(1)    In this section, “agency” has the meaning given under s. 16.52 (7).

   (2)   Except as provided in sub. (3), any agency, with the approval of the department, may sell fuel, water, sewage treatment service, electricity, heat or chilled water to another agency, a federal agency, a local government or a private entity.

   (3)   Prior to contracting for the sale of any fuel or extending any water, sewage treatment, electrical, heating or chilled water service to a new private entity after August 9, 1989, an agency shall contact each public utility that serves the area in which the private entity is located and that is engaged in the sale of the same fuel or utility service. If a public utility so contacted objects to the proposed sale and commits to provide the fuel or service, the agency shall not contract for the sale.