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Saturday, April 19, 2014 |  Madison, WI: 58.0° F  Mostly Cloudy
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COVER STORY

ATC has the power
Despite making lots of enemies, American Transmission Company controls the agenda for infrastructure projects in Wisconsin

Jacky Kelley represents ATC's loyal opposition.
Jacky Kelley represents ATC's loyal opposition.
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When Jacky Kelley arrived at the Sheraton, a Dane County sheriff's deputy was already waiting for her. She got out of her car, carrying a stack of white flyers that read: "ATC: Keeping People in the Dark." The deputy stopped her immediately. "Are you from the opposition?" he asked, according to her account. Kelley confirmed this, and was told she was trespassing on the hotel's private property. If she wanted to hand out flyers, she would have to stand yards away, on the public sidewalk along John Nolen Drive.

It was the second of three "open house" meetings held by American Transmission Company in June on its proposed new 345,000-volt power line in Dane County. Kelley knew she would not be welcome. The night before, at the Quality Inn in Fitchburg, she and her neighbor, Ann Emerson, were similarly threatened by police with a trespassing citation.

At the Sheraton, Kelley stood on the sidewalk along busy John Nolen, clutching her flyers. No cars stopped. She was too far away from the hotel's parking lot to meet anyone arriving for the meeting. After half an hour, she left.

"There wasn't anyone to hand out flyers to," she says.

The next night, Emerson went to ATC's third open house, at the Marriott in Middleton. She was again stopped by police, who sent her to the sidewalk with her flyers. She deliberately stayed for an hour. "I didn't want ATC to think they scared us away," says Emerson.

The company confirms it hired police officers - paying an overtime rate to their employers - for all three of its June meetings. Mark Williamson, ATC's vice president of major projects, says hiring security is routine.

"I have no interest in a dissenting view and public speech-making," he says. "If people want to do that, they can have their own meeting. I have no interest in providing a soapbox."

Williamson's cavalier attitude is one reason ATC inspires such rancor in communities throughout the state. The private, for-profit company has proposed spending $3.1 billion on power lines in Wisconsin over the next 10 years. ATC bullies citizens who object to its projects, while courting people in power, giving campaign contributions to politicians and huge sums to environmental groups. The company also spends hundreds of thousands of dollars on advertising, touting its mission to "keep the lights on."

And ATC has been enormously successful. So far, not a single one of its more than 30 proposed projects has been rejected by Wisconsin's Public Service Commission.

ATC is now focusing on Dane County. On Aug. 1, the company announced its two preferred routes for the massive, 345-kilovolt power line it wants to build linking Middleton to Rockdale. The first route would go mainly along the Beltline, at a cost of $208 million. The second route would be mostly rural, passing through the city of Verona and costing $224 million.

These plans have sparked a firestorm of protest from ordinary citizens and local officials, including Madison Mayor Dave Cieslewicz and Dane County Board Chair Scott McDonell. They say ATC is pushing forward with plans for massive new construction that would dramatically alter the urban environment, without a clear demonstration of need.

Williamson, however, dismisses ATC's critics as a "small minority" of the population. "The company has a good reputation," he insists. "Once they hear the facts, very few people hold out longstanding bad impressions."

Profit motive

ATC was created as part of the same nationwide deregulation movement that spawned Enron. The federal government pushed for electricity to be traded like any other commodity, believing this would spur competition and lower prices.

In Wisconsin, the state's major utilities agreed to turn their transmission lines over to an independent company. So in 1999, the state Legislature added a provision to the budget to create ATC, as a private, for-profit company. ATC is principally owned by the state's five major utilities, including Madison Gas & Electric, which split its annual profits. Last year, ATC made $97 million before taxes.

Theoretically, new transmission lines would let the state import cheaper electricity from elsewhere. But since ATC was launched in 2001, Wisconsin's electric rates have gone from being the lowest in the Midwest to the second highest. Williamson says rates are driven by the rising cost of fuel and the need to upgrade Wisconsin's aging infrastructure.

"If we can get the most efficient infrastructure," says Williamson, "then we can at least moderate the growth [of rates]."

Critics counter that ATC has a profit motive for wanting to build more lines. The Federal Energy Regulatory Commission guarantees the company a 12.2% return on every line it builds - money recovered through a monthly charge on customers' electric bills.

"That's a built-in incentive for ATC to always recommend new transmission lines," says Mike McCabe, executive director of Wisconsin Democracy Campaign. "It was a great mistake of the Legislature to set this up as a for-profit venture. It ought to be a public utility, and it ought to be vigorously and carefully regulated."

Nino Amato recalls a discussion in 1997-98, when he was a senior vice president at Wisconsin Power & Light, about creating a nonprofit transmission company because "ratepayers would never stand for a for-profit monopoly. The alternative was to model it after the rural co-operatives."

But Williamson says the discussion to make ATC nonprofit was never serious. To do so, the government would have had to buy the utilities' transmission assets - at a cost of about $600 million. "There wasn't a proponent of spending government money," he says.

Lee Cullen, a local attorney who represented the Customers First Coalition during the discussion about creating ATC, agrees that the company was never supposed to be nonprofit.

"Never at any time did people think that was possible," says Cullen, now also an attorney for ATC. "The model for this state, and other states, is that we have investor-owned utilities." The tradeoff for this arrangement, he says, is that ATC is "a fully regulated utility."

State Rep. Spencer Black (D-Madison) says the amendment creating the company "was plopped into the budget bill without discussion. It was a deal negotiated behind closed doors." Cullen also disputes this, saying the proposal was openly discussed at two legislative hearings.

In Dane County, ATC paid for a study that showed a strong need for a new power line. But David Shutes, who spent 23 years at Alliant Energy, says the county needs a new line "only if you assume everyone's usage is going to go up." He notes that conservation is a better solution - but not something ATC would ever promote.

"ATC was formed strategically by the utilities that own it," he says. "Historically, utilities have not been allowed to advocate for continued increase in electrical usage. So they created an entity that is allowed to do so."

Cullen says energy conservation alone cannot plug the gap: "We haven't built an extra high-voltage line in Dane County in 25 years. It's a matter of keeping the lights on. The case is pretty clear on the need."

'Some guy was slandering me!'

ATC works hard to silence its critics. Besides hiring police to keep dissenters out of its meetings, the company seeks to discourage ordinary citizens from taking part in the Public Service Commission's review process.

When ATC first proposed building a 138-kilovolt line in Waunakee, 92 Dane County residents signed up as "intervenors." This allowed them a more intimate role in the approval process, rather than simply speaking at the PSC's public hearings.

ATC reacted quickly. First it challenged the citizens' right to intervene. The company noted that many did not live anywhere near the Waunakee line and were simply concerned about other projects in Dane County. ATC also sought to deny some public funding for the Sierra Club and Citizens for Responsible Energy. (The PSC funds public and nonprofit groups that intervene, so they can hire attorneys and experts to advise them.)

These approaches failed, so ATC took it up a notch. Most of the citizens argued that conservation, not building new power lines, is the key to meeting Dane County's energy needs. So ATC sent the individual intervenors a 16-page interrogatory, drilling them on their personal energy use. The questions included, "How many light fixtures are located on your current property, and of these, how many are currently fitted with fluorescent light bulbs?"

ATC also demanded the intervenors' addresses for the past five years, the square footage of each residence, and all of their monthly electric bills. For residents whose property the Waunakee line would directly cross, ATC also wanted a home appraisal, tax assessment or purchase agreement documenting the price paid for the home.

Attorney Frank Jablonski, representing Citizens for Responsible Energy, calls ATC's questions "unnecessary and possibly abusive." He says a neighborhood group that tried to intervene was treated similarly, with ATC demanding the names of all its members. "It's absolutely outrageous intimidation by an entity that is completely out of control."

But the tactic worked. Scores of residents, including Ann Emerson, withdrew as intervenors. "I finally bowed out because it was so overwhelming," she says.

Williamson is unrepentant. He says that since so many intervenors were advocating conservation, it was fair to ask, "Are you practicing what you preach?" Being an intervenor, he adds, "is not something you should take lightly. You have to be ready to respond to these kinds of things."

Last year, a Waunakee resident sent an email to a neighborhood listserv formed to discuss the power line. The email questioned Williamson's role in a scandal surrounding former state Sen. Chuck Chvala, who was convicted and jailed for misconduct in public office and circumventing election laws.

In 2002, Williamson had testified that Chvala asked him to send campaign donations from Madison Gas & Electric to the Kansas Democratic Party. Kansas allows direct campaign contributions from corporations; Wisconsin does not. From 1998 to 2001, MGE and its subsidiaries sent at least $170,000. Money from Kansas was then sent back to Wisconsin, to a group run by Chvala.

The resident wrote of Williamson, "It seems he may be the guy who paid some of the bribes to which state Sen. Chuck Chvala has pleaded guilty of accepting."

Shortly afterward, the activist received a "cease-and-desist letter" from Williamson's attorney, hand-delivered to him at work. The activist, who has obligingly ceased all his work on the ATC issue, is now so fearful of the company that he doesn't want his name used.

Williamson would do it again. "Some guy was slandering me!" he exclaims. "I don't take my reputation lightly. I would sue his ass if he kept it up."

Jablonski says residents who try to fight outfits like ATC are in for a brutal awakening. "There's a mythology that if you work hard enough, you can be Erin Brockovich," he says. "But in my experience, most people just end up getting crushed."

Making friends and influencing people

Like most big corporations, ATC is adept at playing the political game. Since 2003, the company has spent more than $74,000 on lobbying. And ATC's executives have given $104,000 in campaign contributions, including nearly $31,000 to Gov. Jim Doyle.

The top two recipients in the state Legislature are Rep. Phil Montgomery (R-Green Bay) and Sen. Jeff Plale (D-Milwaukee), who co-sponsored a bill that allows utilities to seize public land, if necessary, to build transmission lines. Utilities can already use eminent domain to take private land. The legislators introduced the bill after Douglas County refused to let ATC buy county land for a $420 million line it wanted to build from Duluth, Minn. to Wausau. Gov. Doyle signed the bill into law in 2005.

ATC employs several former PSC staffers, including the commission's one-time attorney, Robert Mussallem, who now manages ATC's state regulatory relations. It's also hired a former Department of Natural Resources official, Franc Fennessy; a former state representative, Lee Meyerhofer (D-Kaukauna); and employees of the Federal Energy Regulatory Commission and the Federal Trade Commission.

But what upset activists most was when Doyle appointed Lauren Azar to the PSC in March. Azar (Rep. Tammy Baldwin's longtime partner) had been ATC's attorney, and her firm, Michael Best & Friedrich, had sent the 16-page interrogatories to citizens. Azar has recused herself from decisions involving ATC. Ironically, the commissioner she replaced was Robert Garvin, whose brother is a lobbyist for ATC. Garvin ended up at Foley & Lardner, as a member of its "Energy Industry Team."

"I think people realize there are plum jobs waiting for them, if they play their cards right," says Wisconsin Democracy Campaign's McCabe. "Once the relationships get too cozy, the regulators stop looking out for the public."

Earlier this year, the state Department of Transportation put together a report on the feasibility of building 120-foot towers to string a power line along the Beltline. The initial draft declared that DOT "is opposed to utilizing the whole corridor for the proposed ATC line." But when the final report was released in March, the language had been softened; it now said DOT merely had "serious concerns" about using the Beltline.

A position letter by DOT regional planning manager John Steiner originally said the Beltline "should not be considered as an alternative because of its many negative impacts on the safety and operation of the highway." This was later changed to say the route "should only be considered if the many impacts to safety and operation of the Beltline" are addressed by ATC.

Bob Fasick of the DOT's Bureau of Highway Operations defends this softening of critical language. "The main point was to make sure we could continue working with ATC," he says. "We wanted to say, the door's still open, but it's only open a crack."

Bolstering the ATC cause

Not surprisingly, ATC engages in extensive advertising, including in Isthmus, and sponsorships throughout the state.

Williamson says the company spends a few hundred thousand dollars a year on advertising, but declines to be more specific. "It's not as much as people think," he says, adding that the company needs to advertise because it's still relatively unknown. "We don't enjoy the 100-year reputation of MGE. People hear 'American Transmission Company' and they think we fix cars."

State law bars utilities from spending ratepayer money on advertising, except for safety and conservation issues. "They can't do advertising saying, 'Support MGE's rate increase so we can build a new power plant,'" says Rep. Black. He wants to prohibit ATC from advertising to promote its transmission projects.

Williamson counters that the Federal Energy Regulatory Commission allows ATC to advertise. "They endorse anything that helps people understand that utilities need to build," he says.

ATC also bolsters its cause with big donations to nonprofits. In 2005, the company gave $300,000 to the foundation created by the state Department of Natural Resources to fund conservation efforts - the largest donation in the foundation's 20-year history. The DNR reviews all of ATC's projects.

Perhaps ATC's most controversial payout was the $258,000 it gave environmental and consumer groups charged with studying whether new power lines are needed in Dane County. These included the Citizens Utility Board, 1,000 Friends of Wisconsin, RENEW Wisconsin and Clean Wisconsin. The resulting study, released in 2005, concluded that the lines are necessary.

ATC gave these groups another $264,000 to study the need for a new, $124 million power line between Madison and Milwaukee. The Citizens Utility Board received nearly $100,000 from ATC for the Dane County study and another $60,000 for the second study. Charlie Higley, the group's executive director, notes that the second study did not support the Madison-Milwaukee line: "This shows that the process worked."

Higley says his group took ATC's money because it thought long-term planning of energy needs was essential and that the PSC would not cover the cost. Now, however, Higley admits that the Dane County study relied too heavily on high-growth projections for the region.

"It turns out our growth rate is slower now than in the late '90s," he says. "We should have done an analysis looking at what happens if the growth rate is slower."

Last fall, Dane County voters overwhelmingly passed a referendum calling for a second, independent study of the need for a new transmission line. The PSC rejected the idea this spring. And ATC flatly refuses to fund another study.

"If this is that important to the county, a study costs $300,000 to $400,000," says Williamson. "Why don't they go out and do it?"

Can't fight the power

State Rep. Sondy Pope-Roberts (D-Middleton) has been fielding complaints from constituents about ATC ever since the company called for adding power lines in Dane County. All of the proposed routes cross some part of her district.

Pope-Roberts is looking into legislation to make ATC a nonprofit entity. She also wants the Legislative Audit Bureau to look into whether the company is acting in the public interest.

"What we have is a private, for-profit LLC which is making astonishing profits," she said at a press conference last month announcing her plans. "We believe they have lost sight of their mission."

Williamson laughs at any plan to turn ATC into a nonprofit. "We've got that pesky Fifth Amendment," he says. "Government can't just take property. They've got to buy it at fair market value." He estimates that buying out ATC would cost taxpayers billions of dollars.

He also doubts there will be a state audit. "The Legislative Audit Bureau is designed to audit state agencies, not utility companies. That's what the PSC is for."

Rep. Black supports Pope-Roberts' call for an audit: "It's time to stop ripping off ratepayers and let people see how their money is being spent."

But it's doubtful the proposed legislation or citizen opposition can stop ATC now. The company has now built about 80% of its $420 million Arrowhead-Weston line. Local opposition was fierce, but ultimately futile.

The battle in Dane County may turn out the same. In October, ATC will formally submit its application for the 345-kilovolt line. The PSC will spend about a year reviewing it; rejection is not a likely outcome. Residents here have already lost one fight. In July, the PSC unanimously approved ATC's Waunakee line, despite vigorous protests from neighbors.

Williamson says it's no longer time to discuss the need for the lines, merely which route they should take.

"Our company has an obligation to keep the lights on," he says. "If we believe the lines are needed, we have an obligation to advance them."

And he believes people who fight ATC don't understand how important the company's work is. "People benefit from having the lights on," he says. "It doesn't happen by magic. People should understand that, as a counterview to the idea that we're an evil empire."

ATC's DNA

The state's transmission lines were originally owned by the individual utilities. In 1999, the state Legislature created American Transmission Company - a private, for-profit entity that now owns most of infrastructure for delivering power in Wisconsin. ATC maintains more than 9,000 miles of high-voltage lines and 480 substations, serving customers in Wisconsin, Illinois, Michigan and Minnesota.

ATC controls the transmission assets of 29 utility companies and co-ops of varying sizes, including those of Stoughton and Sun Prairie. But 90% of the company is owned by the state's five major utilities:

Madison Gas and Electric Co.
a subsidiary of MGE Energy, Inc.

Wisconsin Electric Power Co.
a subsidiary of Wisconsin Energy Corp. (We Energies)

Wisconsin Power & Light Co.
a subsidiary of Alliant Energy Corporation

Wisconsin Public Power Inc.
a consortium of 49 municipal utility companies in Wisconsin, Michigan and Iowa

Wisconsin Public Service Corp.
a subsidiary of Integrys Energy Group, Inc., formerly WPS Resources Corporation

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