SB651: Bill Text

LRB-4441/1

EHS&KP:amn

2023 - 2024 LEGISLATURE

2023 Senate BILL 651

November 9, 2023 - Introduced by Senators Cowles and Stroebel, cosponsored by Representatives Gustafson, Neylon, Tittl, Andraca, Dittrich, Krug, Murphy, O'Connor, Rettinger, Rozar and Spiros. Referred to Committee on Utilities and Technology.

SB651,2,2 An Act to repeal 196.491 (2) (a) 3g., 196.491 (2) (a) 3r., 196.491 (2) (a) 12., 196.491 (2) (a) 13., 196.491 (2) (b) 10. and 196.491 (2) (gm); to renumber and amend 196.027 (1) (f); to amend 196.025 (1) (ar), 196.027 (3) (b), 196.378 (2) (c), 196.491 (title), 196.491 (1) (b), 196.491 (2) (a) 3., 196.491 (2) (a) 3m., 196.491 (2) (a) 4., 196.491 (2) (a) 7., 196.491 (2) (ag), 196.491 (2) (b) 7., 196.491 (2) (b) 8., 196.491 (2) (e), 196.491 (2) (f), 196.491 (2) (g), 196.491 (2r), 196.491 (3) (dm) and 196.795 (7) (a) 1. b.; to repeal and recreate 196.491 (2) (title), 196.491 (2) (a) (intro.) and 196.491 (2) (b) (intro.); and to create 196.027 (1) (d) 3., 196.027 (1) (f) 1. b., 196.491 (1) (fm), 196.491 (1) (s), 196.491 (2) (a) 1., 196.491 (2) (a) 2., 196.491 (2) (a) 5., 196.491 (2) (a) 6., 196.491 (2) (a) 8., 196.491 (2) (a) 14., 196.491 (2) (b) 11., 196.491 (2) (c), 196.491 (2) (d), 196.491 (2) (i), 196.491 (2) (j), 196.491 (2) (jm), 196.491 (2) (k), 196.491 (2) (km), 196.491 (2) (L), 196.491 (2) (m) and 196.491 (5m) of the statutes; relating to: use of environmental trust bonds to finance the costs of retiring electric generating facilities; integrated resource and reliability planning by electric utilities and cooperatives; closure of large electric generating facilities; and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill authorizes the use of environmental trust financing for the costs of retiring an electric generating facility, requires integrated resource and reliability planning by electric utilities and cooperatives, eliminates the requirement that the Public Service Commission prepare a biennial strategic energy assessment, and provides a process by which PSC determines whether a proposed closure of a large electric generating facility will affect electric reliability.

Environmental trust financing

Under current law, an energy utility is allowed to apply to PSC for an order allowing the utility to finance or recover the costs of the following activities by issuing bonds: 1) the construction, installation, or otherwise putting into place of environmental control equipment in connection with a plant that, before March 30, 2004, has been used to provide service to customers; and 2) the retiring of any existing plant, facility, or other property to reduce, control, or eliminate environmental pollution in accordance with federal or state law. Current law defines these activities as “environmental control activities.” If approved by PSC, the bonds, which are referred to as “environmental trust bonds,” are secured by revenues arising from charges paid by an energy utility's customers for the utility to recover the cost of the activities, as well as the cost of financing the bonds.

This bill adds the retiring of any existing electric generating facility as an environmental control activity, the costs of which, including the unrecovered value, may be financed or recovered by an environmental trust bond. In addition, with respect to this new environmental control activity, the bill adds to the costs that may be financed or recovered the portion of an energy utility's rate that is attributable to the rate of return for the facility authorized under PSC's order in a rate-making proceeding and that is forgone as a result of the retirement. Under current law, the costs that may be financed or recovered include capital cost incurred or expected to be incurred in undertaking an environmental control activity and, with respect to retiring a plant, facility, or other property, the unrecovered value of property that is retired.

Under this bill, PSC may order an energy utility to use environmental trust bonds to finance an expenditure. Under current law, PSC may not order an energy utility to use environmental trust bonds to finance an expenditure unless the energy utility has applied to PSC to do so, and PSC may not refuse to allow an energy utility to recover costs for environmental control activities in an alternate manner because of the potential availability of environmental trust financing.

Integrated resource and reliability planning

This bill requires electric utilities and cooperative associations to submit biennial integrated resource and reliability plans to PSC that include certain information about their plans to construct the following: 1) large electric generating facilities with a capacity of 100 megawatts or more; 2) small electric generating facilities with a capacity of at least 12 but less than 100 megawatts; and 3) high-voltage transmission lines that are longer than one mile and operate at 100 kilovolts or more. As part of an integrated resource and reliability plan, an electric utility must identify alternatives to the proposed electric generating facilities, including alternative locations, fuel types, and methods of generation, and must explain the reasons for selecting the types of electric generating facilities proposed. An electric utility must also identify alternative routes for any high-voltage transmission lines proposed and indicate their effects on the environment and how the utility will avoid or minimize potential adverse effects. An electric utility's detailed projection for electricity demand and assessment of whether it has sufficient capacity to make electricity available to consumers at a reasonable price must also be included in the plan, as well as a description of existing and planned programs and policies for discouraging inefficient and excessive electricity use. After holding a hearing on a utility's plan, PSC may approve the plan if PSC finds that the plan will provide a reasonably adequate supply of electricity to meet the needs of the public and that the plan satisfies certain other criteria.

Strategic energy assessment

In addition, the bill eliminates the requirement that PSC prepare a biennial strategic energy assessment. Under current law, the strategic energy assessment evaluates the adequacy and reliability of the state's current and future energy supply and includes information on the following: 1) planned large electric generating facilities and high-voltage transmission lines; 2) plans for assuring an adequate ability to transfer electricity into the state; 3) the projected demand for electricity; 4) activities discouraging inefficient and excessive electricity use; 5) the extent to which effective competition contributes to a reliable, low-cost, and environmentally sound source of electricity; and 6) whether sufficient electricity is available at a reasonable price. Current law requires PSC to hold a hearing on a draft of the strategic energy assessment and prepare a final strategic energy assessment based on received comments.

Closure of large electric generating facilities

The bill requires electric utilities and cooperative associations to notify PSC at least 180 days prior to closing any large electric generating facility with a capacity of 100 megawatts or more, and requires PSC, after public comment and hearing, to issue a determination as to whether the proposed closure will have an effect on electric reliability. The bill requires PSC to make its determination by considering the utility or cooperative's most recent integrated resources and reliability plan and information collected from the electric utility or cooperative and from the public, as well as any other information PSC deems relevant. Under the bill, PSC must notify the electric utility or cooperative of its determination no less than 45 days prior to the planned closure.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB651,1 Section 1. 196.025 (1) (ar) of the statutes is amended to read:

SB651,4,7 196.025 (1) (ar) Consideration of energy priorities. Except as provided in pars. (b) to (d), to the extent cost-effective, technically feasible and environmentally sound, the commission shall implement the priorities under s. 1.12 (4) in making all energy-related decisions and orders, including strategic energy assessment approval of integrated resource and reliability plans under s. 196.491 (2), rate setting and rule-making orders.

SB651,2 Section 2 . 196.027 (1) (d) 3. of the statutes is created to read:

SB651,4,9 196.027 (1) (d) 3. The retiring of any existing electric generating facility.

SB651,3 Section 3 . 196.027 (1) (f) of the statutes is renumbered 196.027 (1) (f) 1. (intro.) and amended to read:

SB651,4,13 196.027 (1) (f) 1. (intro.) “Environmental control cost" means capital all of the following:

SB651,4,19 a. Capital cost, including the capitalized cost relating to regulatory assets, incurred or expected to be incurred by an energy utility in undertaking an environmental control activity and, with respect to an environmental control activity described in par. (d) 2., includes or 3., the unrecovered value of property that is retired, including any demolition or similar cost that exceeds the salvage value of the property.

SB651,5,3 2. “Environmental control cost" does not include any monetary penalty, fine, or forfeiture assessed against an energy utility by a government agency or court under a federal or state environmental statute, rule, or regulation.

SB651,4 Section 4 . 196.027 (1) (f) 1. b. of the statutes is created to read:

SB651,5,8 196.027 (1) (f) 1. b. With respect to an environmental control activity described in par. (d) 3., and subject to sub. (2) (b) 2. a., the portion of an energy utility's rate that is attributable to the rate of return for the facility authorized under the commission's order in a rate-making proceeding and that is forgone as a result of the retirement.

SB651,5 Section 5 . 196.027 (3) (b) of the statutes is amended to read:

SB651,5,18 196.027 (3) (b) The commission may not order or otherwise directly or indirectly require an energy utility to use environmental trust bonds to finance any a project, addition, plant, facility, extension, capital improvement, environmental control equipment, retirement, or any other expenditure, unless, except as provided in sub. (2) (c), the energy utility has made an application under sub. (2) (a) to finance such expenditure using environmental trust bonds. The commission may not refuse to allow an energy utility to recover costs for environmental control activities in an otherwise permissible fashion solely because of the potential availability of environmental trust financing.

SB651,6 Section 6. 196.378 (2) (c) of the statutes is amended to read:

SB651,6,9 196.378 (2) (c) No later than April 15 annually, or another annual date specified by the commission by rule, an electric provider shall submit a report to the commission that identifies the electric provider's renewable energy percentage for the previous year and describes the electric provider's compliance with par. (a) 2. and the electric provider's implementation plans for future compliance. Reports under this paragraph may include certifications from renewable energy suppliers regarding the sources and amounts of renewable energy supplied to the electric provider. The commission may specify the documentation that is required to be included with reports submitted under this paragraph. The commission may require that electric providers submit the reports in a proceeding, initiated by the commission under this section relating to the implementation of s. 1.12, or in a proceeding for preparing a strategic energy assessment an integrated resource and reliability plan under s. 196.491 (2). No later than 90 days after the commission's receipt of an electric provider's report, the commission shall inform the electric provider whether the electric provider is in compliance with par. (a) 2.

SB651,7 Section 7. 196.491 (title) of the statutes is amended to read:

SB651,6,13 196.491 (title) Strategic energy assessment Integrated resource and reliability planning; electric generating facilities and transmission lines; natural gas lines.

SB651,8 Section 8. 196.491 (1) (b) of the statutes is amended to read:

SB651,6,19 196.491 (1) (b) “Commencement of construction" means site clearing, excavation, placement of facilities or installations, or any other substantial action adversely affecting the natural environment of the site, but does not mean borings necessary to determine foundation conditions or other preconstruction monitoring to establish background information related to site or environmental suitability.

SB651,9 Section 9. 196.491 (1) (fm) of the statutes is created to read:

SB651,6,23 196.491 (1) (fm) “Installation” means, unless the context requires otherwise, a small electric generating facility, a large electric generating facility, or a high-voltage transmission line.

SB651,10 Section 10. 196.491 (1) (s) of the statutes is created to read:

SB651,7,3 196.491 (1) (s) “Small electric generating facility” means electric generating equipment and associated facilities designed for nominal operation at a capacity of at least 12 but less than 100 megawatts.

SB651,11 Section 11. 196.491 (2) (title) of the statutes is repealed and recreated to read:

SB651,7,5 196.491 (2) (title) Integrated resource and reliability planning.

SB651,12 Section 12. 196.491 (2) (a) (intro.) of the statutes is repealed and recreated to read:

SB651,7,12 196.491 (2) (a) (intro.) On or before July 1 of each even-numbered year, or such biennial period as the commission may approve, each electric utility shall file its plan with the commission and with those persons or agencies listed in par. (b). Such plans may be appropriate portions of a single regional plan or may be prepared jointly by 2 or more electric utilities, and shall do all of the following:

SB651,13 Section 13. 196.491 (2) (a) 1. of the statutes is created to read:

SB651,7,19 196.491 (2) (a) 1. Describe the general location, size, and type of installations that are expected to be owned or operated in whole or in part by the utility and the construction of which is expected to commence during the next 10 years, or such longer period as the commission deems necessary, and shall identify all existing installations intended to be removed from service during the period or upon completion of such construction.