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Wisconsin PSC Denies Request for Declaratory Ruling on Third-Party Financing

December 18, 2023
3 minute read

Wisconsin PSC Denies Request for Declaratory Ruling on Third-Party Financing

December 18, 2023
3 minute read

Authored By

Mark Bender

Mark C. Bender

Special Counsel

John Clancy

John L. Clancy



The Public Service Commission of Wisconsin (PSC) has denied a request for a declaratory ruling in the second of two closely-watched dockets related to third-party financing arrangements for distributed energy resources (DERs). The decision means that some questions remain unanswered as to the legality of third-party financing of renewable resources in Wisconsin.

Originally filed in May 2022 as Docket 9300-DR-105, Midwest Renewable Energy Association’s (MREA) petition for declaratory ruling had sought clarity from the PSC that entities which provide third-party financing for DERS are not public utilities, and therefore are not subject to PSC regulation. MREA had stated its intent to provide DER financing generally to multiple Wisconsin customers and requested clarity from the PSC as to the extent of its jurisdiction. For the PSC’s consideration, MREA presented eleven attributes it said are common to its proposed DER financing arrangements, and argued that the PSC should issue a declaratory ruling that would apply to that state of facts, rather than any particular arrangement. MREA also requested that such a ruling be binding on the PSC and any party involved in the proceeding. Opponents argued that MREA would in fact be acting as a public utility by providing power “to or for the public,” and accordingly MREA would be subject to PSC regulation. Opponents also argued that approving MREA’s request would represent a change in state law, which requires action by the State Legislature rather than the PSC.

In early 2023, the PSC had ordered the record to be reopened for Docket 9300-DR-105 in order to gather more information from MREA as to the specific circumstances of its request. Commissioners stated at the time that they did not believe the record contained sufficient information on which to make a decision. Without deciding the merits of the petition, the PSC requested additional filings and information from the parties to address three items:

  1. What sub-class of the public does MREA plan to provide for?
  2. How is the equipment to be owned by MREA providing solar photovoltaic service behind-the-meter similar to or differentiated from the provision of front-of-the-meter service?
  3. Provide additional evidence as to the function, intent, and purpose of the various technologies listed by MREA, including solar panels, direct-to-alternating-current inverters, battery energy storage, thermal energy storage, and demand management systems/smart panels.

After nearly a year of additional proceedings and filings, the PSC issued a verbal decision at its December 14, 2023, Open Meeting denying MREA’s petition for declaratory ruling. During the discussion, Commissioner Valcq noted that for declaratory rulings, the PSC must make specific determinations on a case-by-case basis and she stated that the record did not contain enough information to make a decision in this docket. Commissioner Huebner agreed, stating that MREA had failed to engage with the questions the PSC had posed regarding specifics of the planned DER financing arrangements, and accordingly, the request by MREA was too broad for the PSC to make a decision. Commissioner Strand, who joined the PSC shortly after the order to reopen was issued, also agreed with Commissioners Valcq and Huebner.

As a result, the legality of third-party financing arrangements in Wisconsin remains less than clear. While the PSC has not issued a broad ruling on third-party financing, in February 2023, the PSC issued an order in Docket 9300-DR-106 that a single third-party provider, North Wind Renewable Energy Cooperative, would not be regulated as a public utility by owning a single DER system that served a single customer. That ruling has since been appealed and is pending in Dane County Circuit Court.

For more information on this topic, or to learn how Godfrey & Kahn can help you navigate the current regulatory landscape in Wisconsin, please contact Mark Bender, John Clancy, or Art Harrington.

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