Controversial Power Line Bill Dies In Legislature

Legislation that would have given in-state electric power line utilities first dibs on the right to construct new interstate transmission lines has gone dormant and probably died for the year following the state Senate’s adjournment last week.

Senate leaders closed out the chamber’s regular business on Tuesday, March 12, without taking action on AB-470. The bill remains lodged in a Senate committee whose chair is known to oppose the legislation.

The outcome resulted despite extensive lobbying by bill supporters as well as a last-minute pitch by two Democratic senators on behalf of the measure. The bill’s collapse was met with cheers from both ends of the ideological spectrum.

Both backers and critics of the legislation argued that enacting the bill would have a bottom-line impact on Wisconsin ratepayers. Supporters argued that it would help keep utility costs down if it became law, while opponents said it would drive those bills up.

The legislation has been christened by its supporters as the “Right of First Refusal” bill, or ROFR for short. The decision to pass or not pass the bill could leave a mark on as much as $5 billion worth of power line construction in the state in the coming years as the nation’s electric grid continues to expand.

Interstate power networks are built in Wisconsin under the supervision of the Midcontinent Independent System Operator, a regional electricity wholesaler serving 15 states and the Canadian province of Manitoba and regulated by the Federal Energy Regulatory Commission (FERC).

Until 2015 power line operators in each state had an automatic right to take on new projects within their state under federal regulations. FERC replaced that system with a requirement for the nation’s regional power wholesalers such as MISO to select the builders of interstate power line project operators through competitive bidding.

AB-470 would bring back the first-refusal right to Wisconsin utilities, putting power line operators that are already serving an area earmarked for new interstate grid expansion under MISO first in line to do the work.

Up to $5 billion in grid expansion projects at stake

MISO approved $10 billion in new transmission projects in 2021 and recently released a draft plan for another round of projects totaling $17 to $23 billion in the coming years. Up to $5 billion of that could wind up being in Wisconsin, according to some preliminary estimates. That prospect has helped spark the fierce battle over restoring those first-refusal rights.

Similar legislation has passed in other states, but there has also been pushback. Illinois Gov. Jay Pritzker, a Democrat, vetoed such language from a bill he signed in August. Courts have also ruled against in-state protections in Texas and Iowa.

Wisconsin Ethics Commission lobbying records show the Wisconsin bill’s primary support comes from the largest electric utilities in the state, including ATC Management Inc., formerly American Transmission Co.

ATC, which is jointly owned by several power companies, is a principal operator of power lines in Wisconsin. Labor unions representing electric utility employees have also signed on in support of the measure.

The opponents range from Americans for Prosperity, a pro-business, small-government lobbying group and the right-wing Wisconsin Institute for Law & Liberty (WILL), to the environmental group Clean Wisconsin, the Citizens Utility Board (CUB), a utility consumer advocacy organization, and AARP Wisconsin.

At an Assembly public hearing in October, Rep. Kevin Petersen (R-Waupaca), the bill’s lead author in the chamber, argued that clawing back first-refusal rights would benefit Wisconsin ratepayers.

The federal competitive-bidding order “has the effect of encouraging non-Wisconsin companies to get involved in our state’s power grid, even if those companies have not proven they can be reliable in their construction, operation and maintenance of transmission lines,” Petersen testified.

The order’s objectives were “to encourage competition and cost savings,” he allowed. “Although these goals were admirable, unfortunately, they have not necessarily been realized.”

ATC’s chief financial officer, Mike Hofbauer, testified at the same hearing, “Wisconsin customers will pay less for a regional transmission project that is built by an incumbent utility than they would if that project was built by an out-of-state developer.”

Opponents have not bought the argument.

“Eliminating competition will almost certainly cost Wisconsin businesses and consumers more money,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group (WIEG), in testimony at the hearing. WIEG represents large Wisconsin businesses that are among the main users of electric power.

“Without competition, there are fewer checks and balances on cost estimates, and little or no incentive to curb transmission project costs and prevent cost overruns,” Stuart testified.

After the legislation passed committees in both the Senate and Assembly in the fall with bipartisan support — as well as opposition — the Assembly passed it on a voice vote in February.

Getting stuck in an opponent’s committee

Divisions over the bill in the Senate became apparent, however, when instead of scheduling the bill for the Senate floor, Senate President Chris Kapenga (R-Delafield) sent it to a second Senate committee: the Natural Resources and Energy Committee, chaired by Sen. Robert Cowles (R-Green Bay). Cowles (who did not respond to an interview request last week) was widely understood to oppose the measure.

AARP, which has opposed similar legislation in several other states, weighed in with its opposition in a Feb. 26 statement calling the bill “a power grab and blatant end run around current sound federal policy which requires that such construction be awarded openly to the lowest cost bidder.”

In the first two weeks of March, efforts to advance the bill and to keep it bottled up escalated.

The Citizens Utility Board and WIEG sent out two joint statements opposing the bill, the first March 4 and the second a week later.

“Wisconsin, which once paid among the lowest rates in the country for electricity, now pays among the highest in the Midwest, a cost disadvantage that is like a heavy tax on Wisconsin’s manufacturers and a heavy burden on homeowners,” the March 11 statement said. “The excess costs to consumers from the lack of competition across the MISO footprint could easily reach into the billions from overruns and/or lack of financial concessions” if the right of first refusal were to become law.

Meanwhile, Sens. Jeff Smith (D-Brunswick) and Brad Pfaff (D-Onalaska) sought to wrest the bill onto the Senate floor, advocating for its passage and calling on the GOP Senate leaders to move it forward.

Power lines should be built, owned and operated under the supervision of the state Public Service Commission (PSC), they said in a joint statement March 8, four days before the Senate’s March 12 scheduled session. They accused their colleagues who were holding up the bill of “protecting out-of-state interests.”

It wasn’t enough to change the dynamic, however. The bill remained off the calendar, and the session came and went with no opportunity to vote on it.

CUB Executive Director Tom Content welcomed the legislation’s demise.

“Competitive bidding is working in the Midwest and in Wisconsin,” Content said Friday, “and given the cost pressures customers are seeing, plus aggressive building plans from Wisconsin utilities, it’s gratifying to see the Legislature keep tools in place like this that can cap costs for big projects and keep costs under control.”

Controversial power line bill’s opponents win a round as measure dies was originally published by Wisconsin Examiner.