Wisconsin Administrative Code › Public Service Commission › Chapter PSC 100 - Affiliations between public utilities and other persons › Subchapter II - Affiliated Wholesale Merchant Plant Market Power › Section PSC 100.12 - Definitions

Current through June 24, 2024
In this subchapter:
(1) "Affiliated interest" has the meaning set
				forth in s.
				196.52(1),
				Stats.
(2) "Affiliates" means the
				public utilities with which the applicant is affiliated and all other
				affiliated interests of the public utilities.
(3) "Applicant" means any affiliated interest
				of a public utility seeking approval under s.
				196.491(3m),
				Stats., to own, operate, or control a wholesale merchant plant.
(4) "Available economic capacity" means
				economic capacity less the amount of generating capacity reasonably necessary
				to serve, in commercially viable increments, the potential supplier's native
				load.
(5) "DOJ guidelines" means
				the U.S. Department of Justice and Federal Trade Commission Horizontal Merger
				Guidelines, as revised April 8, 1997.
(6) "Economic capacity" means the amount of
				generating capacity owned or controlled by a potential supplier with variable
				costs low enough that energy from the capacity could be delivered to the
				relevant geographic market at a price no more than 5% above the pre-transaction
				market clearing price; less any capacity that is committed under long-term firm
				sales contracts; plus any capacity that is acquired under long-term firm
				purchase contracts, and any generating capacity that is under the operational
				control of a third-party but the potential supplier receives the economic
				benefit of the capacity. In this subsection, a long-term sales or purchase
				contract means a sales or purchase contract which has a remaining commitment of
				more than one year.
(7) "FERC Order
				592" means the December 18, 1996, Federal Energy Regulatory Commission Order
				592.
(8) "HHI statistic" means the
				Herfindahl-Hirschman Index for the market.
(9) "Market power" means the ability of a
				seller in the relevant geographic market to profitably maintain prices for
				comparable products above competitive levels for a significant period of time.
				Sellers with market power also may be able to reduce product quality, quantity,
				service, or innovation.
(10)
				"Native load" means load attributable to customers on whose behalf the
				potential supplier, by statute, franchise, or regulatory requirement, has
				undertaken an obligation to construct and operate its system to meet their
				electricity needs.
(11) "Passive
				investor" is any applicant whose investment the commission determines does not
				permit control or influence by the affiliated utility of the merchant plant and
				who receives no more information regarding plant operations, and who receives
				such information no earlier, than is publicly available to any investor. In
				making a determination whether an investor may exercise control or influence
				over a wholesale merchant plant, the commission shall consider, where
				applicable, such factors as the fiduciary responsibilities of the operator,
				manager and other investors in the wholesale merchant plant to the investor;
				the ability of the wholesale merchant plant to raise capital independently of
				the investor; the ability of the wholesale merchant plant to make investment
				and financing decisions independently of the investor; governance provisions;
				the number, identity and interests of other investors; if the investor may
				exert control or influence over generation rates, terms, conditions and
				production, including outage schedules; any services that will be provided by
				the investor or its employees to the wholesale merchant plant; the terms of any
				agreements between the investor and the wholesale merchant plant, any party
				managing or operating the wholesale merchant plant, any other investor or
				lender in the wholesale merchant plant or any purchaser of output from the
				plant; and any other factors which the commission deems relevant.
(a) An ownership interest of 5% or less shall
				be irrebuttably presumed not to create the ability to control or influence. An
				ownership interest of 50% or more shall be irrebuttably presumed to create the
				ability to control or influence. The ability of investors that loan funds to
				the merchant plant to control or influence shall be judged upon the terms of
				the loan agreements and the other factors listed above.
(b) A passive investor must undertake and
				propose to the commission processes for a compliance audit by the commission to
				ensure the independence of the decision making process of the wholesale
				merchant plant from the passive investor and the continued status of the
				investor as passive. The first compliance audit will be required 2 years after
				initial approval under s.
				196.491(3m),
				Stats., and as necessary thereafter. The compliance audit information must be
				submitted to the commission without any requirement for approval by the
				wholesale merchant plant.
(c) A
				passive investor must immediately report changes to the commission in the
				ownership, operation, management or control of the wholesale merchant plant
				that may affect the status of the investor as passive.