JFC Approves Controversial PSC Proposal for Increased Energy Conservation Spending

Wednesday, December 15, 2010 at 2:10 AM by

The most contentious issue on the agenda of the Joint Finance Committee (JFC) today was the proposal from the Public Service Commission (PSC) calling for utilities to substantially increase spending on energy efficiency measures, in order to reduce energy consumption and greenhouse gas emissions and reduce energy spending for consumers. Although business groups called the PSC proposal a “$340 million energy tax hike” over the next four years, the committee approved it today on a party-line vote of 12 to 4.

Environmental groups and the PSC disagree with the business groups’ critique of the proposal. However, what makes the ongoing dispute about the PSC plan particularly interesting is the combination of the substantive debate, the changing political landscape, and legal arguments about the authority of the current JFC to clear the way for the PSC plan.

On November 9, 2010, the PSC submitted a proposal to increase contributions from investor-owned electric and natural gas utilities for energy efficiency and renewable resource programs. State law now requires these utilities to contribute 1.2% of their revenues to programs to reduce energy consumption. The proposal, which is part of the Commission’s quadrennial planning, would steadily increase those utility contributions over the next four years — from a base level of about $100 million per year to a new level of $256 million in 2014 and thereafter.

A press release issued today by the Sierra Club lays out compelling arguments in favor of the PSC plan.  The business groups’ perspective can be found in a release from Wisconsin Manufacturers and Commerce.

From a procedural perspective, the plot thickens because there is no legal precedent on whether the Joint Finance Committee’s clear statutory authority to object to such a proposal during a 90-day review period (thereby prohibiting the rate increase) also allows the JFC to affirmatively approve the proposal before the end of the review period. The Legislative Fiscal Bureau paper about the proposal attaches a 2-page legal analysis by the Legislative Reference Bureau, which seems to say that the committee can probably act affirmatively to expedite final approval of the proposal, but the analysis hedges a bit by noting in the closing sentence that “the issue is not a simple one.”

The legal question is significant because a number of GOP legislators don’t like the proposed plan and the Finance Committee would probably block it next year, if the new JFC has an opportunity to reopen the issue. If the PSC takes the JFC action as a green light to proceed, as is likely to be the case, litigation over the committee’s action is one possibility, but that would probably be a slow and cumbersome process for resolving the matter.  Action by the full legislature might be a faster option for the measure’s opponents.

According to a synopsis of today’s committee action by the WisPolitics Budget Blog, Republican Representative Robin Vos, who will take over as JFC co-chair in January, opposed the committee’s action today and he said the change will be overturned in the next budget.  Sen. Mark Miller, the committee’s current co-chair, argued that the change will save money in the long run.  Stay tuned for an ongoing debate over this issue.

Jon Peacock

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