Whether it’s a highway, oil pipeline, or power plant, we’ve come to expect objections from liberal groups, but sometimes a project is so poorly conceived that conservatives have cause to join in their opposition. A proposed huge and expensive high-voltage transmission line in Wisconsin is one such project: the entire scheme is nothing more than a cash grab for the area utility companies, as the cost burden on consumers far outweighs the slight and unproven benefits, and a violation of private property rights.
The Cardinal-Hickory Creek high-voltage line (the “CHC line”) is a joint proposal from a group of utility companies to build a 125-mile, 345 kilovolt line that would connect Dubuque County, Iowa, cross the Mississippi River into Wisconsin, continue through the Upper Mississippi River National Wildlife and Fish Refuge and the Driftless region of southern Wisconsin, and terminate in Middleton, just west of Madison.
The utility companies proposing the CHC line enjoy monopoly power, and if this project is approved, the cost will be forced onto customers who have no way to take their business to a competitor. Construction costs alone are estimated at $500 million and baked into the deal is a guaranteed return of 10.3% ROE for each of the next forty years. Do you have a guaranteed return of 10% on your 401(k)? Of course not – only private monopolies are able to wrangle such lucrative protections for their investments.
Altogether, when you add in the guaranteed ROE, recovery of construction and financing costs, and ongoing operation and management expenses, the CHC line is expected to cost at least $2 to $3 billion over 40 years. And that number could easily skyrocket if there are construction delays or other costs overruns, as commonly happens.
The utility companies pushing this project claim it is needed to meet “peak demand,” but current infrastructure in the region is more than sufficient for that purpose. Besides recent technological advances that have significantly improved energy efficiency, southern Wisconsin already has adequate power supply. Ellen Nowak, the recent Chair of the Public Service Commission of Wisconsin, who is now Gov. Scott Walker’s Secretary of the Department of Administration, has said publicly that Wisconsin has surplus power. There is no reliability issue here, and this expensive transmission line is not needed to keep the lights on.
The fact is that electricity demand in Wisconsin has been flat over the past decade, and most electricity forecasts and projections expect it to remain that way. Even if the state experiences a population boom beyond all reasonable expectations, it would be cheaper and less environmentally damaging for Wisconsin to build a new natural gas plant some of the proposed new solar projects and connect them to existing transmission lines than to construct the CHC line to connect to pump in electricity from Iowa, North Dakota, or Minnesota.
Beyond the fact that the CHC line is not needed, even its backers have had to admit that it will not benefit a substantial number of the consumers who will be forced to pay for it. That’s right: many electricity consumers in Wisconsin would see their utility bills rise to pay for this project even though it will never provide any electricity to their homes and businesses. Moreover, the utility companies’ current plan is to spread the costs to consumers in other states, who definitely will not benefit from the new line: Wisconsinites would cover 15% of the charges, and the remainder would be paid by consumers in Michigan (21%), a shared charge for Indiana and Kentucky (19%), Iowa (9%), Minnesota (14%), Illinois (10%), Missouri (8%), a shared charge for North Dakota and Montana (2%), and South Dakota (0.5%).
All in all, that’s people in 11 states being asked to cover the costs of building an unneeded transmission line in one state.
The negative impacts from this project extend beyond increased utility bills. Limited government conservatives were justifiably horrified at the Supreme Court’s ruling in Kelo v. New London, which allowed government to seize private property under their eminent domain power to create a private benefit under the guise of economic development. In the wake of the Kelo decision, many state legislatures -- and now Congress, finally – took action to bolster private property rights from this kind of intrusive seizure, but even under the most lenient reading of Kelo’s holding, the CHC line fails the test.
A key aspect of the majority opinion in Kelo was that the private sector developers who benefited in Kelo went through a competitive process to win the contract to re-develop an economically depressed area. No one knew who the private sector beneficiary would be when the city decided to take the private property. In contrast, the private beneficiaries – the monopoly utilities – who would benefit from the CHC line are known in advance and secured their place without any competitive process.
More importantly to the residents of the area, not only will this project fail to bring economic revitalization, it will have negative economic impacts – some of which have already begun.
The mere proposal of the CHC line has depressed both real estate prices and the frequency of transactions along the areas that would be affected. The prospect of losing one’s property to eminent domain puts a damper on development or improvement plans and causes anxiety over potential legal costs.
Even the property owners not expected to lose their land outright still have legitimate cause for concern. This area of southern Wisconsin is well-known for abundant natural resources that draw hunters, fishers, recreational boaters, hikers, and other tourists, and the regional economy is heavily dependent on tourism and recreation as a result. Unsightly transmission towers and lines would obstruct postcard-perfect views, and increased utility bills imposed on area businesses would make visiting the area less affordable. To put it simply: this unnecessary project strikes a damaging blow at the local and family-owned businesses that are the economic engine for the region.
The time to speak up is now, especially for Wisconsinites. You can look up your state legislators here, and contact Gov. Walker’s office here.
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