Wisconsin Businesses and Ratepayers Battle Crony Capitalism Legislation

by | Feb 14, 2024 | It's the Economy, Stupid

On Feb. 15, Wisconsin legislators will vote on a controversial bill which would eliminate competitive bidding for the building of large-scale transmission lines. Assembly Bill 470 and companion Senate Bill 481 have met with significant pushback from ratepayers of all sizes—from the average residential consumer to the largest energy consumers. Opponents of this bill have characterized this fight as one between the ratepayers and the rate-takers.

Restoration News covered this story recently after Americans for Prosperity (AFP) raised the alarm. AFP Wisconsin noted in November that the bill would eliminate competition for building new large, regional transmission lines in Wisconsin, by allowing only incumbent companies to bid. They set up a website, RatepayerRobbery.com, which encourages Wisconsinites to email their legislators to oppose the bill, saying it locks in monopoly control of electric transmission construction.

The bill would guarantee a no-bid contract to one of two Wisconsin utility companies to build new transmission lines, eliminating the current competitive bidding process which forces utility companies to compete on costs and project timelines, resulting in savings for energy consumers. One can easily imagine who has lobbied in favor of this monopoly protection scheme—and why.

Representatives from Wisconsin businesses have been making the rounds in the capitol explaining to legislators the detrimental effects of this proposal on their industries.

Nathan LaFrance, Regional Category Manger of Energy for Ahlstrom, said, “In an already monopolistic industry, where all but the most egregious cost overruns and mismanagement are passed through to ratepayers, the competitive procurement process for these transmission lines is the one bright spot where market forces are allowed to drive prices lower and improve quality for all customers.” Ahlstrom has over 2,000 employees in Wisconsin directly affected by these bills.

“AB 470 & SB 481 violate all free market principles,” LaFrance said, “and will raise costs for all Wisconsin ratepayers. It will continue to worsen Wisconsin’s position relative to its neighbors on energy cost competitiveness for business.”

What remains unclear is why this legislation has become a priority now, when rates are already skyrocketing—especially at a time when Wisconsin has gone from having the lowest energy rates in the Midwest to now having the second highest rates in the region, just behind Michigan. This is in large part due to $1.5 billion in rate increases since 2019.

Nearly $10 billion in transmission infrastructure projects are set to hit Wisconsin soon, costs that will be passed on to Wisconsin ratepayers. On top of that, if this bill were to pass, it would stick ratepayers with an additional 10.52 percent interest rate or “return on equity” to the utility companies, as Restoration News previously reported. In states that set a competitive bidding process, that percentage is closer to 9.8 percent or lower. That near 1 percent difference on billions of dollars in costs translates to hundreds of millions of dollars in savings for consumers.

Large energy users are not the only consumer groups decrying this proposed bill. According to the latest lobbying registrations the following groups are registered opposed:

AARP

Americans for Prosperity

Associated Builders and Contractors

Citizens Utility Board of Wisconsin

Clean Wisconsin

Kimberly Clark

Koch Industries

MacIver Impact

Midwest Food Products Association

Wisconsin Institute for Law & Liberty

These organizations, and ratepayers across Wisconsin, all oppose this bill because of its anti-competitive protection of monopolies and increased costs for consumers.

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