July 17, 2012 – In Wisconsin, larger public electricity-generating projects are subject to a stricter approval process to build facilities. But not if the facility is outside Wisconsin, according to a recent decision by the Wisconsin Supreme Court.

In 2008, Wisconsin Power & Light applied to construct a wind farm facility in Minnesota to serve Wisconsin residents. The approval agency, the Wisconsin Public Service Commission (PSC), used a less demanding approval process than required for large in-state facilities.

In general, “large scale electric generating facilities” operating at a capacity of 100 megawatts or more must comply with Wis. Stat. section 196.491(3) to obtain a “Certificate of Public Convenience and Necessity,” a stricter process. Smaller scale projects must meet the requirements of section 196.49(3) to obtain a “Certificate of Authority.”

The Wisconsin Industrial Energy Group (WIEG) and the Citizens Utility Board, both consumer groups, argued that PSC could not use a less demanding procedure to approve the wind farm facility, noting ratepayer protections that the stricter process was designed to address.

PSC said it could not impose a process that would interfere with Minnesota’s interests, and could only impose stricter procedures on facilities located within the state. Eventually, it granted the Wisconsin Power & Light a “Certificate of Authority” to proceed with the project.

The plaintiff consumer groups sought judicial review of the PSC’s decision, which the circuit court upheld. An appeals court certified the case to the Wisconsin Supreme Court.

In Wisconsin Industrial Energy Group v. Public Service Commission of Wisconsin, 2012 WI 89 (July 11, 2012), the Wisconsin Supreme Court majority (5-2) affirmed PSC’s decision.

“[W]e cannot ignore the State of Wisconsin’s lack of authority to regulate a person’s activities in another state,” wrote Justice Patience Roggensack for the majority.

The majority explained that PSC could use the less demanding application process to approve out-of-state facilities, but could only use the more demanding process for in-state ones.

“[B]ecause the purpose of the [stricter] law is to require more thorough review of local site-specific factors, and not primarily greater ratepayer protections, as WIEG contends, WIEG’s focus on ratepayer protections under the [stricter] law is misplaced,” Justice Roggensack wrote.

Dissent

Justice Anne Walsh Bradley (joined by Chief Justice Shirley Abrahamson), wrote a dissenting opinion, arguing that PSC should use the stricter application process for out-of-state facilities.

“Like the majority, I recognize that both statutes are silent on their application to out-of-state facilities,” Justice Bradley wrote. “I part ways with the majority, however, when it transforms that silence into an ambiguous directive that erodes the legislative policy of providing protection for Wisconsin ratepayers.”

The dissent suggested that the legislature should craft a statute to address the application process for out-of-state facilities specifically, or sever provisions requiring extraterritorial regulation from the stricter law to obtain a “Certificate of Public Convenience and Necessity.”