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Expanded Conservation and Energy Efficiency

Current Law

  • Under current law, each energy utility is required to spend 1.2% of its annual operating revenues for energy efficiency and renewable resource programs.
  • Energy utilities are required to contract with one or more persons to administer the programs.
  • The statewide programs funded by the revenues collected must include components to address the energy needs of residential, commercial, agricultural, institutional, and industrial energy users and local units of government, and initiatives to address market barriers to the offering of goods and services relating to energy efficiency and renewable resources.
  • Utilities are allowed to recover the cost of the energy efficiency and renewable resource programs in rates.

Proposed Law

  • The proposed law would change way the energy efficiency and renewable resource programs are funded and implemented.
  • Grants rulemaking authority to the PSC to do the following:
    • The commission shall exercise its regulatory authority to ensure that the maximum reductions in the use of and demand for electricity and natural gas are achieved through the implementation of cost−effective energy efficiency and conservation programs, utility demand response and load management programs, and tariffs designed to reduce energy use, while taking account of the costs and benefits for customers and the need to maintain a highly reliable system capable of delivering an adequate supply of electricity and natural gas at reasonable cost.
  • Creates new definition for Biomass:
    • “Biomass” means plant material or residue, biological waste, or landfill gases. “Biomass” does not include garbage, as defined in s. 289.01 (9), or nonbiological industrial, nonbiological commercial, or nonbiological household waste.
    • The proposed law repeals the existing funding mechanism for the “Energy Efficiency and Renewable Resource Programs” and replaces it with the following language:
    • Quadrennial proceedings; generally. (Par. bc) (Wis. Stat. §196.374(3)(bc); Section 106; pp. 81-85).
      • Every 4 years, the Public Service Commission (“commission”) shall, after notice and opportunity to be heard, conduct a proceeding for making assessments, establishing goals, establishing funding requirements, and allocating the funding requirements.
    • Quadrennial potential studies (Par. bg)
      • (Subd. 1) The commission shall assess the reduction in the use of and demand for each target fuel that can be achieved in each year of the quadrennium through all of the following:
      • (1.a) Cost−effective energy efficiency and renewable resource programs administered by energy providers or other persons.
      • (1. b) Programs and policy mechanisms under the commission’s jurisdiction, including demand response and load management programs, tariffs designed to reduce energy use or promote customer applications of renewable resources, and the renewable portfolio standard.
      • (1.c) Low−income weatherization programs.
      • (1. d.) Other programs and policy mechanisms, including appliance and equipment efficiency standards, mandatory and voluntary energy conservation standards for buildings, and voluntary certification programs.
    • Reductions in use of and demand for a target fuel in assessments shall be expressed as percentages of total sales for the target fuel.
  • Quadrennial goals (bn)
    • For each year of the quadrennium following the proceeding under par. (bc), the commission shall establish a goal for the reduction in demand for and use of each target fuel that can be achieved under the statewide programs, and a goal for the reduction in demand for and use of each regulated fuel that can be achieved by or on behalf of each municipal utility and retail electric cooperative, as follows:
    • For each regulated fuel:
      • (Subd. 1. a.) Estimate the total sales of the regulated fuel that will occur in the year.
      • (Subd. 1. b.) Estimate the proportion of the amount estimated under subd. 1. a. that will be attributable to sales by all energy utilities in the year and multiply the proportion estimated under this subd. 1. b. by the amount estimated under subd. 1. a.
      • (Subd. 1. c.) Estimate the proportion of the amount estimated under subd. 1. a. that will be attributable to sales by each municipal utility or retail electric cooperative in the year and multiply the proportion estimated under this subd. 1. c. by the amount estimated under subd. 1. a.
      • (Subd. 1. d) Determine the difference between the percentages determined under par. (bg) 1. a. and c. for the regulated fuel for the year.
      • (Subd. 1. e.) Multiply the product determined under subd. 1. b. by the difference determined under subd. 1. d. The resulting product shall be the goal under the statewide programs for the regulated fuel for the year, unless modified by the commission under sub. (8) (b) 2.
      • (Subd. 1. f.) Multiply the product determined under subd. 1. c. for a municipal utility or retail electric cooperative by the difference determined under subd. 1. d. The resulting product shall be the goal for the regulated fuel for the year for the municipal utility or retail electric cooperative, unless modified by the commission, and except that the commission may revise the goal if the commission determines that the goal is unreasonable considering the composition of the membership or customer base of the municipal utility or retail electric cooperative.
    • For each unregulated fuel:
      • Estimate the total sales of the unregulated fuel that will occur in the year.
      • Determine the difference between the percentages determined under par. (bg) 1. a. and c. for the unregulated fuel for the year.
      • Multiply the estimate under subd. 2. a. by the difference determined under subd. 2. b. The resulting product shall be the goal under the statewide programs for the unregulated fuel for the year, unless modified by the commission under.
  • Quadrennial funding requirements (br)
    • 1. ‘Statewide programs.’ The commission shall determine the amount of funds necessary for statewide programs for each target fuel for each year of the quadrennium following the proceeding under par. (bc) as follows:
      (1.a) For each target fuel, determine the amount of funds necessary to achieve the goal determined under par. (bn) 1. e. or 2. c. for the year.
      (1.b.)Subtract from the amount determined under subd. 1. a. the total amount that the commission allows all energy utilities to pay for utility−administered programs for the target fuel in the year.
      (1.c) Subtract from the amount determined under subd. 1. b. the total amount of funding the commission allows for all large energy customer programs for the target fuel in the year. The result determined under this subd. 1. c. shall be the amount of funding necessary for statewide programs for the target fuel in the year.
    • 2. ‘Municipal utilities and retail electric cooperatives.’
      Except as provided in sub. (7) (bg), each municipal utility and retail electric cooperative shall determine the amount of funds necessary to achieve the goal determined under par. (bn) 1. f. for each regulated fuel for each year of the quadrennium following the proceeding under par. (bc).
  • Funding allocation (bw)
    • A prime supplier shall report to the commission, in the form specified by the commission, the amount of unregulated fuel that the prime supplier imports into this state each year for ultimate use by end users in this state.
    • In the proceeding under par. (bc), for each target fuel, the commission shall determine the percentage of total sales of the target fuel by all energy utilities and prime suppliers in the quadrennium prior to the proceeding that is attributable to each energy utility and prime supplier.
    • For each regulated fuel, the commission shall order each energy utility to collect from its customers in each year of the quadrennium following the proceeding under par. (bc) an amount equal to the percentage determined for the energy utility under subd. 2. multiplied by the amount determined under par. (br) 1. c. for the regulated fuel for the year and pay the amount to a statewide programs contractor.
    • For each unregulated fuel, the commission shall order each prime supplier to pay to a statewide programs contractor in each year of the quadrennium following the proceeding under par. (bc) an amount equal to the percentage determined for the prime supplier under subd. 2. multiplied by the amount determined under par. (br) 1. c. for the unregulated fuel for the year.

Program Audits and Reports (Wis. Stat. §§ 196.374 (3); Sections 111-112):

  • Audits. (Amends Wis. Stat. § 196.374 (3)(d)). Provides that the PSC shall contract with one or more independent auditors to prepare a financial and performance audit of the statewide, utility-administered, supplemental utility, and large energy customer programs. The purpose of the audit is to evaluate the programs and measure the performance of the programs against the goals approved by the PSC. The audit is also required to determine the amount of reduction in the demand for and use of each target fuel that has resulted in the year under the programs.
  • Consultations. (Creates Wis. § 196.374 (3) (dm)):
    • If an audit indicates that a program has failed to achieve one or more goals for the year of the audit, the commission shall consult with the statewide programs contractor or person administering the program regarding ways to modify the program to ensure that it will achieve its goals.
  • Compliance and Enforcement (Creates Wis. § 196374 (8) (a)):
    • Determinations
      • For each quadrennium following the proceeding under sub. (3) (bc), the commission shall determine the annual average reduction in demand for and use of each target fuel that is achieved under the statewide programs and achieved by or on behalf of each municipal utility and retail electric cooperative through commitment to community programs. Except as provided in subds. 1. b. and 1. c., if the annual average reduction for a target fuel equals or exceeds the average of the goals determined under sub. (3) (bn) 1. e., 1. f.,or 2. c. for the quadrennium, the commission shall conclude that the goal is achieved for the quadrennium.
      • If a municipal utility or retail electric cooperative enters into a contract under sub. (7) (am) 3. with a wholesale supplier and at least one other municipal utility or retail electric cooperative enters into a similar contract with the wholesale supplier, the commission shall determine whether to conclude that a goal is achieved for a regulated fuel for a year under subd. 1. a. based on the aggregate annual average reduction that results for that regulated fuel for that year under all of the contracts.
      • If a wholesale supplier accepts assignment of a goal under sub. (7) (bg) for a regulated fuel for a year from more than one municipal utility or retail electric cooperative, the commission shall determine whether to conclude that the goal is achieved on an aggregate basis for all the municipal utilities and retail electric cooperatives for which the wholesale supplier has accepted the assignment, rather than on an individual basis for each municipal utility or retail electric cooperative.
      • For each utility−administered, supplemental utility, and large energy customer program, the commission shall determine whether the program achieved the goals approved for the program under sub. (3) (c) 2. on average over the time period in which the program is in effect or another time period specified by the commission.
    • Reviews
      • If the commission determines under par. (a) that a goal is not achieved, the commission shall investigate, as applicable, the statewide programs or the utility−administered, large energy customer, or commitment to community programs at issue, and determine the reasons for failure to achieve the goal.
      • If the commission determines under subd. 1. that a statewide programs contractor or person administering the utility−administered, large energy customer, or commitment to community program made a good faith effort to meet the goal and that the failure is due to factors outside the statewide program contractor’s or person’s control, the commission shall take those factors into account in modifying goals for and, where applicable, approving future programs administered by the statewide programs contractor or person.
      • If the commission determines under subd. 1. that a statewide programs contractor or person administering the utility−administered, large energy customer, or commitment to community program did not make a good faith effort to achieve the goal or that the failure to achieve the goal was due to factors within the statewide program contractor’s or person’s control, the commission shall implement remedies according to the rules promulgated under par. (c). The commission may determine that a statewide programs contractor or person administering the utility−administered, large energy customer, or commitment to community program did not make a good faith effort to meet a goal only if the commission finds any of the following:
        • The statewide programs contractor or person has repeatedly or grossly failed to meet a goal.
        • For a commitment to community program, the municipal utility, retail electric cooperative, or wholesale supplier administering or contracting for the program did not determine an amount of funds under sub. (3) (br) 2. or (7) (bg) 1. That could reasonably be considered necessary to achieve the goal.
        • Any other condition specified by the commission by rule.
      • Remedies
        • The commission shall promulgate rules specifying remedies to implement under par. (b) 3. that are in proportion to the magnitude of the failure to achieve a goal and the degree to which a statewide programs contractor or person administering the utility−administered, large energy customer, or commitment to community program did not make a good faith effort or did not control the factors that resulted in the failure to achieve the goal. The rules shall include all of the following remedies:
          • An order that a statewide programs contractor or person take corrective actions, which may include achieving the goal in a year or other time period specified by the commission, in addition to achieving any other goal under this section that applies to that year or time period.
          • For a goal under the statewide programs:
            • An order that the energy utilities invoke any provisions of a contract under sub. (2) (a) 1., or that a statewide programs contractor invoke any provisions of a subcontract, that impose monetary penalties for failure to achieve a goal.
            • An order that the energy utilities modify or terminate the contract with a statewide programs contractor under sub. (2) (a) 1. or an order that a statewide programs contractor modify or terminate any subcontract.
          • For a goal under a utility−administered or large energy customer program, an order modifying or terminating the program.
          • For a goal of a municipal utility or retail electric cooperative, an order requiring the municipal utility or retail electric cooperative to modify or terminate a contract with or assignment to a wholesale supplier under sub. (7) (am) 3. or (bg), or enter into a contract with a statewide programs contractor under sub. (7) (am) 2., or an order requiring both.
          • Any other remedy specified by the commission.

Utility Earnings on Investments in Energy Conservation (Wis. § 196.374 (9); Section 148; pp. 98-99)

  • The commission may allow an energy utility to earn a return on capital invested under a utility−administered or supplemental utility program for energy conservation or efficiency equipment that is located on customer premises, including equipment owned by either the energy utility or a customer. The commission may make such an allowance only if the commission determines that the investment is prudent and a cost−effective means of advancing energy conservation or efficiency.
  • If the commission makes an allowance under par. (a), all of the following apply:
    • If the investment is made to replace existing equipment, the commission shall allow the energy utility to earn a return only on that portion of the investment that can be attributed to improving energy conservation or efficiency in comparison to the existing equipment.
    • If the investment is made to install new equipment that does not replace existing equipment, the commission shall allow the energy utility to earn a return only on that portion of the investment that can be attributed to improving energy conservation or efficiency in comparison to generally available alternative equipment.
    • The commission shall promulgate rules to implement this subsection, including rules specifying the energy conservation or efficiency equipment that qualifies for treatment under par. (a).