Chapter 196

196.025 Cross-reference Cross-reference: See also ch. PSC 172, Wis. adm. code.

196.025 History History: 1993 a. 414; 1999 a. 9; 2001 a. 38; 2003 a. 89; 2005 a. 141; 2009 a. 28; 2017 a. 17; 2017 a. 136 ss. 1, 36 to 38; 2023 a. 19.

196.025 Note NOTE: 1993 Wis. Act 414, which creates this section, contains extensive explanatory notes.

196.025 Cross-reference Cross-reference: See also PSC, Wis. adm. code.

196.026 196.026 Settlements.

196.026(1) (1) All parties to dockets before the commission are encouraged to enter into settlements when possible.

196.026(2) (2) In this section, “docket” means an investigation, proceeding, or other matter opened by a vote of the commission, except for rule making.

196.026(3) (3) Parties to a docket may agree upon some or all of the facts. The agreement shall be evidenced by a written stipulation filed with the commission or entered upon the record. The stipulation shall be regarded and used as evidence in the docket.

196.026(4) (4) Parties to a docket may agree upon a resolution of some or all of the issues. When a written settlement agreement is proposed by some of the parties, those parties shall submit to the commission the settlement agreement and any documents, testimony, or exhibits, including record citations if there is a record, and any other matters those parties consider relevant to the proposed settlement and serve a copy of the settlement agreement upon all parties to the docket.

196.026(5) (5) If a proposed settlement agreement is not supported by all parties, the settling parties shall convene at least one conference with notice and opportunity to participate provided to all parties for the purpose of discussing the proposed settlement agreement. A nonsettling party may waive its right to the conference provided in this subsection.

196.026(6) (6) Within 30 days of service of a settlement agreement under sub. (4), each party to the docket shall respond in writing by filing and serving on all parties the party’s agreement, objection, or nonobjection to the settlement agreement. Failure to respond in writing within 30 days of service, unless a different time is set by the commission for good cause, shall constitute nonobjection to the settlement agreement. A party objecting to a settlement agreement shall state all objections with particularity and shall specify how the party would be adversely affected by each provision of the settlement agreement to which the party objects.

196.026(7) (7) The commission may approve a settlement agreement under sub. (4) if all of following conditions are met:

196.026(7)(a) (a) All of the following have been given a reasonable opportunity to present evidence and arguments in opposition to the settlement agreement:

196.026(7)(a)1. 1. Each party that has filed an objection or nonobjection to the settlement agreement under sub. (6).

196.026(7)(a)2. 2. Each party whose failure to respond in writing constitutes a nonobjection to the settlement agreement under sub. (6).

196.026(7)(b) (b) The commission finds that the public interest is adequately represented by the parties who entered into the settlement agreement.

196.026(7)(c) (c) The commission finds that the settlement agreement represents a fair and reasonable resolution to the docket, is supported by substantial evidence on the record as a whole, and complies with applicable law, including that any rates resulting from the settlement agreement are just and reasonable.

196.026(7m) (7m) If a public utility’s fuel cost plan is contained in a settlement agreement, the commission may approve the fuel cost plan for the first year of a 2-year settlement agreement without holding a hearing.

196.026(8) (8) The commission may approve a settlement agreement under sub. (4) in whole or in part and with conditions deemed necessary by the commission. If the settlement agreement does not resolve all of the issues in the docket, the commission shall decide the remaining issues in accordance with applicable law and procedure.

196.026 History History: 2017 a. 136; 2021 a. 24.

196.027 196.027 Environmental trust financing.

196.027(1) (1) Definitions. In this section:

196.027(1)(a) (a) “Ancillary agreement” means any bond insurance policy or other financial arrangement entered into in connection with the issuance of environmental trust bonds.

196.027(1)(b) (b) “Assignee” means any person to which an interest in environmental control property is sold, assigned, transferred, or conveyed and any successor to such a person.

196.027(1)(c) (c) “Energy utility” means a public utility engaged in the transmission, delivery, or furnishing of natural gas by means of pipes or mains or of heat, light, or power.

196.027(1)(d) (d) “Environmental control activity” means any of the following:

196.027(1)(d)1. 1. The construction, installation, or otherwise putting into place of environmental control equipment in connection with an energy utility plant that, before March 30, 2004, has been used to provide service to customers.

196.027(1)(d)2. 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.

196.027(1)(e) (e) “Environmental control charge” means a charge paid by customers of an energy utility or its successors for the energy utility to recover environmental control costs and financing costs.

196.027(1)(f) (f) “Environmental control cost” means capital cost, including 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 the unrecovered value of property that is retired, including any demolition or similar cost that exceeds the salvage value of the property. “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.

196.027(1)(g) (g) “Environmental control equipment” means any device, equipment, structure, process, facility, or technology, owned or controlled by an energy utility, that is designed for the primary purpose of preventing, reducing, or remediating environmental pollution.

196.027(1)(h) (h) “Environmental control property” means all of the following:

196.027(1)(h)1. 1. The right specified in a financing order to impose, collect, or receive environmental control charges, or to obtain adjustments to such charges as provided in this section, and any interest in such right.

196.027(1)(h)2. 2. All revenues and proceeds arising from the right and interests specified in subd. 1.

196.027(1)(i) (i) “Environmental pollution” means the contamination or rendering unclean or impure of the air, land, or waters of the state, or the making of the same injurious to public health, harmful for commercial or recreational use, or deleterious to animal or plant life.

196.027(1)(j) (j) “Environmental trust bonds” means bonds, debentures, notes, certificates of participation, certificates of beneficial interest, certificates of ownership, or other evidences of indebtedness that are issued by an energy utility or an assignee, the proceeds of which are used directly or indirectly to recover, finance, or refinance environmental control costs and financing costs, and that are secured by or payable from environmental control property.

196.027(1)(k) (k) “Financing cost” means any of the following:

196.027(1)(k)1. 1. Interest and redemption premiums, that are payable on environmental trust bonds.

196.027(1)(k)2. 2. A payment required under an ancillary agreement, including any amount required to fund a reserve account.

196.027(1)(k)3. 3. The cost of retiring or refunding an energy utility’s existing debt and equity securities in connection with the issuance of environmental trust bonds, but only to the extent the securities were issued for the purpose of financing environmental control costs.

196.027(1)(k)4. 4. Any other reasonable cost related to issuing and servicing environmental trust bonds, including servicing fees, trustee fees, legal fees, administrative fees, placement fees, capitalized interest, and rating agency fees.

196.027(1)(k)5. 5. Any taxes and license fees imposed on the revenues generated from the collection of environmental control charges.

196.027(1)(L) (L) “Financing order” means an order under sub. (2) that allows for the issuance of environmental trust bonds, the collection of environmental control charges, and the creation of environmental control property.

196.027(2) (2) Financing orders.

196.027(2)(a) (a) Applications. An energy utility may apply to the commission for a financing order. In addition to any other information required by the commission, an energy utility shall do all of the following in an application:

196.027(2)(a)1. 1. Describe the environmental control activities that the energy utility proposes to undertake, indicate whether the energy utility’s electric, natural gas, or steam service is associated with the activities, and describe the reasons for undertaking the activities.

196.027(2)(a)2. 2. Estimate the environmental control costs of the activities described under subd. 1.

196.027(2)(a)3. 3. Indicate whether the energy utility proposes to finance all or a portion of the costs estimated under subd. 2. with environmental trust bonds. If the energy utility proposes to finance a portion of the costs, the energy utility shall identify that portion in the application.

196.027(2)(a)4. 4. Estimate the financing costs of the environmental trust bonds proposed under subd. 3.

196.027(2)(a)5. 5. Estimate the environmental control charges necessary to recover the environmental control costs and financing costs estimated in the application and indicate whether the environmental control charges are proposed for the energy utility’s electric, natural gas, or steam service.

196.027(2)(a)6. 6. Estimate any cost savings to customers resulting from financing environmental control costs with environmental trust bonds as opposed to alternative financing methods.

196.027(2)(b) (b) Commission powers and duties.

196.027(2)(b)1. 1. No later than 120 days after receiving an application under par. (a), the commission shall, after a hearing, issue a financing order or an order rejecting the application. The commission may issue a financing order if the commission finds all of the following:

196.027(2)(b)1.a. a. That the order will result in lower overall costs to customers than would alternative methods of financing environmental control activities.

196.027(2)(b)1.b. b. That the proposed structuring and expected pricing of the environmental trust bonds will result in the lowest environmental control charges that are consistent with market conditions and the terms of the financing order.

196.027(2)(b)1.c. c. That the financing order is otherwise consistent with the public interest, and is prudent, reasonable, and appropriate.

196.027(2)(b)2. 2. In a financing order issued to an energy utility, the commission shall do all of the following:

196.027(2)(b)2.a. a. Except as provided in subds. 2. c. and 4., specify the amount of environmental control costs and financing costs that may be recovered through environmental control charges and the period over which such costs may be recovered.

196.027(2)(b)2.b. b. For the period specified in subd. 2. a. require that, as long as any customer obtains distribution service from the energy utility or its successors, the customer shall pay environmental control charges to the energy utility or its assignees regardless of whether the customer obtains other service from a different energy utility or other energy supplier.

196.027(2)(b)2.c. c. Include a formula-based mechanism for making any adjustments in the environmental control charges that customers are required to pay under the order and making any adjustments that are necessary to correct for any overcollection or undercollection of the charges or to otherwise ensure the energy utility’s or assignee’s timely recovery of environmental control costs and financing costs.

196.027(2)(b)2.d. d. Specify the environmental control property that is created and that may be used to pay or secure environmental trust bonds.

196.027(2)(b)2.e. e. If considered appropriate by the commission, include a provision allowing for the retirement of environmental trust bonds before their termination dates.

196.027(2)(b)2.f. f. Include any other conditions that the commission considers appropriate and that are not otherwise inconsistent with this section.

196.027(2)(b)3. 3. A financing order issued to an energy utility may provide that the energy utility’s acquisition of environmental control property specified in subd. 2. d. is conditioned upon, and shall be simultaneous with, the sale of the environmental control property to an assignee and the pledge of the environmental control property to secure environmental trust bonds.

196.027(2)(b)4. 4.

196.027(2)(b)4.a. a. If the commission issues a financing order, the commission shall apply, at least annually, the formula-based mechanism specified in subd. 2. c. and, based on estimates of demand and other mathematical factors, make the adjustments described in subd. 2. c. The commission shall make the adjustments within 45 days of the anniversary date on which environmental trust bonds are issued and after expiration of the comment period described in subd. 4. b.

196.027(2)(b)4.b. b. The commission may not hold a hearing for the purpose of making an adjustment under subd. 4. a., but shall allow interested parties 30 days to make comments limited to any error in the application of the formula-based mechanism relating to the appropriate amount of any overcollection or undercollection of environmental control charges and the appropriate amount of an adjustment.

196.027(2)(b)5. 5. A financing order is irrevocable and, except as provided in subds. 2. c. and 4., the commission may not reduce, impair, or otherwise adjust environmental control charges approved in the order.

196.027(2)(c) (c) Subsequent orders. The commission may commence a proceeding and issue a subsequent financing order that provides for retiring or refunding environmental trust bonds issued pursuant to the original financing order if the commission included a provision described in par. (b) 2. e. in the original financing order and if the commission finds that the subsequent financing order satisfies all of the criteria specified in par. (b) 1. a., b., and c.

196.027(2)(d) (d) Judicial review. A financing order or an order rejecting an application under par. (b) 1. is reviewable by the circuit court for Dane County under ch. 227, except that the court shall proceed to hear and determine the action as expeditiously as practicable and give the action precedence over other matters not accorded similar precedence by law.

196.027(2)(e) (e) Effect of orders.

196.027(2)(e)1. 1. A financing order shall remain in effect until the environmental trust bonds issued pursuant to the order have been paid in full and the financing costs of the bonds have been recovered in full.

196.027(2)(e)2. 2. A financing order issued to an energy utility shall remain in effect and unabated notwithstanding the bankruptcy of the energy utility.

196.027(2)(e)3. 3. An application by an energy utility for a financing order and commission approval of a financing order are in addition to and do not replace or supersede any other review or approval by the commission under this chapter that may be required or allowed for environmental control activities.

196.027(3) (3) Exceptions to commission jurisdiction.

196.027(3)(a) (a) If the commission issues a financing order to an energy utility, the commission may not, in exercising its powers and carrying out its duties regarding rate making, consider the environmental trust bonds issued pursuant to the order to be the debt of the energy utility, the environmental control charges paid under the order to be the revenue of the energy utility, or the environmental control costs or financing costs specified in the order to be the costs of the energy utility, nor may the commission determine that any action taken by an energy utility that is consistent with the order is unjust or unreasonable. Nothing in this paragraph affects the authority of the commission to adjust or reduce an energy utility’s revenue requirements under sub. (4) (a).

196.027(3)(b) (b) The commission may not order or otherwise directly or indirectly require an energy utility to use environmental trust bonds to finance any project, addition, plant, facility, extension, capital improvement, environmental control equipment, 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.

196.027(4) (4) Energy utility duties.

196.027(4)(a) (a) An energy utility shall place the proceeds of any environmental trust bonds issued pursuant to a financing order in a separate account. An energy utility may use the proceeds only for paying environmental control costs and financing costs that are prudent, reasonable, and appropriate, and only if the energy utility has applied for and obtained all approvals from the commission under this chapter that are required for the environmental control activities for which the environmental control costs are incurred or expected to be incurred. If the commission finds that the proceeds have been used for environmental control costs or financing costs that are not prudent, reasonable, or appropriate, the commission may adjust or reduce the energy utility’s revenue requirements in connection with charges other than environmental control charges for the purpose of ensuring that the energy utility’s customers do not pay for such costs.

196.027(4)(b) (b) An energy utility shall annually provide to its customers a concise explanation of the environmental control charges approved in a financing order issued to the energy utility. The explanation may be made by bill inserts, website information, or other appropriate means.

196.027(4)(c) (c) The failure of an energy utility to comply with this subsection shall not invalidate, impair, or affect any financing order, environmental control property, environmental control charge, or environmental control bonds.

196.027(5) (5) Environmental control property.

196.027(5)(a) (a) In general.

196.027(5)(a)1. 1. Environmental control property that is specified in a financing order shall constitute a present property right notwithstanding that the imposition and collection of environmental control charges depend on the energy utility to which the order is issued performing its servicing functions relating to the collection of environmental control charges and on future energy consumption. Such property is considered to exist whether or not the revenues or proceeds arising from the property have accrued and whether or not the value of the property is dependent on the receipt of service by customers of an energy utility.

196.027(5)(a)2. 2. Environmental control property specified in a financing order shall continue to exist until the environmental trust bonds issued pursuant to the order are paid in full and all financing costs of the bonds have been recovered in full.

196.027(5)(a)3. 3. Environmental control property specified in a financing order issued to an energy utility may be transferred, sold, conveyed, or assigned to any person, including an affiliate of the energy utility created for the limited purpose of facilitating or administering environmental control property or environmental control trust bonds under the financing order and not including any other affiliate of the energy utility. Environmental control property may be pledged to secure environmental trust bonds issued pursuant to the order. Each such transfer, sale, conveyance, assignment, or pledge by an energy utility or affiliate of an energy utility is considered to be a transaction in the ordinary course of business.

196.027(5)(a)4. 4. If an energy utility defaults on any required payment of revenues arising from environmental control property specified in a financing order, a court, upon application by an interested party, and without limiting any other remedies available to the applying party, shall order the sequestration and payment of the revenues. Any such order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the energy utility.

196.027(5)(a)5. 5. The interest of an assignee or pledgee in environmental control property specified in a financing order issued to an energy utility, and in the revenue and collections arising from that property, are not subject to setoff, counterclaim, surcharge, or defense by the energy utility or any other person or in connection with the bankruptcy of the energy utility or any other entity.

196.027(5)(a)6. 6. Any successor to an energy utility, whether pursuant to any bankruptcy, reorganization, or other insolvency proceeding, or pursuant to any merger or acquisition, sale, or transfer by operation of law, as a result of energy utility restructuring or otherwise, shall perform and satisfy all obligations of, and have the same rights under a financing order as, the energy utility under the financing order in the same manner and to the same extent as the energy utility including collecting and paying to the person entitled to receive them revenues with respect to the environmental control property.