Transmission Lines Company Driving Up Wisconsin’s Electric Costs?

An advocate for industrial ratepayers said American Transmission Company’s rates that cover the cost of building and maintaining transmission lines are rising faster than inflation.

The review commissioned by the Wisconsin Industrial Energy Group comes as Republican lawmakers have put forth legislation that would give incumbent transmission utilities first crack at building transmission projects. The Midwest grid operator has approved building almost $22 billion in new transmission lines, including two major projects in Wisconsin.

The trade group represents 25 of the state’s largest energy customers. Todd Stuart, the group’s executive director, said data shows the Pewaukee-based company’s transmission rates have outpaced inflation and increased by 43 percent since 2019.

“Wisconsin’s rates have gone up $2 billion since 2019, and one of the contributing factors is the transmission rates,” Stuart said. “We’re trying to get that under control. We’re trying to bring more competition to help ease some of that pain on your electric bill.”Electricity prices have been increasing faster than inflation nationwide, and Wisconisn has the second-highest rates in the Midwest for residential and industrial customers.

Ellen Nowak, ATC’s vice president of state and federal affairs, said it’s misleading for the group to compare the company’s long-term capital investments that are paid off over decades to short-term changes in the consumer price index. Nowak, a former utility regulator, said the company’s rates have increased as its system has grown.

“The growth that you do see in what we’ve had to invest in the Wisconsin system (is) a direct result of customer demand, economic growth and maintaining a reliable infrastructure system,” Nowak said.

ATC has proposed $10 billion of capital projects over the next decade, including projects approved by the Midwest grid operator. As the company invests in its system, ATC has also seen rising costs due in part to inflation since 2020. Nowak said the cost of materials like steel, copper, wire and cable have increased between roughly 50 and 79 percent. The company’s labor costs have gone up about 31 percent.

Opponents say bill would prevent competition, drive up rates more

The Wisconsin Industrial Energy Group is drawing attention to the company’s rates because it argues legislation that grants incumbent utilities the right of first refusal on projects would undercut competition and drive up rates even more. The Citizens Utility Board, Americans for Prosperity and Wisconsin Institute for Law & Liberty also oppose the bill.

Supporters of the bill like ATC, the Wisconsin Utilities Association and top Republican and Democratic leaders say the legislation would benefit workers and ratepayers, allowing transmission utilities to spread out costs across other states in the Midwest. Without it, Nowak said projects might wait an additional year prior to construction due to what she called a “cumbersome bureaucratic process” for the Midwest grid operator MISO to select an owner.

The grid operator has requested proposals for two major projects in Wisconsin that would cost nearly $1.8 billion. Proposals were due July 28 for the Wisconsin Southeastern Project, which includes four new 345-kilovolt transmission lines and substations. Bids were due Aug. 11 for the Bell Center-Columbia-Illinois/Wisconsin State Line project, which includes three new 765-kilovolt transmission lines.

Nowak declined to comment on whether ATC bid on the projects, referring questions about the bidding process to MISO. A spokesperson for the Midwest grid operator said proposals are confidential until a report is released later this year on those selected to build the projects.

Senate Majority Leader Devin LeMahieu, R-Oostburg, and Rep. Kevin Petersen, R-Waupaca, did not immediately return requests for comment on whether the bills will be revisited during the fall session.

Transmission line legislation sees most lobbying in first half of this year

Groups devoted the most hours lobbying on the legislation than any other proposal in the first six months of this year, according to WisPolitics. Groups spent 1,786 hours on the Senate and Assembly versions of the bill.

ATC reported spending $245,333 on lobbying in the first half of this year, allocating most of its time on the two bills.

Without competition, opponents say there’s less incentive for incumbent transmission utilities to keep costs down. They typically receive more than a 10 percent return on their investment from building projects, and studies show competition can provide 20 to 30 percent in cost savings.

Nowak disputed that. She said the company does request bids for construction and engineering costs. While federal regulation that removed the right of first refusal aimed to promote competition, she said promises of “lowball bids” have not been reflected in the final cost of projects.

If legislation is passed, opponents such as Americans for Prosperity have said it will likely result in litigation. Last year, a federal judge in Texas ruled a similar law favoring in-state utilities was unconstitutional. ATC’s Nowak said the law was different from Wisconsin’s legislation. She added a similar law in Indiana was upheld, though it’s still subject to legal challenges.

Listen to the WPR report

Industrial ratepayer advocate says rates are rising for American Transmission Company was originally published by Wisconsin Public Radio.