'Right Of First Refusal' Bill Would Raise Your Rates

Energy prices have skyrocketed in recent years, making it more difficult for families to pay their monthly bills and forcing businesses to raise prices on the goods and services they offer. With Wisconsinites struggling in every corner of the state with rising costs, you would think our elected officials in Madison would be looking for ways to provide relief. Unfortunately, that is not the case.

Senator Julian Bradley recently introduced legislation he claims will “retain Wisconsin control over the safety and reliability of our state’s power grid…”. The fact of the matter is the legislation Senator Bradley introduced will truly only do one thing: raise your rates. Again. And Wisconsinites can’t afford it.

The bill would eliminate competition for building new transmission lines in Wisconsin. When utilities build new transmission lines, you and I pay the cost on our monthly electricity bills, which includes utilities’ ‘return on equity.’

What does that mean, exactly? Utility companies are authorized to earn up to a 10.52% profit on any new transmission lines they build – these costs and their profit are passed along through the electricity bills we all pay. While families and businesses in our state would pay higher rates under this proposal, utility companies and their Wall Street hedge fund shareholders will simply continue to profit.

Without true competition, where is the incentive for companies to keep costs down? There is none. Projects across the country prove that competitive bidding saves hundreds of millions of dollars:

• $1 billion estimated savings from two new electricity transmission projects in Maine (see here, and here).
• $900 million estimated savings on the largest-ever competitive bidding process for a transmission project in the country in New Jersey (see here, and here).
• $500 million estimated savings on the Empire State Transmission Line in New York (see here, and here).
• $58 million estimated savings on the Wolf Creek to Blackberry transmission project in Kansas and Missouri (see here).
• $26 million estimated savings on the Minco-Pleasant Valley Draper project in Oklahoma (see here).
• $84 million estimated savings on the Crossroads- - Hobbs – Roadrunner upgrade project in New Mexico (see here).

These are significant savings that will be realized by ratepayers in these states. Shouldn’t Wisconsinites benefit from savings as well?

Senator Bradley further argues that other states have adopted similar anti-competitive provisions. Unfortunately, two examples that he cited—Iowa and Texas—had their laws thrown out by state and federal courts. In both decisions, the courts rang the alarm bell that these types of laws are almost certainly unconstitutional. Why would Wisconsin legislators risk an almost guaranteed lawsuit that taxpayers will end up footing the bill for?

Finally, Senator Bradley argues that his bill will reserve the role of the state’s Public Service Commission (PSC) in deciding who owns and operates transmission lines in Wisconsin. Maintaining competitive bidding for these lines does not eliminate any role the PSC has in overseeing Wisconsin’s grid, it simply boxes out bids from other qualified companies.

At the end of the day, this can seem like a complicated issue, but it’s not. Senator Bradley’s bill will simply eliminate competition and lead to even higher rates on our monthly bills. Legislators must oppose Senator Bradley’s bill and preserve competition to keep costs down for all of us.

-- Submitted by: Megan Novak, AFP-Wisconsin State Director