Influential monopolies run up state’s electric costs, scare off businesses

AP and WiG reports

Wisconsin’s high electric costs could spark some of its big manufacturers to move or expand elsewhere, state regulators have been warned.

Under free-market capitalism, such as that preached by Gov. Scott Walker, House Speaker Paul Ryan and other high-ranking state Republicans, businesses and residents should be able to choose the utility companies they want.

But Wisconsin operates under a system that rewards influential electric companies, which are among Walker’s top donors, with monopolies over certain areas of the state. Walker has received over $830,000 during the course of his political career from We Energy employees, and WEC Energy Group was the second-largest contributor to Walker’s 2014 re-election campaign.

The state’s monopolistic environment eliminates competition among electric providers, which in turn drives up costs.Wisconsin’s average electric rates are now the highest among eight Midwest states for the first time since 2006, according to a report approved by the Public Service Commission last month.

Comments submitted in response to that report say the energy rates make it hard for industries to remain competitive, the Wisconsin State Journal reported. And that’s led to renewed calls for price competition by allowing users to choose their power providers instead of being restricted to the current utility monopolies.

Wisconsin’s electric costs average 10.97 cents per kilowatt-hour. Other states range from 8.65 cents in Iowa to 10.87 cents in Michigan. The U.S. average is 11.02 cents, the report says.

For industrial customers, Wisconsin’s rates are also the highest among the eight Midwest states at 7.81 cents per kilowatt-hour compared with 6.06 cents to 7.25 cents for the other states.

The Wisconsin Industrial Energy Group, representing more than 30 of the state’s largest companies, and the Wisconsin Paper Council submitted a joint statement to the PSC contending that electricity is not available “at reasonable prices” in Wisconsin compared with other states.

In other words, when it comes to electric costs, Wisconsin is not open for business, they say.

“It is particularly troubling to note in a state whose economy is built on manufacturing that in 2015, not only did Wisconsin have the highest average industrial rate when compared to surrounding states, the Midwest and U.S. averages respectively, but the growth rate from 2001 to 2015 was the highest as well,” the groups said.

Charter Steel says it won’t move out of Wisconsin, but it may do its growing elsewhere.

“The noncompetitive cost of electricity in the We Energies’ service territory is a key reason we are looking to expand outside of Wisconsin for future growth projects,” said Bob Venable, president and chief operating officer of Charter Manufacturing, Charter Steel’s parent company.


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