Bipartisan legislation that would have blocked out-of-state competition on long-distance power line projects in Wisconsin died last year following what a former member of Wisconsin’s utility regulatory agency claims was a secret collaboration between a national transmission company and a well-known conservative advocacy group.
In a March 15, 2022, email sent to a handful of state lawmakers and obtained by the Wisconsin State Journal through a public records request, then-Public Service Commission member Ellen Nowak asserts that officials with LS Power, an independent transmission company headquartered in New York, worked with conservative group Americans for Prosperity to lead efforts against the proposals.
“The public will never know,” Nowak wrote in the email sent to Sen. Julian Bradley, R-Franklin, who chairs the Senate Committee on Utilities and Technology, and then-state Reps. Tyler Vorpagel and Mike Kuglitsch, Republicans who sat on similar committees in the Assembly. “I know you share my disappointment and frustration that important policy in Wisconsin was hijacked by an out of state interest group that never came to meet with any Wisconsin legislator.”
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Senate Bill 838 and Assembly Bill 892 were proposed to give in-state companies the exclusive right to build any transmission project approved by the Midwest grid operator, known as MISO. Critics of such so-called “right of first refusal“ laws have said they limit competition and drive up energy costs for ratepayers.
Multiple states — including Iowa and Michigan — have passed similar legislation in the decade since the Federal Energy Regulatory Commission abolished federal anti-competition protections.
The federal government does not directly control the grid but sets ground rules for entities such as MISO, an independent nonprofit organization established in 2001 to operate electricity markets and oversee regional planning in 15 states and one Canadian province.
Nowak, who now works for Wisconsin-based American Transmission Company, which supported the legislation, claims in the email that LS Power, an organization that has opposed similar measures in other states, “chose to use a ‘customer group’ to be the face of the opposition because it ‘sounds better’ and that when LS Power has been visible in other states when similar legislation was being considered the company looked like ‘a bunch of carpetbaggers.’”
Nowak asserts that LS Power turned to the conservative free-market group Americans for Prosperity to be “the vehicle in Wisconsin to oppose” the bills.
From there, Americans for Prosperity “initiated a misinformation campaign to stop the legislation,” which included social media posts, phone calls to constituents and messages to conservative talk radio shows, Nowak added.
Officials with LS Power, which manages more than 680 miles of transmission infrastructure across the country, and Americans for Prosperity denied Nowak’s allegations.
“The answer is no, we weren’t hired by any power companies,” Eric Bott, Americans for Prosperity regional vice president, told the State Journal, calling Nowak’s allegations “absurd and kind of sad.”
Sharon Segner, senior vice president of transmission policy for LS Power, said in an email that Nowak’s comments are inaccurate.
Nowak declined to comment for this story.
Despite receiving a public hearing in February 2022, the measures never reached a formal vote and ultimately died with the end of that legislative session.
Bradley said in an email the proposal “was introduced late in the session and we ran out of time.”
“This is an issue that most people are unfamiliar with,” Bradley continued. “I think it will be a different story if the bill is reintroduced.”
Bradley directed questions about Nowak’s claims to LS Power and Americans for Prosperity. He did not say what efforts were made to verify the commissioner’s allegations.
Democratic co-sponsors of the bills and members of the Senate utilities committee Sens. Brad Pfaff, of Onalaska, and Jeff Smith, of Brunswick, said they had no previous knowledge of Nowak’s email, which Pfaff said “shed some light on why we never had any further action on the legislation.”
Smith also recalled Americans for Prosperity’s opposition to the measure, which he said “surprised me at the time.”
“One thing I do know is that it was kind of odd at the time that they were taking such a stance on that bill,” Smith said.
Vorpagel joined Municipal Electric Utilities of Wisconsin as the organization’s director of legislative and regulatory relations last summer, while Kuglitsch is now with the law firm Michael Best Strategies LLC, where he focuses on a range of matters including energy and utilities. Neither responded to requests for comment on Nowak’s email.
A secret effort
Nowak was appointed to the commission by former Republican Gov. Scott Walker in 2011. After a brief stint as secretary of the state Department of Administration, Nowak rejoined the commission in January 2019.
In July 2023, Nowak joined American Transmission Company, an organization that operates most of Wisconsin’s transmission network and is owned by a group of distribution utilities including Alliant and Madison Gas and Electric.
Nowak’s move from state utilities regulator to one of Wisconsin’s largest utilities isn’t unusual. Several former members of the commission have gone on to jobs with utilities or transmission companies. State law prohibits Nowak from appearing before the PSC on behalf of ATC for the first 12 months after her departure from the commission.
In the email, Nowak expressed her “profound disappointment in the process that evolved while this legislation was under consideration.”
Nowak said she was approached by two people — Marjorie Philips, LS Power’s vice president of wholesale market policy, and Richard Mroz, a senior director with Archer Public Affairs — at the National Association of Utility Regulators Conference in Washington, D.C., in February 2022 to express opposition to the proposed legislation.
“This was a surprise to some, since LS Power never registered in opposition to the bill let alone even set foot in Wisconsin during the pendency of the effort,” she wrote.
In addition to Americans for Prosperity, other groups to oppose the measure included the Associated Builders and Contractors of Wisconsin, Citizens Utility Board of Wisconsin, Clean Wisconsin, Midwest Food Products Association, Wisconsin Industrial Energy Group and Wisconsin Institute for Law and Liberty. LS Power did not register against either bill.
Eighteen organizations supported the measure, including American Transmission Company, ITC Holdings, Madison Gas and Electric Company, WEC Energy Group and Wisconsin Electric Cooperative Association.
“Perhaps the most remarkable thing about this — LS Power (or AFP) never personally testified at either the Senate or Assembly committee hearing,” Nowak added. “That speaks volumes. That should not be the norm. What were they afraid to answer? How can an out of state company that wants to own critical infrastructure in Wisconsin (and stand to make substantial money from doing so) get away with not even testifying?”
A list of attendees for the regulators conference, which allowed for both in-person and online attendance, includes Nowak, Philips and Mroz.
Segner said Philips “does not, and has never, represented transmission policy issues at LS Power, and she doesn’t speak on behalf of the transmission business of LS Power as she isn’t involved in that division of LS Power.”
Segner did not respond to a follow-up email seeking details about the February summit. Mroz did not respond to a request for comment.
Shifting alliances
In her letter, Nowak also pointed to LS Power’s political leanings, which she notes are, “to put mildly, a sharp contrast to the stated principles” of the conservative Americans for Prosperity.
“But LS Power knew that it had to change its strategy since right of first refusal legislation was passing in other Midwestern states despite LS Power’s opposition,” Nowak continued.
Employees and owners of LS Power donated more than $170,000 to federal candidates in the 2022 election cycle, according to Open Secrets, a transparency group that tracks money in politics. Of those funds, more than 88%, or more than $150,000, was donated to Democratic candidates, compared with less than $20,000 to Republicans.
Bott said an agreement between LS Power and Americans for Prosperity, such as Nowak suggests, would be “bad business,” adding that Americans for Prosperity largely opposes right of first refusal laws as being “a raw deal for the consumer.”
“On its face, unquestionably, it’s a terrible deal for ratepayers and it’s just as equally clear it’s a wonderful deal for incumbent utilities,” Bott said of the Wisconsin proposals.
Bott has also said the law would likely violate the “dormant commerce” clause of the U.S. Constitution, which prohibits states from passing protectionist policies that discriminate against nonresidents doing business.
While American Transmission Company supported the proposal in Wisconsin, the company fought a similar bill when it came up a decade earlier in Minnesota. Company lobbyist John Garvin wrote to Minnesota lawmakers in 2012 that the proposal under consideration at the time “would stifle competition in the development and construction of electric transmission facilities leading to higher costs for electricity users in Minnesota,” the Milwaukee Journal Sentinel reported last year.
Bill Marsan, American Transmission Company’s executive vice president and general counsel, told the outlet the company was considering projects in other states when it opposed the Minnesota law, but that position has since changed “based on the reality of the market and our conviction that the best way to actually get transmission built and serving customers was through the traditional state regulatory process.”
American Transmission Company declined to comment for this story.
Right of first refusal
Under the Wisconsin proposals, the state’s three transmission utilities would have the exclusive right to add to their networks.
The bills would not have changed the state Public Service Commission’s role in permitting individual projects, such as the controversial Cardinal-Hickory Creek line under construction between Dubuque, Iowa, and Middleton. It would have prohibited MISO from awarding contracts to outside developers.
The bills’ authors framed the proposal as a means of “maintaining control” over the state’s transmission development, but critics of the anti-competition laws argued it would simply protect utility profits by preventing competitive bidding and lead to higher energy prices.
“Transmission rates in Wisconsin have been skyrocketing,” Segner said. “Obviously, the in-state industrial, consumer, and free market voices that soundly defeated the monopoly bill have their own good reasons to be strongly opposed to writing a perpetual monopoly into state law for the clean energy transition. They speak for themselves.”
In testimony provided Feb. 3, 2022, to the Assembly Committee on Energy and Utilities, Nowak wrote in support the the bills, noting the proposal “isn’t about rates, it is about reliability and construction costs which make up around 10% of a customer’s bill.”
“Any suggestion that turning over the decision as to who builds critical infrastructure in Wisconsin to out of state bureaucrats or the federal government will save money is false,” Nowak continued.
In September 2022, Bradley and then-acting chair of the Assembly Committee on Energy and Utilities Rep. David Steffen, R-Green Bay, sent a letter to the FERC indicating plans to reintroduce the proposal in the current legislative session.