Few state agencies are as complex and affect more people than the Public Service Commission of Wisconsin (PSC). None are as challenging to navigate. Dramatically changing electric-rate designs and unprecedented expansions of the state’s transmission system underscore the importance of understanding the workings of the PSC, and of knowing how to help your clients be heard on matters of increasing importance to every Wisconsin resident. This article is a primer for lawyers interested in representing clients before the PSC.
Suppose your client is a municipality along the route of a proposed transmission line. Your client has a variety of interests in the utility’s application to construct the line. It will be entitled to an impact fee, and may need you to help negotiate the amount. Its land use plans may be affected. If nothing else, the proposed line will create extraordinary interest and concern among residents, concerns that will be brought to the government for its help.
Suppose you represent a hospital, supermarket, or other 24/7 user of electricity. The PSC’s brand-new rate designs – increasing the charge for covering the utility’s embedded costs, relative to the charge for usage – may dramatically affect your client’s electric bills, and energy is a major cost center.
These are just two scenarios calling for legal advice and assistance.
There are several ways to assist clients with matters involving the PSC. Depending on the needs of the client, testifying at a public hearing or electronically filing a comment may suffice. In some cases, however, intervention and participation as a full party may be necessary. This article will help you advise clients on how best to be heard by the PSC, whatever segment of the public you represent.
The importance of the PSC is illustrated by a recent series of controversial decisions modifying the way electric utilities recover their costs of service, by the pending merger of two large utility holding companies, and by a major expansion of the electric transmission system.
In December 2014, the PSC authorized three of the state’s investor-owned utilities to increase their fixed charges for electric service relative to charges based on energy usage.1 According to critics, the move weakens incentives to conserve energy. Supporters of the new rate design claim that the change is necessary to more accurately reflect the cost of electric service.2 A number of important additional issues are yet to be determined.
Edward S. Marion, U.W. 1974, is a former general counsel and administrative law judge at the PSC. He was a principal author of the PSC’s rules of practice and procedure, and helped design the agency’s internal operating procedures. He successfully argued Clean Wisconsin v. PSC, 2005 WI 93, a comprehensive survey of public utility construction law. He practices law with his wife, Margaret Maroney, at Marion & Maroney LLC in Madison.
The PSC is considering an application to construct the Badger-Coulee transmission line, projected to be up to 180 miles long.3 In addition, American Transmission Co. recently announced a 125-mile-long line, to be known as Cardinal-Hickory Creek.4In 2012, the PSC approved the 128-mile Alma-La Crosseline.5 The Alma-La Crosse line is part of, and the Badger-Coulee and Cardinal-Hickory Creek lines are related to, CAPx2020, which, according to its proponents (11 transmission providers in four states), “is the largest development of new transmission in the upper Midwest in nearly 40 years … and is projected to cost more than $2 billion and cover nearly 800 miles.”6
Finally, Wisconsin Energy Corp., the parent of We Energies, is asking the PSC to approve its acquisition of Integrys Energy Group Inc., the parent of Wisconsin Public Service Corp., a purchase that, if approved, will create the 14th largest energy company in the United States.7
All these matters have garnered great public interest. What many people might not know is that literally everyone affected by these cases – and that is just about everyone – has an opportunity to be heard. Lawyers in Wisconsin should be prepared to answer their clients’ questions about how.
Background and Organization
The PSC regulates more than 1,100 public utilities. Its primary cases are rate cases and construction authorizations. The PSC is led by three commissioners, appointed by the governor. The agency is organized into four divisions, the most important of which, for purposes of this article, is the Gas and Energy Division. The divisions are staffed with engineers, accountants, economists, and other professionals. The PSC’s lawyers work within the Office of General Counsel.
The PSC sits as a decision maker in contested cases brought under the Administrative Procedure Act.8 The commissioners do not preside at hearings, although they may sit in on some major cases. An administrative law judge (ALJ) – who does not rule on the merits of a case – decides motions, rules on evidence, and otherwise regulates the assembly of the record.
The PSC has an advisory staff. Although the term “staff” is pervasively used, it is not defined. PSC employees testify as expert witnesses at PSC hearings, and conduct briefings with individual commissioners on the resolution of the issues. Parties and other interested persons are free to communicate with staff, although ex parte restrictions preclude meetings with commissioners.9
Public Input into PSC Decisions
There are several ways to participate in PSC dockets. A person or entity can request to intervene, becoming what the PSC sometimes refers to as a “full party.”10 Parties have all rights and responsibilities that go with being a litigant, including the right to engage in discovery, call witnesses, cross-examine other witnesses, file briefs, and comment on staff-created briefing documents.
Although some dockets have a large number of parties,11 a more common way of being heard is to file a comment or testify at one of the public hearings held in major cases.12
Parties have all rights and responsibilities that go with being a litigant, including the right to engage in discovery, call witnesses, cross-examine other witnesses, file briefs, and comment on staff-created briefing documents.
These hearings are in addition to the so-called technical hearings, which are restricted to the testimony of parties, mostly experts. The public-hearing sessions resemble legislative-type proceedings, at which individuals present their personal opinions, usually in three to five minutes.
Comments are mostly filed electronically, although they may be submitted on “appearance slips” handed out at public-hearing sessions. The comments are gathered and offered as an exhibit by PSC staff at the conclusion of the technical hearings.
Another way to be heard at the PSC is by filing comments to the draft environmental-impact statement prepared in connection with every major construction case. Any person interested in utility projects can subscribe to receive electronic records filing (ERF) system filings. In this way, they will have notice of the filing of draft environmental impact statements and the requirements for comment. PSC staff members routinely highlight individual concerns expressed through these comments. The final environmental impact statement becomes part of the evidentiary record.
Not surprisingly, by far the most effective way to be heard at the PSC is to become a party. The following sections of this article describe the PSC’s formal practice and procedure.
Practice and Procedure Before the PSC
A major rate case or construction docket begins with the filing of an application. The records office assigns a docket number to the application for tracking purposes and opens a folder on the agency’s ERF system.13 The application is routed to the appropriate division for review.14 The PSC consults with staff members, and decides whether to open a proceeding. The first official PSC action is the issuance of the notice of proceeding. The notice usually sets a date for a prehearing conference and a schedule for the filing of requests for intervention.
In a construction case, the PSC will not open a docket15 until the administrator of the Gas and Energy Division has issued a completeness letter. The PSC has 180 days to rule on an application for a major electric construction project (usually extended to 360 days by stipulation). The time does not begin to run until the application is deemed complete. Although the PSC does not solicit comments on whether or not an application is complete, parties do, at times, raise the issue. Completeness determinations may be subject to interlocutory review by the full PSC; they are not subject to immediate judicial review.
The next major event in a PSC case is the prehearing conference. If the ALJ has not already ruled on requests to intervene,16 he or she will do so at the prehearing. Also accomplished at the prehearing are the identification of issues and the setting of a prehearing schedule (motions, discovery, and so on) and a time for the hearing.
For a novice attorney, the prehearing may seem like a meeting of old friends you don’t know. There are a number of “regulars,” including the Citizens Utility Board (CUB), Clean Wisconsin, and the Wisconsin Industrial Energy Group, which intervene almost as a matter of course in major cases. The assigned PSC staff attorney will usually take the lead at the conference. Counsel are expected to consult off the record (if they have not already done so before the conference), and consensus is usually reached on all matters.
A transcript of the prehearing conference is prepared, as is a comprehensive prehearing conference memorandum, which contains the issues list, the list of parties, the schedule for the completion of the matter, and other relevant information. It also lists all requirements for future filings, including format.17
The Wisconsin Legislature has appropriated funds – supplied by the utilities through assessments – to help organizations without adequate resources to participate in dockets. There are strict requirements and deadlines for the submission of intervenor compensation requests. Filing for intervenor compensation may enable an attorney to pay experts needed to present a party’s position, particularly if that party is a local association or other civic group that is not one of the regular participants.
Discovery and Prefiled Testimony
While PSC staff members gather information through data requests,18 the parties use customary forms of civil discovery (although depositions are rare). Parties do not engage staff in discovery. However, a party may contact staff to discuss a case; this process might help staff and a party better understand the position or concerns of the other before prefiled testimony is prepared.19
A unique feature of public utility regulation is the use of prefiled testimony. Rather than present witnesses for direct examination at the hearing, parties file their case in chief (direct), rebuttal, and any sur-rebuttal in the form of written questions and answers, resembling a transcript. The rounds after direct examination are limited to responding to the issues raised in the prior round; new theories, arguments, or defenses could be subject to motions to strike.
In most cases, only cross-examination is conducted orally. There may be stipulations to admit prefiled testimony into the record, but usually the witnesses are called to verify that their testimony would have been the same had they been questioned under oath. With advance notice to parties and coordination with the ALJ, telephonic appearances of witnesses can be accommodated, particularly if the testimony is noncontroversial.
The resulting record, consisting of prefiled testimony, exhibits, and cross-examination transcripts (plus necessary supplemental direct), may look strange to the uninitiated. Best efforts are undertaken to make the record intelligible, but prefiled testimony and live cross-examination might be out of sequence, and those accustomed to the sequential submission of evidence at a trial or hearing may be confused.20
Parties file briefs after the publication of the transcript. Oral argument rarely takes place. After briefs have been filed, staff members prepare a decision matrix and (sometimes) a briefing memorandum. The decision matrix lists all issues in the case, with references to the record, and presents alternative dispositions for the PSC’s consideration. The briefing memorandum comprehensively presents and analyzes the record to help the commissioners focus their efforts. The memorandum also functions as a synopsis or summary of the evidence pursuant to Wis. Stat. section 196.24(3). Parties have the opportunity to comment on the accuracy of the matrix and memorandum.
After consulting with staff, the PSC schedules an open meeting, at which the commissioners discuss the case. The commissioners vote on each issue and then assign staff members the task of writing the final decision. The commissioners separately review the draft decision, and then either discuss and vote on it or simply vote on it at a subsequent meeting.
Utility cases are intimidating, but an awareness of how the PSC operates may create a more welcoming climate for participation, whether informally through written comments or public testimony, or formally, as a party represented by counsel.
1 Application of Madison Gas & Electric Company for Authority to Change Electric and Natural Gas Rates, Docket No. 3270-UR-120; Joint Application of Wisconsin Electric Power Company and Wisconsin Gas LLC, both d/b/a We Energies, for Authority to Adjust Electric, Natural Gas, and Steam Rates, Docket No. 05-UR-107; Application of Wisconsin Public Service Corporation for Authority to Adjust Electric and Natural Gas Rates, Docket No. 6690-UR-123.
2 Thomas Content, Regulators Approve Higher Fixed Charges on Madison Gas & Electric Customers, Milwaukee J. Sentinel, Nov. 26, 2014.
3 Joint Application of American Transmission Company LLC and Northern States Power Company-Wisconsin, as Electric Public Utilities, for Authority to Construct and Operate a New Badger-Coulee 345 kV Transmission Line from the La Crosse Area, in La Crosse County, to the Greater Madison Area in Dane County, Wisconsin, Docket No. 05-CE-142.
5 Joint Application of Dairyland Power Cooperative, Northern States Power Company – Wisconsin, and Wisconsin Public Power, Inc., for Authority to Construct and Place in Service 345 kV Electric Transmission Lines and Electric Substation Facilities for the CapX Twin Cities-Rochester-La Crosse Project, Located in Buffalo, Trempealeau, and La Crosse Counties, Wisconsin, Docket No. 05-CE-136.
7 Application of Wisconsin Energy Corporation for Approval to Acquire the Outstanding Common Stock of Integrys Energy Group, Inc., Docket No. 9400-YO-100.
8 Wis. Stat. ch. 227.
9 Wis. Stat. § 227.50.
10 Use of the term “full party” harkens back to when PSC rules permitted “limited” intervention.
11 Badger-Coulee has 27 interveners.
12 Public hearings are held throughout an affected geographic area, both during the day and in the evening, to encourage participation. PSC staff members attend the hearings to answer questions.
13 ERF is a very user-friendly system for accessing all documents filed in a matter. After entering the docket number, for example, x-UR-x (for rate cases) or x-CE-x (for construction cases), one may download documents by selecting a link to a unique reference number, for example, PSC REF # xxxxxx. Documents subsequently created by the PSC often include hyperlinks using these reference numbers, for ease of public access.
14 The agency’s other program divisions are the Division of Regional Energy Markets, the Division of Water Compliance and Consumer Affairs (which handles water rate cases), and the Division of Business and Communications Services (which succeeded the old Telecommunications Division, phased out as a result of telecommunications deregulation.)
15 A docket number is typically secured in advance to facilitate collection and filing of all materials pertinent to the matter.
16 The requirements for standing are very easy to satisfy – usually being a ratepayer suffices – and requests are rarely contested.
17 The complexity of a major PSC matter necessitates a significant degree of standardization, in terms of organization, pagination, headings, and the like. Strict conformance with the prehearing format facilitates a successful process.
18 A data request may be in the form of a letter, see for example, PSC REF#: 203787, available at http://psc.wi.gov. Data requests are, in substance, interrogatories and requests for the production of documents, although formal discovery rules are not applicable. The authority for issuing data requests may lie in Wis. Stat. section 196.25, which requires utilities to respond to staff questionnaires.
19 Staff members are very accessible to parties and other interested persons during the course of a docket.
20 A typical prehearing order (contained in the prehearing conference memorandum) may call for the filing of the applicant’s direct, then the staff and interveners’ direct, then a round of rebuttal, and sur-rebuttal. Efforts are also sometimes made to separately file intervener testimony in support of an application from testimony in opposition.