Public Service Commission authorizes carrying costs for WP&L's Heartland contribution at WACC

The Public Service Commission voted on March 5, 2026, to modify a prior decision and authorize carrying costs at the weighted-average cost of capital (WACC) for Wisconsin Power and Light's contribution to the Heartland pipeline project. Commissioner Nieto moved the modification and Chairperson Strand seconded; the commission approved the motion by unanimous voice vote.

The decision reopens docket 66-80-AF-108 after the Federal Energy Regulatory Commission approved the Heartland project. Chairperson Strand said the commission initially denied carrying costs because the project had not been filed at FERC, but "now is the appropriate time for the commission to consider whether carrying cost should be authorized, and then if so, at what rate." The applicant had estimated customer savings of about $13,000,000 using the economic cost of capital (ECOC) and about $16,000,000 using WACC; Strand noted the difference between the two options is roughly $3,000,000.

Commissioner Nieto said the Kayak accounting treatment remained a "win-win" proposal but that she had considered order conditions to limit customer exposure to risk premia. Nieto said she could join colleagues at WACC while reserving the option of conditions that cap recoverable amounts. "There's a little bit of that either-or choice being presented here," she said, describing the applicant's alternatives as Kayak with carrying cost (preferred), non-Kayak, and Kayak with no carrying cost.

Commissioner Hawkins emphasized the role of competing investments and the degree of risk the utility would have in a noncore investment such as an interstate pipeline. Hawkins said WACC "has the most benefits for the customer" and better balances customer savings and the applicant's incentives, adding that the utility should not be encouraged to treat such investments as routine company business.

The commission also confirmed that reporting conditions would remain in place to monitor project progress. The order directs that the WACC carrying costs be authorized until the projected costs of the project are included in the net investment rate base; commissioners emphasized that the decision is tied to these case-specific facts and should not be read as a broad precedent.

The commission did not record a roll-call tally in the transcript; commissioners indicated unanimous support during the voice vote. The meeting then moved on to the Akron Solar CPCN docket.

Next steps: The commission issued the order implementing the change to the previous final decision; reporting requirements outlined in the reopened docket will govern follow-up oversight.