Utilities Flood Capital With Lobbyists

In February 2022 Ellen Nowak took the extraordinary step of testifying before the Wisconsin Legislature in favor of an insider deal supported by the American Transmission Co., or ATC, and several Wisconsin utilities that are co-owners of ATC.

This was extraordinary because she was a governor-appointed member of the Public Service Commission (PSC), whose mission is to regulate public utilities and make decisions to benefit the public, not a particular company. Nowak conceded it was unusual for her to be testifying because she viewed the PSC as “a creature of the Legislature charged with carrying out the utility regulation” that lawmakers determine.

But she explained that away noting that “I am testifying on my own behalf and not on behalf of the Commission.”

Except that a letter she wrote to the Legislature was written on PSC letterhead broadcasting the fact that she was a commissioner. On the letter, which can be found on page 108 of the public document listing all testimony on the bill, the names of other commission members were whited out, so only Nowak is listed on the PSC board.

One month later Nowak finished her term as commissioner and the following year she was hired as vice-president of regulatory and government affairs for ATC, which is based in Pewaukee and owns more than 10,000 miles of transmission lines in the Midwest, primarily in Wisconsin and Michigan. Now Nowak is one of more than 45 lobbyists pushing for legislation that would give her new boss the inside track on federal funding to build new transmission lines.

It is difficult to recall any issue over the last several decades where so many lobbyists were hired to push an issue in the state Capitol. But the stakes are high. The federal government is expected to spend heavily on these projects, with at least $10.3 billion alone spent in the Midwest region of MISO (Midcontinent Independent System Operator), which helps manage “the flow of high-voltage electricity across 15 U.S. states,” as its website notes. Nearly $1.6 billion will go for two transmission line projects in Wisconsin, MISO announced.

The normal process for awarding that money is through competition, which can involve bidding by as many as 45 companies. But a proposed law, called The Right of First Refusal Bill, will remove the competition and the “incumbent carrier” in this state will get the projects. The incumbent carriers in Wisconsin are ATC, Xcel Energy and Dairyland Power Cooperative.

The potential windfall for ATC is so huge that it can afford to hire 11 lobbyists to push for this law. That of course includes Nowak, but also former state legislator Mike Kuglitsch, who served last session as Assembly Chair of the Utility Committee. Also pushing the issue as a lobbyist for the Municipal Electric Utilities of Wisconsin is former state representative Tyler Vorpagel, the Assembly author of the bill. If you’re looking for insiders in the process, those three are about as good as it gets. (All lobbyists must register with the state Ethics Commission, which lists them and their clients.)

But don’t overlook Wisconsin Energy Corp.(WEC), the parent company of We Energies and Wisconsin Public Service, which are among five utilities that are co-owners of ATC. WEC owns 60% of ATC and naturally wants to see it make big profits. With that in mind, WEC has 10 lobbyists working to get the Right of First Refusal bill passed, though one of them also lobbies for ATC.

Then there’s Alliant Energy, another co-owner of ATC (it owns 16%), which has six lobbyists pushing for the bill. Compared to that, Xcel Energy is a mere piker, with just four lobbyists. Then there’s Madison Gas & Electric, which owns 20% of ATC and has hired three lobbyists, two of whom also lobby for ATC. In addition. seven other utility industry companies and associations who support ending the competitive process for building transmission lines have all hired at least one lobbyist to get this done.

These are the kind of lobbyists who earn $150 per hour — or more. But the utility groups can afford this, because of their high rate and profits. A study commissioned by the Wisconsin Industrial Energy Group (WIEG), an association of industrial companies in the state, which found that over a six-year period, 2014-2019, Wisconsin’s electric rates were on average, 10.2% higher than the national average and 10% higher than the midwestern average for investor-owned utilities, as Urban Milwaukee reported.

The website of Madison Gas and Electric (MGE) declares that its lobbyists “advocate positions that are in the best interest of our customers and shareholders.” But while higher rates benefit shareholders they increase the financial burden for customers.

And a law that ends competition for building new transmission lines is likely to lead to higher rates. Take it from ATC, which opposed a bill restricting competition in Minnesota that would have excluded it from bidding on the contract. The bill “would stifle competition in the development and construction of electric transmission facilities leading to higher costs for electricity users in Minnesota,” ATC lobbyist John Garvin wrote in a memo to Minnesota lawmakers in 2012, as Patrick Marley reported.

Now the company has flip-flopped and wants to restrict competition in Wisconsin. That’s because the company learned “over time” that “the federal process failed to deliver competitive projects” and “the best way to actually get transmission built and serving customers was through the traditional state regulatory process,” Garvin explained.

Which didn’t wash with Eric Bott, director of Americans for Prosperity (AFP) in Wisconsin. ”They want to have it both ways,” he told Marley. “They want government in Wisconsin to protect them from competition, right? But they want to be able to compete for work in other states.”

Yes, the Koch-funded AFP is aligned with what has been described as “kind of a Star Wars bar scene” that opposes the bill, and range from conservative groups like the Wisconsin Institute for Law & Liberty and Americans for Tax Reform to consumer protection groups like Citizens Utility Board (CUB) to business and trade groups like WIEG, Wisconsin Cast Metals Association, the Associated Builders and Contractors and the Midwest Food Producers Association.

They all believe the bill will hike electric rates, as does Illinois Governor J.B. Pritzker, who vetoed a right of first refusal bill in that state. “Without competition… ratepayers will pay for these transmission projects at a much higher cost,” Pritzker wrote. “Competitively bidding transmission construction, instead of giving the utility a monopoly, has been shown to lower costs significantly.”

Eight other states have passed a right of first refusal law, and you can bet there were many high-priced lobbyists pushing for this as they are in Wisconsin, promising it would avoid “cumbersome regulations” and “a hodgepodge of projects.”

But what the bill really is, says CUB executive director Tom Content, is “incumbent monopoly utility protection” legislation that will raise rates for residents and businesses across Wisconsin.