WI Act 79.

BIENNIAL PSC REVISIONS
AB 532/SB 475

Transfers various duties and powers from the Department of Administration (DOA) to the Public Service Commission (PSC). Makes changes to Wisconsin energy policy and laws governing public utilities. The utilities support these bills. AB 532 passed the Assembly and has been referred to the Senate Utilities Committee.
WISCONSIN STATE BUDGETAB 64/SB 30

  • Stray Voltage – As introduced, the Budget Bill would have eliminated the stray voltage program administered jointly by the Public Service Commission (PSC) and the Department of Agriculture, Trade and Consumer Protection (DATCP). Utilities were concerned that elimination of this program would leave farmers with stray voltage issues, few productive options when seeking relief. As a result, the legislature restored one position at the PSC and one veterinarian at DATCP along with appropriate support, to continue the program. These changes remained in the bill as signed by the Governor.
  • Intervenor Compensation Funding – As introduced, the Budget Bill increased funding for the intervenor compensation program that helps support consumer groups that participate in rate cases before the Public Service Commission (PSC). Utilities believe that robust intervenor participation in rate cases, helps develop a more complete and balanced record at the Commission, which mitigates against judicial review of Commission decisions. The Legislature approved the Governor’s request for an increase of $742,600 in intervenor compensation over the biennium, which remained in the bill as signed by the Governor.

Budget Restores Funding for Citizens Utility Board Advocacy

The Wisconsin state budget, recently signed into law, restores in part a funding cut enacted by the
Legislature in the 2015-17 budget. That cut led to cutbacks at the Citizens Utility Board, a residential
customer advocacy group in existence since 1979.

The Legislature endorsed Governor Scott Walker’s proposal to boost funding for intervenors to $742,500 a year after the Legislature cut the funding from more than $1 million a year to $371,000 per year in 2015. The funding increase was supported by state utilities.

CUB said it was appreciative of the support it received from a variety of energy industry stakeholders and for the testimony of PSC Chair Ellen Nowak before the Legislature’s Joint Finance Committee.

Legislative Update

The 2017-18 Legislature convened its first regular session in January of this year.
In February, Governor Walker introduced his Biennial Budget proposal (AB 64/SB 30)
which governs the state’s taxing and spending for the next two years beginning in July
2017. The Legislature’s Joint Finance Committee has begun its review of the proposal
and the Budget is expected to occupy most of the Legislature’s time and attention until
the bill finally passes in late June.

Of significant interest to utility shareholders, legislation has been introduced by Senator
Stroebel and Representative Ott (SB 115) that will allow the Wisconsin Public Service
Commission (PSC) to retroactively modify or terminate, existing and previously approved,
leased generation contracts. Currently, under such contracts, public utilities are able to
lease electrical generating facilities from their affiliates. This type of financing arrangement
has been used in Wisconsin to facilitate the investment of billions of dollars in new generation
facilities in recent years.

Under current law, the PSC may modify or terminate such contracts only as specified in the
contract itself, or the original order approving the original contract. Under the provisions of
SB115, the Public Service Commission could unilaterally invalidate or modify these contracts
which could significantly impact a utilities rate of return and dividend payout.

The sponsors of the bill believe that modifying these existing contracts will force a
reduction in electric rates. However, the current rates are necessary to generate a fair rate
of return for utility shareholders based on the recent investments Wisconsin utilities have
made in new electric generation.

If this proposal makes investment in Wisconsin utility stock less attractive for many small
investors, it will become more difficult for Wisconsin utilities to raise the necessary capital
to maintain and upgrade our electrical system. In the long run, this hurts consumers
who will have to pay even higher rates to finance the additional borrowing and internally
generated capital needed to replace their equity investment.

Investors seeking stability and reliability have the choice of investing in a wide range
of electric utilities across the country. To the extent that Wisconsin utilities become a
less attractive investment option, shareholders can go elsewhere, while consumers in
Wisconsin are simply left with higher electric rates.

Wisconsin utilities, WUI and many key legislative leaders have already expressed concern
over this bill. You can add your voice of opposition by attending WUI’s Legislative Day in
Madison on May 24, 2017.

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