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.

GOVERNOR WALKER INTRODUCES BIENNIAL BUDGET

On February 20th, Wisconsin Governor Scott Walker
presented his 2013-15 budget bill to a joint session of
the Legislature. The budget includes $33.652 billion
for fiscal year 2014 and $34.347 billion for fiscal year
2015. The proposed biennial budget will start with a
surplus of $145.6 million. The 1093 page document
will be the primary focus of legislative activity over the
next four months.

WISCONSIN GOVERNOR WALKER SIGNS 2011-2013 STATE BUDGET BILL

On Sunday, June 26, Governor Scott Walker signed AB 40, the 2011-13 Budget Bill, into law. The $66 billion budget
balances the budget and provides a $300 million structural surplus. The governor’s action included fifty vetoes.

WISCONSIN LEGISLATURE MOVES AHEAD ON STATE BUDGET

The State’s Biennial Budget Bill is moving forward after the Joint Committee on Finance completed agency briefings and held public hearings around the state. The committee has been voting on measures in the bill. The Assembly leadership has announced that the house will only be in session during May on the 10th, 11th and 18th. It had previously scheduled other dates but has now scrapped them. Primary focus over the next two months will be on adoption of the budget which is designed to resolve the  state’s $3.6 billion budget deficit. The Republican-dominated Joint Finance Committee is expected to endorse the major items in the Governor’s original proposal, but a number of strictly policy items have been removed for separate action.   The Legislative Fiscal Bureau had released its list of 46 separate non-fiscal policy items contained in the Governor’s bill on April 20. The committee co-chairs also released a memo on April 20 outlining 21 non-fiscal policy items that would be stripped from the budget and not taken up by the Committee. The Committee expects to complete its action on the budget by the end of May, and observers believe that most of the significant changes to the Governor’s budget will be made in committee.

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