Committee-of-the-Whole Agenda Packet - 6:40 PM

City of Oconomowoc Committee-Of-The-Whole Tuesday, September 15, 2026 - 6:40 PM City Hall - Council Chambers 174 E. Wisconsin Ave. Oconomowoc, WI 53066 (Or immediately following Public Services) Notice: If a person with a disability requires that the meeting be accessible or that materials at the meeting be in accessible format, call the City Clerk at least 48 hours prior to the meeting to request adequate accommodations. Tel: (262) 569-2186. 1. Call to order and confirmation of appropriate meeting notification 2. Roll Call 3. Committee Business a. Update from Bruce Nattinger, President of the Lac La Belle Management District b. Discussion - Utility Adoption of Parallel Generation Rates 4. Adjourn Gina Kozlik, City Clerk City of Oconomowoc Notice is hereby given that a majority of the Common Council will be present at the above scheduled meeting to gather information about a subject over which they have decision-making responsibility. This constitutes a meeting of the Common Council pursuant to State ex rel. Badke v. Greendale Village Board, 173Wis. 2d 553, 494 N.W. 2d 408 (1993) and must be noticed as such, although the Common Council will not take any formal action at this meeting. 1 1 MEMORANDUM LAC LA BELLE LAKE MANAGEMENT DISTRICT Date: September 15, 2026 To: Mayor and Committee of the Whole From: Mark Frye, City Administrator Re: Presentation from Lac La Belle Management District RELATES TO THE STRATEGIC PLAN Strategic Goal-NA BACKGROUND Alderman Lou Kowieski requested Bruce Nattinger, President of the Lac La Belle Management District, to provide an update regarding the lake. Bruce has agreed and will be talking about the health of the lake and other initiatives from the Management District. ADDITIONAL ANALYSIS N/A FINANCIAL IMPACT N/A RECOMMENDATION N/A SUGGESTED MOTION N/A Z:\City Administrator\Lac La Belle Management District\COW Presentation 09152026\Background Memo for Lac La Belle Management District Presentation 09152026.docx 2 MEMORANDUM ELECTRIC UTILITY Date: September 15, 2026 To: Mayor and Committee of the Whole From: Kevin Kaari, Utility Manager Re: Discuss Adoption of New Pgs-1 Rate for Parallel Generation (20 kW or less) – Net Energy Billing RELATES TO THE STRATEGIC PLAN N/A BACKGROUND Oconomowoc electric utility is considering joining other Wisconsin Public Power Inc. Energy (WPPI) member utilities in making a rate adjustment for “parallel generation” customers under the Pgs-1 rate. The current Pgs-1 rate tariff applies strictly to customer-owned generation systems (like rooftop solar) with a capacity of 20 kW or less. A kW or kilowatt is a unit of measurement for the rate of power an electrical device or load uses. The higher the kW of a device, the more electrical power is needed to operate it. Most U.S. homes require between 5–20 kW to run at full capacity at any given moment, depending on which appliances are running simultaneously such as air conditioning, oven and dryer. In Oconomowoc, we currently have approximately 100 customers with photovoltaic (PV) solar panels. At times, the solar energy the customer generates is greater than the customer’s electrical consumption. This “excess generation” flows in the opposite direction through the electric meter and is added to our distribution system. Under the current tariff, a customer who generates more electricity than their own monthly usage, is allowed to sell the excess electricity back to the utility at the retail rate they pay. The revised Pgs-1 tariff will still allow an electric customer to offset their own electrical usage at the retail rate, but if they produce more than what they use, the excess electricity they produce will be paid at the same rate that we pay WPPI for our wholesale electric power. The whole sale power rates are roughly 3 to 4 cents per kilowatt-hour. Our retail rate for residential customers is around 12.5 cents per kilowatt-hour. The retail rate at which we sell electricity is calculated to recover the total cost for the entire process of delivering energy. A customer providing energy back onto our distribution grid is only providing generation and should not be compensated for the other components of the electric delivery process that we pay for. 3 P:\Committee and Council\Memos\Memo - 9-15-2026 - Electric Utility -PGS-1 Tariff - Oconomowoc - Final.docx ADDITIONAL ANALYSIS Investor-owned utilities in the state of Wisconsin, like We Energies, changed their parallel generation rates to this method since January 1, 2016. On July 1, 2026, WPPI member Sturgeon Bay Utilities was approved for their new Pgs-1 rate. Using Sturgeon Bay as the model for Wisconsin municipal utilities, WPPI will file for this new rate structure on our behalf in October 2026. FINANCIAL IMPACT Over the past 12 months, the amount credited for excess generation has cost the utility over $57,000. Paying retail rates for the purchased energy from customers unfairly increases costs for all other electric customers. The proposed tariff allows existing parallel generation systems to be “grandfathered” so we will continue to pay them at the retail rate for the next 10 years. Any customers adding parallel generation after the new rate is passed will begin at the new rate immediately. RECOMMENDATION Discussion Only. We will be asking for approval to be part of the WPPI filing at our Council meeting on October 6, 2026. SUGGESTED MOTION N/A 4 Click to edit Master title style 1 Parallel Generation Rate Update: Pgs-1 City of Oconomowoc - Electric Utility 9/15/2026 5 Click to edit Master title style 2 Parallel Generation Background 2 • Core Purpose: Better align the shared benefits of parallel generation with actual utility costs, as deemed appropriate by the Public Service Commission of Wisconsin (PSC). • Proven Blueprint: Modeled directly after PSC-approved Investor-Owned Utility (IOU) parallel generation schedules. • Timeline & Status: • Sturgeon Bay: Approved rates went into effect July 1, 2026. • WPPI Joint Member Filing: Scheduled for this fall, with expected effective rates in 2027. • Member Participation: Approximately 27 WPPI members have already secured local approval to join the filing. 6 Click to edit Master title style 3 Pgs-1 Overview (Systems 20 kW or less) 3 • Oconomowoc Landscape: Oconomowoc currently has 99 customers in this category. • Grandfathering Provision: All existing Pgs-1 customers are grandfathered for 10 years, retaining the current retail rate credit for excess generation. • Net Metering Continuity: Systems under 20kW will maintain net-metering treatment, allowing monthly generation to offset utility purchases. • Monthly Excess: Any generation exceeding load at the end of the month will continue to receive a credit. 7 Click to edit Master title style 4 What is Changing? 4 • New Credit Benchmark: Excess generation will be credited at the WPPI avoided energy cost (market energy rate) instead of the previous retail rate. • $0.03 to $0.04 per kWh vs. $0.125 per kWh • Time-of-Use Structure: Separate On-peak and Off-peak credits will be established. • Seasonal Pricing: Based on a 3-year average of seasonal Midcontinent Independent System Operator (MISO) Locational Marginal Price (LMP) across four blocks of time (Winter – Spring – Summer-Fall): • Dec – Feb | Mar – May | Jun – Aug | Sep – Nov • Annual Updates: Credits will be updated every year to reflect current market conditions. 8 Click to edit Master title style 5 Pgs-1: Benefits & Cost Signals 5 • Right-Sized Systems: Encourages customers to size systems to their actual load. • Customers avoid full retail energy charges up to their full load, while excess is paid at wholesale market prices. • Subsidy Removal: Eliminates the rate subsidy previously paid by non- generation customers who covered full retail rates for excess generation. • Fair Cost Shifting Reduction: More cost-based structure reduces the burden of shifting local fixed cost recovery onto non-generation customers. 9 Click to edit Master title style 6 Questions? 10 RATE FILE Sheet No. 1 of 2 Schedule No. Pgs-1 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Parallel Generation (20 kW or less) -- Net Energy Billing EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 1. Effective In All territories served by the utility. 2. Availability Available for single-phase and three-phase customers generating power using renewable resource generators that satisfy the requirements of “qualifying facility” status under Part 292 of the Federal Energy Regulatory Commission’s regulations under the Public Utility Regulatory Policies Act of 1978 where a part or all of the electrical requirements of the customer are supplied by the customer’s generating facilities located behind-the-meter (BTM) on the customer’s premises, where such facilities have a total generating capability of 20 kW alternating current (AC) or less, where such facilities are connected in parallel with the utility and where such facilities are approved by the utility. 3. Rate The customer shall be billed monthly on a net energy basis and shall pay the customer charge and energy charge(s) specified in the rate schedule under which the customer is served. When the energy produced exceeds energy consumed for the billing month, the customer shall be credited for the excess energy volumes at the energy credit component (multiplied by the loss factor) specified for BTM COGS in the utility’s Pgs-2 rate schedule, unless the customer qualifies for the rate described in the next paragraph. The buy-back energy rates will be reset annually for billing on or after February 1 of each year based on the most recent three-year average locational marginal price of energy in MISO at the WEC.WPPI commercial pricing node. The following customers will continue to be credited for net monthly excess generation at the energy rate specified in the rate schedule under which the customer purchases energy, including the monthly power cost adjustment clause (PCAC), until April 30, 2036: a) customers taking service under this rate schedule prior to April 6, 2026;. A customer that makes changes to the capacity or type of its generation facilities after April 6, 2026 will be treated as a new customer and shall be subject to the standard avoided cost rate. If, in any month, the customer’s bill has a credit balance of $100 or less, the amount shall be credited to subsequent bills until a debit balance is reestablished. If the credit balance is more than $100, the utility shall reimburse the customer by check upon request. Monthly credits shall be computed by taking the net excess kilowatt-hours produced times the applicable energy charge. 11 RATE FILE Sheet No. 2 of 2 Schedule No. Pgs-1 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Parallel Generation (20 kW or less) -- Net Energy Billing EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 4. Metering and Services Facilities A customer who is served under a regular rate schedule shall have any ratchet and/or other device removed from the meter to allow reverse power flow and measurement of net energy used. Customers eligible for net energy billing but with existing metering facilities equipped with ratchets or other devices preventing reverse registration (i.e. time-of-use metering facilities) may request that the utility install the necessary metering to permit such billing. Non-Standard Meter Service, if any, is not available for customers electing the Pgs-1 Schedule. 5. Customer Obligation See Wis. Admin. Code ch. PSC 119; Rules for Interconnecting Distributed Generation Facilities. 6. Renewable Energy Credits and Benefits All renewable energy credits and benefits, emissions allowances, or other renewable energy, air emissions, or environmental benefits for which the customer’s generation system qualifies under any existing or future applicable law shall remain the property of the customer. 12 RATE FILE Sheet No. 1 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 1. Effective In All territories served by the utility. 2. Availability Available for single-phase and three-phase customers generating power using renewable resource generators that satisfy the requirements of “qualifying facility” status under Part 292 of the Federal Energy Regulatory Commission’s regulations under the Public Utility Regulatory Policies Act of 1978 who desire to sell excess generation to the utility from behind-the-meter (BTM) customer-owned generation systems (COGS), or who sell all generation to the utility from front-of-the-meter (FTM) COGS. For BTM COGS, a part or all of the electrical requirements of the customer are supplied by the COGS located on the customer’s premises. For FTM COGS, all of the generation is sold to the utility under an executed service agreement between the COGS and the utility, and all of the customer’s electricity usage is supplied separately by the utility under applicable retail service schedules. In either case, BTM or FTM, such facilities shall have a total generating capability of greater than 20 kW and less than or equal to 5 MW alternating current (AC), with such facilities connected in parallel with the utility, and where such facilities are approved by the utility. Customers not desiring to sell energy under this rate have the right to negotiate a buy-back rate. If, in lieu of taking service under this rate schedule, a customer elects to sell their excess generation to another utility or into the market administered by the Midcontinent Independent System Operator, Inc. (MISO) the utility shall transport the customer’s excess generation across the utility’s distribution system and shall recover actual costs of such transportation from the generating customer. 3. Rate Unless separately negotiated in accordance with paragraph 7 of this rate schedule, the utility shall, for all energy sold to the utility, credit the COGS at the applicable avoided cost rate specified below. The avoided cost rates will be reset annually for billing on or after February 1 of each year to reflect the then current value of each component shown in the table below: a. For BTM COGS: Customers shall receive monthly payments equal to the sum of the excess energy volume (in kWh) in each On-Peak Hour of the month multiplied by the seasonal on- peak buy-back rate plus the sum of the excess energy volume (in kWh) in each Off- Peak Hour of the month multiplied by the seasonal off-peak buy-back rate. The following table shows the components of these rates. 13 RATE FILE Sheet No. 2 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 WINTER (December through February) Component On-Peak Off-Peak Energy Credit $0.0431/kWh $0.0358/kWh Capacity Credit $0.0005/kWh $0.0000/kWh Transmission Credit $0.0000/kWh $0.0000/kWh Sub-Total $0.0435/kWh $0.0358/kWh x Loss Factor 1.03 1.03 Total Buy-Back Rate $0.0448/kWh $0.0369/kWh SPRING (March through May) Component On-Peak Off-Peak Energy Credit $0.0298/kWh $0.0241/kWh Capacity Credit $0.0061/kWh $0.0000/kWh Transmission Credit $0.0000/kWh $0.0000/kWh Sub-Total $0.0359/kWh $0.0241/kWh X Loss Factor 1.03 1.03 Total Buy-Back Rate $0.0370/kWh $0.0249/kWh SUMMER (June through August) Component On-Peak Off-Peak Energy Credit $0.0523/kWh $0.0299/kWh Capacity Credit $0.0328/kWh $0.0000/kWh Transmission Credit $0.0000/kWh $0.0000/kWh Sub-Total $0.0851/kWh $0.0299/kWh X Loss Factor 1.03 1.03 Total Buy-Back Rate $0.0876/kWh $0.0308/kWh FALL (September through November) Component On-Peak Off-Peak Energy Credit $0.0394/kWh $0.0282/kWh Capacity Credit $0.0099/kWh $0.0000/kWh Transmission Credit $0.0000/kWh $0.0000/kWh Sub-Total $0.0493/kWh $0.0282/kWh X Loss Factor 1.03 1.03 Total Buy-Back Rate $0.0508/kWh $0.0291/kWh 14 RATE FILE Sheet No. 3 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 For BTM COGS, both the Energy Credit and the Capacity Credit will be based on seasonal historical averages. The Energy Credit will be reset annually based on the most recent three-year average locational marginal price of energy in MISO at the WEC.WPPI commercial pricing node. The Capacity Credit will likewise be reset based on the most recent three-year average annual capacity clearing price in the MISO Planning Resource Auction. b. For FTM COGS: Customers shall enter into a service agreement with the utility and shall receive monthly payments equal to: [FTM Energy Credit + FTM Capacity Credit + FTM Trans Credit] x DLF Where: FTM Energy Credit = the sum of the energy produced by the FTM COGS (in kWh) in each On-Peak Hour of the month multiplied by the seasonal on-peak Energy Credit rate, plus the sum of the energy produced by the FTM COGS in each Off-Peak Hour of the month multiplied by the seasonal off-peak Energy Credit rate. The seasonal FTM Energy Credit rates are equal to the Energy Credit components specified in the table for BTM COGS and will be updated annually as described there. FTM Capacity Credit = (1/12) x (Applicable Net CONE) x (Cap of FTM COGS) Applicable Net CONE = MISO’s Net Cost of New Entry (specified in $/kW-year) effective when the FTM COGS and utility enter into a 10- year service agreement, subject to extension in 5 year increments at the end of the initial term and each subsequent term. Net CONE shall be updated upon any extension. Cap of FTM COGS = MISO’s accredited capacity amount (in kW) then effective for the FTM COGS at the time of the service agreement or any extension thereof. FTM Trans Credit = $0 DLF (Distribution Loss Factor) = 1.03 15 RATE FILE Sheet No. 4 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 4. On-Peak and Off-Peak Hours and Holidays On-Peak Hours: 8:00 a.m. – 8:00 p.m., Central Prevailing Time, Monday through Friday, excluding Holidays. Off-Peak Hours: All hours that are not On-Peak Hours. Holidays: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day, or the date celebrated as such. 5. Minimum Charge The monthly minimum charge paid by the customer shall be the customer charge. 6. Power Factor The customer shall maintain a minimum power factor as specified in Wis. Stats. Chapter PSC 119.20 (7). 7. Negotiated Rates Customers with generation systems greater than 20 kW have the right to negotiate a buy-back rate. The buy-back rate cannot be greater than the full avoided cost. The following are the required procedure guidelines: a. The utility must respond to the customer-owned generating system within 30 days of the initial written receipt of the customer-owned generating system proposal and within 30 days of receipt of a subsequent customer-owned generating system proposal, b. The utility’s rejection of the customer-owned generating system proposal must be accompanied by a counter-offer relating to the specific subject matter of the customer- owned generating system proposal, and c. If the utility is unable to respond to the customer-owned generating system proposal within 30 days it shall inform the customer-owned generating system of: 1) Specific information needed to evaluate the customer-owned generating system proposal. 2) The precise difficulty encountered in evaluating the customer-owned generating system proposal. 3) The estimated date that it will respond to the customer-owned generating system proposal. 16 RATE FILE Sheet No. 5 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 d. The Commission may become involved in the utility negotiations upon showing by either the utility or the COGS that a reasonable conclusion cannot be reached under the above guidelines. The Commission may provide a waiver to the guidelines and order new negotiation requirements so that a reasonable conclusion can be reached. e. A copy of all negotiated buy-back rates shall be sent to the Commission. These rates shall not be effective until the contract is placed on file at the Commission. 8. Charges for Energy Supplied by the Utility Energy supplied by the utility to the customer shall be billed in accordance with the rate schedules of the utility under which the customer is served. 9. Maintenance Rate A customer-owned generation facility may be billed lower demand charges for energy purchased during scheduled maintenance provided written approval is obtained in advance from the utility. Demand charges other than “Distribution Demand” shall be prorated if maintenance is scheduled such that the utility does not incur additional capacity costs. Such prorated demand charges shall be calculated as the demand charge rate times (the number of days in the billing period minus the number of authorized days of scheduled maintenance), divided by the number of days in the billing period. 10. Application Process and Customer Obligation See Wis. Admin. Code ch. PSC 119, Rules for Interconnecting Distributed Generation Facilities. 11. Utility Obligation a. Metering Facilities The utility shall install appropriate metering facilities to record all flows of energy necessary to bill in accordance with the charges and credits of the rate schedule. To the extent that the utility determines a separate meter is required for the generator, the utility will charge a monthly meter charge of $8.00 for such meter. Non-Standard Metering service is not available for customer metering under this schedule. b. Notice to Communication Firms Each electric utility shall notify telephone utility and cable television firms in the area when it knows that a customer-owned generating facility is to be interconnected with its 17 RATE FILE Sheet No. 6 of 6 Schedule No. Pgs-2 Public Service Commission of Wisconsin Amendment No. 99 STURGEON BAY ELECTRIC UTILITY Customer-Owned Generation Systems (Greater than 20 kW) EFFECTIVE: July 1, 2026 PSCW AUTHORIZATION: Final Decision in Docket 5780-TE-111 issued April 6, 2026 system. This notification shall be as early as practicable to permit coordinated analysis and testing in advance of interconnection, if considered necessary by the electric or telephone utility or cable television firm. 12. Right to Appeal The owner of the generating facility interconnected or proposed to be interconnected with a utility system may appeal to the Commission should any requirement of the utility service rules filed in accordance with the provisions of Wis. Admin. Code § PSC 119.40, or the required contract be considered to be excessive or unreasonable. Such appeal will be reviewed and the customer notified of the Commission’s determination. 13. Renewable Energy Credits and Benefits All renewable energy credits and benefits, emissions allowances, or other renewable energy, air emissions, or environmental benefits for which the customer’s generation system qualifies under any existing or future applicable law shall remain the property of the customer. 18