A divisive bill that would block out-of-state competition on long-distance power line projects in Wisconsin was revived Friday by legislative Republicans.
A previous version of the bill, which died in committee last session, was opposed by consumer advocates and the free-market conservative group Americans for Prosperity, who argued the measure merely protects in-state transmission companies’ interests by limiting competition and would drive up energy costs for ratepayers. Proponents, including some of the state’s largest utility companies, have said the so-called “right of first refusal” law would maintain Wisconsin’s regulatory oversight of the state’s transmission infrastructure and ensure reliable energy and reduced construction costs.
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The proposal would not change 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, though it would prohibit the Midwest grid operator, known as MISO, from awarding contracts to outside developers. Essentially, the measure would give in-state companies the exclusive right to build any transmission project approved by MISO.
“Decisions about our power grid in Wisconsin should be made by our own state government, not an out-of-state regional authority,” the latest bill’s cosponsors Sen. Julian Bradley, R-Franklin, and Rep. Kevin Petersen, R-Waupaca, wrote in a memo promoting the legislation. “The companies building our power grid should be the same companies we’ve entrusted to keep our lights on at night, not out-of-state or international corporations.”
The bill would require Wisconsin transmission developers to competitively bid their infrastructure construction projects, which would be reviewed and approved by the PSC. Even so, critics of right of first refusal laws have argued it would simply protect utility profits by preventing competitive bidding from outside the state and lead to higher energy prices.
“Faced with the burden of double-digit utility rate increases taking effect this year and additional hikes proposed for the next, this bill couldn’t come at a worse time for Wisconsin families who are already struggling to make ends meet,” Megan Novak, director of Americans for Prosperity-Wisconsin, said in a statement.
“With the elimination of true competitive bids, ratepayers across Wisconsin will end up paying more,” Novak continued. “Wisconsin lawmakers should reject this fake competition language and instead find ways to lower electric bills, not raise them.”
Neighbors did it
Lawmakers in at least eight states — including Minnesota 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.
However, right of first refusal laws have faced backlash in some of those states, including Iowa, where the the Iowa Supreme Court earlier this year halted the law. The 5th Circuit Court of Appeals last year ruled that a similar measure in Texas violated the “dormant commerce” clause of the U.S. Constitution, which prohibits states from passing protectionist policies that discriminate against nonresidents doing business in those states. Illinois Gov. JB Pritzker vetoed a right of first refusal bill in August.
Tom Content, executive director of the state watchdog Citizens Utility Board, said consumer advocacy groups like CUB continue to oppose rollbacks to competitive bidding on largescale power line projects, which he said can result in increased energy rates.
“That’s one of the reasons that competitive bidding is being deployed — to help keep a lid on costs at a time when customers across the state and across the country are seeing extreme rate pressure and higher and higher bills every year,” Content said. “This would eliminate the tool that is already being used around the country and the Midwest to contain costs.”
Tried before
Two similar bipartisan right of first refusal measures were introduced last legislative session but ultimately died in committee.
In a March 15, 2022, email sent to a handful of state lawmakers, including Bradley, and obtained by the Wisconsin State Journal through a public records request, then-Public Service Commission member Ellen Nowak asserted 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.
Nowak, who now works for Wisconsin-based American Transmission Co., which supported the legislation, claimed 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.’”
Officials with LS Power, which manages more than 680 miles of transmission infrastructure across the country, and Americans for Prosperity denied Nowak’s allegations.
Lines still drawn
“Wisconsin has rejected ROFR laws for being anti-consumer, anti-market and anti-competitive, and they should do so again,” said Paul Cicio, chair of the Electricity Transmission Competition Coalition, a group of more than 85 companies across the country — including LS Power, Wisconsin Industrial Energy Group and Wisconsin Cast Metals Association — that advocates for competition in the energy transmission industry.
“A monopoly has no reason to reduce costs,” Cicio continued in a statement. “When competition is blocked, prices go up, and consumers pay the bill.”
With regard to the latest proposal, Bill Marsan, American Transmission Co.’s executive vice president and chief general counsel, said the bill “keeps the state of Wisconsin in the driver’s seat when it comes to who builds, maintains and operates the reliable electric grid every Wisconsinite relies on, 24/7.”
“We would like to extend our gratitude to Senator Bradley and Representative Petersen for their dedication and commitment to keep Wisconsin out of a federally controlled procurement process that adds yearlong delays to grid development projects,” Marsan continued. “This bill also maintains the existing competitive bidding construction process for grid projects, ensuring Wisconsinites are getting the best deal for their energy.”
American Transmission Co. originally 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.”