This month’s “Message from the CEO” is guest commentary from Rob Richard, WECA Director of Government Affairs. WECA President and CEO Steve Freese is currently on medical leave
Last September I raised the impending issue of third-party ownership with you in a column titled “The Rising Threat of Unregulated Third-Party Ownership.” A 2–1 decision last month by the Public Service Commission (PSC) of Wisconsin granting unregulated third-party entities the ability to sell power has gone against decades-long regulatory and judicial precedent and puts electric cooperatives on the defensive as concerns about consumer protection, reliability, and cost-shifting to lower-income members become top priority.
To quickly recap, last May two non-profit entities, Vote Solar and Midwest Renewable Energy Association, filed individual petitions asking the PSC to make declaratory rulings that third-party financed distributed energy resources (i.e. solar, wind, geothermal, etc.) are not “public utilities” defined under state law and therefore not subject to PSC jurisdiction for regulatory purposes.
In an expedited decision that surprised no one, on December 1 the PSC made the declaratory ruling approving Vote Solar’s petition in Docket 9300-DR-106. The specific case in this petition will now allow North Wind Renewable Energy Cooperative to serve their host customer, The Family Project, under a power purchase agreement to directly sell them electricity and not be regulated as a public utility. A decision on the MREA petition may come soon [no decision was reached at the time of publication].
As I wrote in September, the petition was “asking a non-elected, three-person, gubernatorial-appointed Commission to legalize the sale of electricity by a third-party entity within the regulated service territory of another electric provider—your local electric cooperative—without any regulatory oversight of that entity. This action could completely upend a regulatory model that our electric cooperatives have been governed by their entire existence.” While a few may argue the PSC’s “narrow action” is limited to the facts in this one case, this decision has clearly opened the barn door and will impact all electricity customers in the state. In fact, Vote Solar and MREA openly testified that they don’t intend to limit their expanse as they hope to actively seek customers throughout the state. We have known this all along. This is their endgame.
While troubling in and of itself, the lack of concern for consumer protection, reliability, and cross-subsidization by entities supporting third party is going to ultimately hurt cooperative consumer members. Even though expert testimony confirmed that the Wisconsin Consumer Act would not apply to third-party systems, when asked if consumer protection issues would be affected, the Citizens Utility Board testified, “Not really, no,” and further testified that “ultimately, as with economic issues, these consumer protection issues are not germane…” Opening the door to unregulated third-party owners while putting consumer protections on the back burner is completely opposite of how this should be approached.
PSC Commissioner Ellen Nowak, the lone dissenting vote, railed on this point when she said, “Opponents to the petition [WECA, etc.] also raise valid points about the lack of consumer protections raised to third-party leasing agreements or arrangements. Petitioner and its allies, I thought, responded with a very laissez-faire attitude contending that these protections can be addressed later. However, they don’t say when, or by whom, and if by this commission, and how we would even have jurisdiction since they don’t want to be regulated by us in the first place.” Nowak rightfully pointed out the obvious concluding, “If we disclaim jurisdiction over these entities, as Vote Solar request, how would we even have the authority to regulate?”
This decision will most certainly be appealed in court, but our work is cut out for us. One of the commissioners used an ineffectual analogy trying to argue that Generac has the same business model as third-party owners. To be clear, Generac sells and leases equipment. They do not sell electricity. Vote Solar and MREA wish to enter into power purchase agreements with customers and sell electricity. If the question were simply about equipment, the commissioner’s own question, “Would we be having such a ferocious debate if the petitioner was Generac?” would be self-explanatory and this docket wouldn’t even exist. Let’s hope the court sees it that way.