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ICYMI: Law would drive up consumer electricity costs

Feb 1, 2022 by AFP

MADISON, WI — The Capital Times published an op-ed by Eric Bott and Josiah Neeley. Eric Bott is State Director of Americans for Prosperity-Wisconsin. Josiah Neeley is Senior Fellow, Energy Policy, R Street Institute. Read the entire op-ed here.

Below are excerpts from the piece:

With Wisconsinites increasingly worried about inflation and rising energy costs, you’d think state officials would be acting to alleviate the situation, not make it worse. But if legislation recently filed in Wisconsin goes into effect, residents may be in for a shock when they get their electric bill. The legislation would change the way electric transmission lines are built and operated in the state, eliminating competition and driving up costs for consumers to benefit a few established monopolies.

Specifically, the bill would give incumbent utilities a “right of first refusal” (ROFR) when bidding on new transmission projects. Under these ROFR laws, incumbents can effectively bar new companies from competing for projects, locking them out of the system.

It is particularly important to keep costs low for electric transmission because of the atypical way transmission projects are paid for. When utilities build transmission projects, they generally are guaranteed to recover their costs plus a set percentage of profit through added surcharges to customer electric bills. Unlike a normal business, where spending more than necessary harms the business’ profitability, the more money a utility spends the more money it makes. Making consumers pay more than is necessary to pad the bottom line of incumbent utilities is fundamentally unfair.

Transmission costs are already a growing fraction of the price of delivering electricity to consumers throughout the country, and up to $100 billion in new transmission projects are expected in the region in the coming years. Wisconsin’s electric rates are already above the national average and have been above the average for Midwest states for almost 20 years. The state can’t afford to make electricity more expensive.

Wisconsin lawmakers should be finding ways to lower electric bills, not raise them. Double digit rate hikes are already coming in 2022 for energy customers both large and small. To prevent further price increases, Wisconsin must maintain the right of competition.

Read the entire op-ed here.