HOLMEN, Wis. – A La Crosse County community that will soon be bisected by two high-voltage power lines says Wisconsin utility regulators infringed on individual property rights and subjected electric customers to unnecessary financial risk when they approved a line that isn’t needed to keep the lights on.
In a first-of-its-kind case, the town of Holland is asking a judge to overturn the Public Service Commission’s approval of the Badger-Coulee transmission line between Holmen and Dane County.
A judge on Monday will hear oral arguments that center on whether the board responsible for protecting utility consumers erred when it authorized a consortium of utility companies to build the nearly $600 million line, which the projects owners say will allow utilities to purchase cheaper and cleaner power from wind farms in Minnesota and the Dakotas.
A joint venture of American Transmission Co. and several regional utility companies, including La Crosse-based Dairyland Power Cooperative, the 180-mile line will run between the Madison suburbs and Holmen, where it will connect to another high-voltage line, CapX2020, that runs across Minnesota and western Wisconsin.
The owners say the lines will make the electric grid more reliable and provide a pipeline between remote locations with strong wind resources with population centers such as Madison and Milwaukee where the energy is needed. The estimated $580 million cost will be shared by customers in 15 Midwestern states and one Canadian province.
ATC has started building the eastern end of the line and is doing engineering and design of the rest. Construction of the segments in La Crosse and Trempealeau counties is expected to start sometime next year, and the line is scheduled to be in service by the end of 2018.
The PSC approved the project in 2015 with a route that essentially parallels CapX through the Town of Holland, often putting massive towers side by side or on opposite sides of the road.
The town challenged the ruling, arguing that the PSC did not follow state law when it comes to establishing a need for such projects, that the agency’s environmental review was insufficient, and that it was wrong to route the line through the town without using the existing poles.
Unlike CapX2020, which the PSC decided was necessary to meet the demand of the La Crosse area, Badger-Coulee was not billed as a project to keep the lights on.
“The key issue … is the question of what constitutes a need that justifies the imposition of these kinds of impacts on communities and landowners,” said Frank Jablonski, the attorney representing the semi-rural town of 3,701 people. “The determination of need has to be based on a requirement for adequate energy in a Wisconsin setting.”
That’s based on a reading of the state statute, which says a project must satisfy “the reasonable needs of the public for an adequate supply of electric energy.”
PSC spokeswoman Elise Nelson provided a written statement which reads, “Following a year-long process laid out explicitly in state statute, Commissioners considered extensive public comment, arguments from both applicants and interveners in the case, the associated environmental impact statement, routing options and other information, and ultimately determined based upon substantial evidence, that the project was necessary to satisfy the needs of the public for an adequate supply of energy and would bring other significant benefits to the state.”
The agency also defends its decision in a 62-page legal brief that cites hundreds of pages of evidence and defends the consideration of economic and public policy benefits.
‘We pay for it no matter what’
With towers taller than a 10-story building and price tags that can exceed $1 billion, high voltage transmission lines are a controversial piece in the effort to bolster the nation’s electrical grid, the network of power plants, transformers and wires. They move electricity more efficiently, help prevent blackouts and encourage development of alternative energy by connecting population centers and remote locations with greater wind, hyrdo and solar resources.
But opponents say the huge investments often outweigh the benefits, discourage the development of locally-based solutions and line the pockets of utility shareholders at the expense of consumers. They say money would be better spent shoring up the existing system and reducing demand through spending on energy efficiency programs.
“The future is not towards expanding the system. The future is making the system smaller and serve our communities better and serve ourselves better,” said Rob Danielson, secretary of Save Our Unique Lands, a grassroots group that formed in opposition to Badger-Coulee. “We’re much better off starting to look at how we’re going to prolong the life to make our local facilities work better for us.”
To make sense of the issue, it helps to understand that utilities don’t only make money by selling electricity. As regulated monopolies, utilities are guaranteed a return on investment whenever they build new power plants or other infrastructure such as transmission lines.
That rate of return set by federal regulators for transmission companies is now about 10 percent, meaning if a utility builds a $100 million power line, its shareholders can expect to see $10 million in profits.
“Their business model, as regulated by the state, encourages them to spend capital to get a return,” said John Farrel, director of the Energy Democracy Initiative at the Institute for Local Self Reliance. “That is the regulatory framework in which they operate, so of course they’re going to prefer transmission to non-transmission.”
ATC estimates the project will ultimately save consumers anywhere from $118 million to $702 million over the line’s 40-year lifespan. The theory is, if power demand rises, the line will allow utilities to access cheaper electricity, which in the long run will save consumers money.
But if demand doesn’t increase as predicted, the benefits aren’t realized and consumers still have to pay for the lines.
“When the gamble doesn’t work out, it’s not the companies who build the transmission lines that end up paying. It’s the ratepayers,” Jablonski said. “We pay for it no matter what. If the deal works, we pay for it. If the deal doesn’t work, we pay for it. In all cases the companies win.”
The town’s primary argument is based on the idea that Badger-Coulee is not necessary to keep the lights on in western Wisconsin
The PSC contends line will be needed to meet the La Crosse area power needs as early as 2026. But those projections were based on electricity use from 2010 to 2012, as the economy recovered from the deepest recession in nearly 100 years.
According to data from the Energy Information Administration, U.S. electricity use climbed relatively steadily until 2007, when it nosedived.
Over the decade ending in 2014 (the last year for which EIA data are available), the nation’s electricity sales have grown by about 0.6 percent per year. In Wisconsin, where manufacturing represents a larger chunk of the economy, growth has been only about 0.2 percent. The EIA projects a modest average annual growth of half a percent through 2017.
Electricity growth slows
With manufacturing becoming more efficient and the nation moving toward a service-based economy, Jablonski thinks demand will remain flat for the foreseeable future.
But the PSC decided Badger-Coulee met the statute in broader ways: eliminating the need for other projects, lowering costs and providing “reliable, affordable, and clean electric energy.”
It’s a rationale the PSC first used in its 2008 approval of a $133 million transmission line between Dane and Rock counties known as Paddock-Rockdale. While the PSC has approved several transmission projects on similar economic benefit grounds, this is the first time that need basis has been challenged in court.
The town argues that amounts to the commission re-writing the rules without input from lawmakers or the public.
“The PSC has arrogated to itself power that it does not have – the power to over-ride an explicit statutory criterion because it thinks it has a good idea on other grounds,” the brief argues.
The PSC counters that the town’s reading of state law is too narrow, a position shared by ATC and the other partners.
“Taken to the logical extreme, the Petitioner’s position would mean that the Commission would be unable to approve a new transmission line or power plant, even if energy costs in the state were skyrocketing due to congestion on the transmission system or a lack of affordable, cost-effective generation resources,” the stakeholders write in their brief.
Jablonski said those other factors may be beneficial, but they don’t constitute need.
“If supply is adequate – and it is – then there is not a need,” Jablonski said. “They’re saying the concept of need is this suitcase and you pack into it whatever you like about the project.”
The town goes on to argue that the PSC did not follow statutory requirements to follow the state’s top energy priorities: energy efficiency and conservation.
In its 638-page environmental impact statement, ATC devoted just over two pages to an evaluation of non-transmission alternatives.
“The EIS utterly failed to ‘study, develop and describe’ the required ‘no build’ … alternative,” the town’s brief states. “It nowhere identifies, much less develops, the required ‘environmentally preferred’ alternative.”
PSC attorneys say this criticism is based on “nothing more than rhetoric.”
Danielson said the biggest problem is the PSC did not require ATC to provide an analysis of what the project would mean at the consumer level, in spite of requests by more than 90 local governments.
“They have refused to tell ratepayers what the actual benefit would be on our bills,” he said.
The town has also challenged the siting of the line, which parallels CapX2020 for about eight miles on a separate set of towers, at times running on either side of Hwy. 53 and cutting through farm land that is designated for future residential development in what is the fastest-growing part of the county.
The town argues the lines should have been co-located on a single set of towers.
The PSC says that would violate federal reliability standards, which encourage redundancy. So, for instance, if one line is knocked down by a storm the other would remain in service.
Local benefit and clean energy
Transmission line opponents argue Wisconsin ratepayers would be better served if utilities spent money on in-state solutions, generating renewable energy locally or reducing congestion through energy efficiency or better load management.
“Hosting a transmission line doesn’t necessarily bring you a lot of economic benefit,” said Farrell of the ILSR. “A lot of times it doesn’t even give you a way that you can put power into that system because a high-voltage line is kind of bringing it from one point to another point. There’s not a lot of on and off ramps.”
What’s more, investing billions of dollars in transmission leads to a phenomenon known as “path dependence.”
“We’ve now poured lots of money into a transmission system, so we might as well use it,” Farrell explains. “We might as well build large-scale projects that can take advantage of that system.”
But clean energy advocates like Renew Wisconsin say big transmission lines are key to reducing the state’s dependence on coal, which now accounts for about 60 percent of Wisconsin’s generation.
“Besides the public health implications it’s very risky economically for a state to be that dependent on coal when we don’t have any coal in our state,” said Tyler Huebner, executive director of the nonprofit group. “We’re completely dependent on other states to bring that in by train.”
Huebner said transmission projects can actually make it easier to develop in-state renewable generation, such as a 98-megawatt wind farm scheduled to be built next year near Platteville with a contract to sell electricity to Dairyland Power.
While lines like Badger-Coulee primarily serve to import power from the west, adding such a high-volume pathway across the Mississippi River will alleviate congestion on lower-voltage transmission networks, said Ben Porath, vice president for power delivery at Dairyland.
That will open a new pathway for energy from projects like the Quilt Block wind farm to flow toward Madison.
Because of the way energy is priced, Danielson is doubtful it will actually lead to any reduction in fossil fuel use.
“There’s nothing in Badger-Coulee that says … Wisconsin utilities are going to buy 1 more kilowatt of wind energy because this transmission line is built,” he said.
Instead, he sees such lines competing against community-based and rooftop solar electric generation, and other such programs that would increase the share of renewable energy while putting money into local economies.
Huebner believes there’s room for each.
“Our position is that we need both,” Huebner said. “We need all of the above clean energy.”