Fiscal Estimate

By eliminating the one-year contract for newly authorized vendors, and extending the vendor contract from two to three years, both the state and local WIC programs will reduce administrative expenditures associated with more frequent authorizations. Authorized grocery stores and pharmacies (WIC vendors) will also experience a slight cost savings, assuming that it cost store owners and managers time to complete the applications.

It is not possible to estimate the reduction in expenditures resulting from this administrative rule change.

A copy of the full text of the fiscal estimate may be obtained at no charge at the Wisconsin Administrative Rules website at http://adminrules.wisconsin.gov or by contacting Patti Herrick at the address above.

The proposed rule will affect industries in the Food and Beverage Stores subsector and the health and personal care stores subsector of the retail trade sector (sector 44-45) as classified by the North American Industry Classification System (NAICS).

In Wisconsin, the Food and Beverage Stores subsector includes approximately 2,372 establishments with revenues of approximately $7,830,155 and approximately 61, 524 paid employees. Industries in the Food and Beverage Stores subsector usually retail food and beverage merchandise from fixed point-of-sale locations. The specific industry group affected by the proposed rules in this subsector is grocery stores, including supermarkets and other grocery (except convenience) stores, and convenience stores. This industry group accounts for over half of the Wisconsin Food and Beverage Stores subsector, or 1,410 establishments, revenues of $7,288,475 and 56,204 paid employees.

The Health and Personal Care Stores subsector includes approximately 1,348 establishments with $1,904,229 in revenues, and 17,190 paid employees. Industries in the Health and Personal Care Stores subsector retail health and personal care merchandise from fixed point-of-sale locations. The specific industry group affected by the proposed rules in this subsector is pharmacy and drug stores which includes establishments primarily engaged in retailing prescription drugs and selling other items, such as proprietary drugs, medicines, and health and first-aid products; cosmetics; toiletries; greeting cards; magazines; tobacco; and candy; beauty preparations; household supplies; and candy and prepackaged snacks. This industry group includes approximately 724 establishments $1,646,621 in revenues and 14,058 paid employees.

As of July 21, 2005, the Department authorizes 861 grocery stores and 160 pharmacies for a total of 1,041 authorized WIC vendors. The proposed rules will affect all 1,041 currently authorized WIC vendors and approximately 1,113 potential applicants for WIC vendor authorization.

Currently applicants for WIC vendor authorization are required under s. HFS 149.03 (2) (c) to charge a price that is no more than 115% of the average price charged for a standardized combination of foods by other applicants in the project service area in which the grocery store or pharmacy is located. The average price is determined by the department and based on reported prices of all stores in a project service area for the standardized combination of foods during the previous 6-month period. Applications are screened for basic store and management information, business integrity, and the selection of WIC authorized foods at competitive prices as determined by prices charged by all stores in a project service area.

The Department believes that this method of computing average price may impede the ability smaller stores to obtain or maintain WIC vendor authorization, due to the smaller stores' inability to offer prices that are competitive with that of larger stores.

The proposed changes will allow the Department to compute average price based on reported prices of a vendor's peer group. The Department believes that the proposed method of computing average price will result in a more equitable process for small store applicants. Prices of these stores will no longer be compared to the prices of larger stores, who can offer lower prices than their smaller counterparts due to economies of scale. Also, by eliminating the one-year contract for newly authorized vendors, and extending the vendor contract from two to three years, authorized grocery stores and pharmacies (WIC vendors) will experience a slight cost savings due to the reduction in the time that vendors spend on completing applications for vendor authorization. It is not possible to estimate the reduction in expenditures resulting from this proposed change.The proposed rule does not establish operational standards, or require reporting, bookkeeping and other procedures, or use of professional skills for compliance with the rule.

Patti Herrick, Wisconsin WIC Director

1 W. Wilson St. Room 243

Madison, WI 53702

herriph@dhfs.state.wi.us

Phone: 608-266-3821

Fax: 608-266-3125

Rosie Greer

Department of Health and Family Services

1 W. Wilson St. Rm. 658

Madison, WI 53702

Greerrj@dhfs.state.wi.us

Phone: 608-266-1279

Fax: 608-267-1434

NOTICE IS GIVEN that a hearing will be held beginning on Wednesday, September 28, 2005, at 10:00 a.m. in the Amnicon Falls Hearing Room at the Public Service Commission Building, 610 North Whitney Way, Madison, Wisconsin, and continuing at times to be set by the presiding Administrative Law Judge. This building is accessible to people in wheelchairs through the Whitney Way first floor (lobby) entrance. Parking for people with disabilities is available on the south side of the building. Any person with a disability who needs additional accommodations should contact the Docket Coordinator listed below.

Any person may submit written comments on these proposed rules. The hearing record will remain open for written comments from the public, effective immediately, and until Friday, October 7, 2005, at noon or until Thursday, October 6, 2005, at noon, if filed by fax. All written comment must include a reference on the filing to docket 1-AC-217. All industry parties are required to file comments through ERF.

The Commission does not discriminate on the basis of disability in the provision of programs, services, or employment. Any person with a disability who needs accommodations to participate in this proceeding or who needs to obtain this document in a different format should contact the Docket Coordinator listed below.

October 7, 2005 – Noon

Address Comments To:

Lois J. Hubert, Docket Coordinator

Gas and Energy Division

Public Service Commission

P.O. Box 7854

Madison, WI 53707-7854

FAX (608) 266-3957

Questions regarding this matter may be directed to Deputy General Counsel John Lorence at (608) 266-8128, or by e-mail at john.lorence@psc.state.wi.us. Comments should be addressed to Lois J. Hubert, Docket Coordinator, and filed through the Commission's ERF system at the Commission's website http://psc.wi.gov or to the address shown in the Notice of Hearing.

The Public Service Commission of Wisconsin proposes an order to amend ch. PSC 111 (title), and to create subch. VII of ch. PSC 111, Wis. Admin. Code, relating to rules concerning the establishment of capital cost ratemaking principles for certain rate base electric generating facilities.

Statutory authority: ss. 196.02 (3), 196.371 and 227.11 (2), Stats.

Statute interpreted: s. 196.371, Stats.

Section 196.371, Stats., established a process for a public utility to obtain a Commission order regarding capital cost ratemaking principles which may be applicable to the proposed purchase or construction of an electric generating facility. Section 196.371 (4), Stats., directs the Commission to promulgate rules for administering the process. This promulgates those rules as subch. VII of ch. PSC 111, Wis. Admin. Code.

No similar federal provision is known. However, Iowa Code Ann. § 476.53 (2005), grants the Iowa Utility Board similar authority which is codified in Iowa Administrative Code r. 199-7.

2005 Wisconsin Act 7 provides a public utility that proposes to build or purchase an electric generating facility to request that the Commission determine, in advance and by order, the underlying principles by which the Commission will treat the recovery of the capital costs of the facility in setting rates for the utility. These capital costs include the purchase price and any necessary modifications or improvements to the facility made at the time of purchase. The Commission may issue an order if it finds that the proposed principles provide a sufficient degree of certainty to the utility, investors, and ratepayers with respect to future recovery of the facility's costs and that the order is otherwise in the public interest. The proposed rules elaborate on the process and the information required in the application.

The capital structure and other financial parameters surrounding capital cost recovery are important parameters in determining whether the facility complies with the criteria under Wis. Stats. s. 196.49 (3) (b) 3. Fixing financial parameters for electric generating facilities is optional and the public utility should have evaluated whether such treatment is in its investors' and customers' best interest prior to submitting its application to build or purchase. Consequently, a public utility which does not file an application under these rules simultaneously with its application to purchase or build will not be allowed to make such a filing at a later date.

TEXT OF PROPOSED RULE

Section 1. Chapter PSC 111 (title) is amended to read:

REQUIREMENTS FOR STRATEGIC ENERGY ASSESSMENTS,

AND CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY,

AND FIXED FINANCIAL PARAMETERS FOR CERTAIN RATE BASE ELECTRIC

GENERATING FACILITIES

Section 2. Subchapter VII of ch. PSC 111 is created to read:

SUBCHAPTER VII – FIXED FINANCIAL PARAMETER APPLICATIONS

PSC 111.61 Purpose. The purpose of this subchapter is to implement s. 196.371, Stats.

PSC 111.62 Applicability. (1) A public utility may, but is not required to, apply for an order fixing financial parameters under s. 196.371, Stats.

(2) An electric generating facility proposed to be constructed cannot qualify for fixed financial parameters, unless the public utility's application for a certificate, as defined in s. 196.371 (1), Stats., for construction was made simultaneous with the application for fixed financial parameters.

(3) An electric generating facility proposed to be purchased by a public utility may qualify for fixed financial parameters if all of the following apply:

(a) The application for authority to purchase the electric generating facility was made simultaneously with the application for fixed financial parameters.

(b) The proposed sale and purchase is not between affiliates.

(c) The electric generating facility has never been owned by the public utility or any of its affiliates.

PSC 111.63 Information required. A public utility desiring fixed financial parameters shall provide the following minimum information in its application:

(1) The economic useful life of the facility, including technology type and commercial operation date.

(2) The proposed return on equity and rate of return for the facility, including supporting materials such as relevant studies or testimony.

(3) The proposed capital structure and financing mechanisms for the facility.

(4) The capital cost of the facility For purchased facility, the capital costs shall include the cost of any necessary modifications or improvements to the facility.

(5) The proposed method for determining the costs that may be recovered in rates.

(6) Any other proposals or information regarding the recovery of the costs that the public utility determines are necessary for providing certainty to the public utility, investors and ratepayers in future rate-making proceedings.

(7) The cost of debt plus issuance costs, and related credit ratings for any short-term or long-term project financing which may already have occurred.

(8) Any other information required by the commission.

Section 3. Effective date This rule shall take effect on the first day of the first month following publication in the Wisconsin administrative register as provided in s. 227.22 (2) (intro.), Stats.

The rules being created apply to a public utility that has or expects to have electric generating facilities in this state and provides electric service to end users in this state. It is unlikely that any such entity would be a small business as defined in s. 227.114 (1), Stats. Therefore, the proposed rules are not expected to affect small businesses as defined in s. 227.114 (1), Stats.

This rule has no fiscal impact.