An appeals court has toppled Wisconsin’s longstanding ban on aggregators of demand response participating in wholesale markets.
The District IV Court of Appeals for Wisconsin agreed with the Midwest Renewable Energy Association (MREA) that the Wisconsin Public Service Commission’s circa-2009, temporary order prohibiting customers and aggregators from selling demand response in MISO was procedurally improper (2021CV41).
The court said in a May 31 ruling that the original order in fact meets the definition of a rule according to Wisconsin law and the Wisconsin PSC should have proposed and adopted it using different procedures. Judges called the order “invalid and unenforceable” and reversed a circuit court’s decision to dismiss a challenge to it.
“There is no dispute that, in issuing the order, the commission did not comply with the pertinent rulemaking procedures set forth” in Wisconsin statute, the appeals court said.
The 15-year-old order — which bars retail customers of Wisconsin’s largest utilities, as well as third-party aggregators, from selling load reductions in wholesale markets — was considered temporary when commissioners approved it. It was to remain in effect until regulators rescinded it through another order, which to date hasn’t happened.
At the time, commissioners reasoned they needed time to analyze the financial implications of demand response aggregations on ratepayers and investigate how such aggregations would affect utility-sponsored demand response programs and resource planning.
MREA first challenged the order with the Portage County Circuit Court in 2021.
The Wisconsin PSC asked the appeals court to sustain the dismissal. It said MREA failed to challenge the order within 30 days of issuance and didn’t exhaust all administrative remedies first because it didn’t ask regulators to reopen the docket to rescind or alter the order. The commission also argued it has main jurisdiction over the issue.
But the court said the order isn’t an administrative decision according to Wisconsin law and isn’t subject to the 30-day limit. It noted Wisconsin law allows plaintiffs to petition courts “for declaratory relief without first asking the agency to rule” on claims and dismissed the commission’s contention that the PSC was exclusively equipped to handle the matter.
“[MREA’s} argument that the order is an invalid, unpromulgated rule involves only issues of law that fall squarely within the circuit court’s expertise,” the court said. It remanded the case to the circuit court with instructions for the court to deem the temporary order invalid.
The court similarly wasn’t persuaded by the Wisconsin PSC’s argument that the order didn’t amount to the “general application” of a rule. Wisconsin considers rules generally applicable when the class of constituents is “described in general terms and new members can be added to the class.”
The court agreed with MREA that since the order applied to all existing and future retail customers of Wisconsin’s four largest utilities and all existing and future third-party aggregators, it met the definition of a rule.
