Why Does ATC Exist?

So, here’s a question for you. Two judges have ruled that opponents of the American Transmission Company’s massive power line from Iowa to Middleton have a case that’s likely to prevail. So, why does ATC keep building it anyway? 

Here’s an answer that may not surprise you. Because they’ll make money even if the line is never connected to anything. 

Let’s back up and review the history — as briefly as possible — of this whole sordid mess. A few years ago ATC proposed a big power line tearing through Wisconsin’s beautiful and environmentally sensitive Driftless Region. The line was dubbed “Cardinal-Hickory” for each of its end points. 

The Public Service Commission approved the line, but Dane and Iowa counties, the Wisconsin Wildlife Federation and the Driftless Area Land Conservancy filed several lawsuits to try to stop it. Two of those suits have traction right now. One, before Dane County Circuit Court Judge Jacob Frost, challenges the PSC decision on the grounds that then-PSC Chairperson Mike Huebsch had conflicts of interest. The other suit, before U.S. District Judge William Conley, claims that the line would do irreparable harm to federally protected wetlands and that the U.S. Army Corps of Engineers did not give that factor adequate consideration in their environmental analysis of the project. 

Frost has ruled that the plaintiffs, led by the Chicago-based Environmental Law and Policy Center nonprofit law firm, are likely to prevail on the merits. He’s ready to issue an injunction to halt the project, but he says that state law requires him to make the plaintiffs put up a bond to make ATC whole for the costs of delays should they ultimately win the underlying case. The amount of the bond is $32 million. Obviously, the small nonprofits behind the suit can’t come up with that kind of scratch, so they’ve appealed. Judge Frost is expected to rule on their appeal soon, but the upshot is that no injunction is in place right now. 

ATC makes money by building power lines. So why wouldn’t the company build them whether they’re needed or not?

Over on the federal side, Judge Conley has also said that the plaintiffs “have some likelihood of success” because the Corps’ documents showed “no evidence of even cursory analysis of the cumulative impact” of construction along federal waters in Wisconsin. Conley issued a preliminary injunction — but only on building through the federally protected wetlands, which make up a very small part of the length of the line.

Now, right here you might think that, given the likelihood that ATC will have to reroute, if not abandon, their project, they would stop construction and wait for the outcome of these cases. But they’re not. They’re bulldozing ahead — literally. They’re clearing swaths and clear cutting forests outside of the wetlands covered by Conley’s injunction. The Environmental Law and Policy Center estimates that they may have spent around $200 million so far. 

Why would ATC risk that? One reason is that they want to put the courts and everybody else into a corner. As Conley wrote in his decision granting the preliminary injunction, “Thus, by permitting construction up to the edge of the Refuge on the Wisconsin side, just as they have already been doing on the Iowa side, the Refuge would represent only a relatively small strip of land, albeit likely the most environmentally sensitive, to complete the line. Psychologically, if not legally, this would likely make it much harder for state or federal regulatory authorities or the courts to deny a right of way through the Refuge.”

And then, of course, there may be no actual risk to ATC at all. Under state law, they’re guaranteed a profit on their investment, even if they have to abandon it. That profit is 10.3 percent, so even if the judges find that the PSC had a conflict of interest and that the Corps didn’t do its job in looking at wetlands impacts, ATC’s investors still walk away with something like $20 million. 

And who will pay for that $200 million in wasted money plus ATC’s profits? We will. Utility ratepayers will pick up the tab. There will have been no risk to ATC’s investors, no moral hazard for pushing a project that some have argued was unnecessary from the start. 

This is so messed up in so many ways. Mike Huebsch had close friendships with senior officials at both ATC and WE Energies, which owns 60 percent of ATC, and after he left the PSC he applied to be CEO of Dairyland Power, another partner in the line. He voted for the line along with another holdover Gov. Scott Walker appointee, Ellen Nowak, and a Gov. Tony Evers appointee, Rebecca Valcq, who spent her career as a regulation lawyer for WE Energies. 

The PSC member who replaced Huebsch, Tyler Huebner, has recused himself from the project altogether because he lobbied in its favor when he worked for RENEW, a renewable energy nonprofit. That would leave any new decisions about this to the Walker appointee, Nowak, and the former WE lawyer, Valcq. But Frost has already said that if Huebsch had a conflict it likely so tainted the whole process that the PSC commissioners need to be bypassed altogether. In that case, it would probably go to a special master appointed by the court. 

And underlying even that is the perverse law that allows utilities to stick their customers with costs and their own guaranteed profits even for projects that they’ve screwed up on. 

When the smoke clears on this whole mess — as it may in the next several months — we need at least two big reforms. 

First, we need a law that strictly prohibits the appointment of commissioners with ties to the industry they’re regulating. And it seems to me that, while it may be hard to put this into law, future governors should develop a practice of appointing retired judges to the PSC. 

And, second, we need to explore why ATC exists in the first place. It’s a private company, which has a guaranteed profit, and it makes money by building power lines — even power lines to nowhere. So, it has a big economic incentive to push for lines, whether they’re needed or not. And it can push for those projects with enormous resources. ELPC’s small legal staff is going up against ATC’s army of lawyers from international law firm Perkins Coie. And the company has money to burnish its public image. I saw happy ATC ads during the television broadcasts of the high school football championships this week. Turns out they’re just here to keep my lights on. Who knew?

The Cardinal-Hickory line is tearing an unsightly gash across the Wisconsin countryside. But the rotten system behind it is an ugly scar on Wisconsin’s once proud tradition of clean and open government. 

This post originally appeared in Isthmus.

Welcome to the 283rd day of consecutive posts here at YSDA. Thanks for reading!

Published by dave cieslewicz

Madison/Upper Peninsula based writer. Mayor of Madison, WI from 2003 to 2011.

One thought on “Why Does ATC Exist?

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