David Michael Miller
This is a story of how power — both political and electrical — works in Wisconsin. It ends with 153,000 electrical customers of Madison Gas & Electric helping to subsidize the Taiwanese company Foxconn, and its Racine plant, for the next 40 years.
It was back in December 2017 that we learned the massive subsidy going to Foxconn would grow by $117 million, to pay for the construction of high-voltage power lines and a new substation to serve the company’s needs. At that point the planned manufacturing campus of 20 million square feet was expected to draw six times more power than the next-largest factory in Wisconsin.
So Gov. Scott Walker, who hoped the Foxconn project would get him reelected, made sure it happened. That meant that American Transmission Co., a publicly regulated company which provides electrical connections in the eastern half of Wisconsin and the Upper Peninsula of Michigan, had to develop the project as Foxconn demanded, unless the PSC objected, and all three of its commissioners at the time were appointed by Walker.
From the very beginning the project seemed questionable. It was based on a promise by Foxconn to build a massive plant under a state contract that provided no protection for taxpayers (and ratepayers) if all the basic infrastructure — including expanded highways and electrical connections — were built and Foxconn scaled back its plans.
By late July 2018, when the PSC made its ruling, there were clear signs the Foxconn plant wouldn’t be as big as first announced. Two months earlier, media reports began to suggest the project would be drastically scaled back to about one-third of the projected size, from a Gen 10.5 plant to a Gen 6 plant.
Yet the PSC approved the deal on a 3-0 vote. Just three weeks later Foxconn executive Louis Woo admitted the project would be nothing like what was first projected and was being radically downscaled. As of today, the project is down to just over 1 million square feet in size, about 5.5 percent of the original plan, yet the massive electrical construction project is still being completed.
While the PSC might have been expected to go along with what turned out to be a Walker boondoggle, why did ATC? Though the entire project was for Foxconn, its entire cost would be charged over a 40-year period to ratepayers of five utilities in the region served by ATC: MGE, We Energies, Wisconsin Public Service, Alliant Energy, and Superior Water, Light and Power.
“Generally, projects built by ATC within our service area are paid for by ATC’s customers, which are local utilities that pass those costs to their customers,” Alissa Braatz, who handles corporate communications for ATC, wrote in an email
But this was hardly a project that would seem to fit a general rule. Had ATC ever handled a similar project? I asked, and Braatz did not respond. It meant that customers of Superior Water, Light and Power, some 6.5 hours and 419 miles away from the Foxconn plant, would help pay for a project that would never benefit them. For that matter, electric customers in the U.P. would help pay for a distant project in another state for 40 years.
Why didn’t MGE object to its customers helping pay for this project? “The PSC makes the decision on which transmission investments are beneficial to customers throughout the state of Wisconsin,” says Steve Schultz, corporate communications manager for MGE.
In reality, MGE often contests PSC decisions. So why not in this case? As it happens, MGE and the other four utilities are all co-owners of ATC, whose corporate board includes executives of the utilities. They were all in this together and none objected, presumably because Walker had appointed PSC commissioners who typically sided with utilities. So don’t rock the boat.
Moreover, the utilities are public monopolies that can pass any costs on to customers, as long as the government regulators with the PSC approve it. ATC was so confident of getting approval from the three Walker-appointed commissioners that it purchased land for the Foxconn project in June 2018, a month before the PSC was to rule on the issue.
To Milwaukee Ald. Robert Bauman, who objects to Milwaukee electric customers having to help pay for this subsidy, the decision proves the PSC, which is supposed to protect the public, does no such thing. “It doesn’t protect the ratepayers, it protects the shareholders of the utility companies. There’s been total regulatory capture in Wisconsin. The utilities run the PSC and quite possibly the Legislature.”
As to the exact costs to be paid by customers of MGE and the four other utilities, not one of them has disclosed the total amount their ratepayers will be charged. That’s how power — both kinds — works in this state.
Bruce Murphy is the editor of UrbanMilwaukee.
