Cartel Politics

Cartel Politics

The word “cartel” typically brings to mind brutal drug kingpins and their machine gun-toting minions committing unspeakable atrocities. In Wisconsin, though, the word is fast becoming synonymous with an industry that may seem mundane but is every bit as vicious in its protection of its turf.

The state’s three electrical transmission companies are once again trying to create a government-backed cartel that gives them a monopoly on the highly lucrative business of building out Wisconsin’s electrical grid. In so doing, they’re acting an awful lot like a drug cartel: Buying supporters, silencing opposition, and using their massive wealth to bend government to their will.

For a second straight year, American Transmission Company (ATC), Xcel Energy, and Dairyland Power Cooperative are seeking Right of First Refusal (ROFR) legislation giving them the right to deny out-of-state transmission companies an ability to bid on transmission projects.

This would create a legalized cartel of three ostensibly independent companies who will hold a monopoly on what is expected to be a multibillion-dollar industry as the demand for electricity increases exponentially with the rise of artificial intelligence, quantum computing, and advanced robotics as well as the expected increase in demand for electric vehicles.

Last year, a nearly identical bill passed the Assembly on a voice vote but died in the Senate. This year, the cartel is taking no chances and spending so much money on lobbying efforts that it has even targeted the media, including this author. For the first time in a nearly quarter-century broadcast career, a lobbyist hired by ATC but working for the entire cartel insisted on making his pitch before this column was published or any analysis of ROFR was conducted on the radio.

The primary argument the cartel makes for granting its coveted monopoly is that doing so would save taxpayers what the cartel projects will be $1 billion on transmission projects by shifting a portion of their cost onto other states. Federal law allows incumbent transmission companies to share expenses with neighboring Midcontinent Independent System Operator (MISO) states—effectively forcing, say, Illinois ratepayers to shoulder some of the cost of building out Wisconsin’s grid.

Calculating $1 billion in savings, of course, presumes that Illinois would not in turn pass a significant portion of its transmission expenses onto Wisconsin. Illinois Governor JB Pritzker has spent millions of dollars of his own money to elect two Wisconsin Supreme Court justices. Of course he will get involved in Wisconsin’s electrical transmission policy and shift his state’s costs right back over the border!

The cartel’s argument for cost savings also collapses under the weight of the actual data: Transmission projects are dramatically less expensive when they are competitively bid. Analysis from the MacIver Institute “shows that competitively bid projects in the MISO region resulted in overall costs 37% less than the highest bids placed, and 52% less than MISO’s estimates.” Conversely, “similar multi-value projects (MVP) not subject to the competitive process resulted in costs that were 18% higher than MISO’s original estimates.”

This should come as no surprise to anyone who understands how monopolies work, but a disturbingly large contingent of Republicans in the Wisconsin Legislature who profess to be free market conservatives are instead demanding an end to competitive bidding. And they don’t want their voters to know about it: Last year, Assembly Speaker Robin Vos allowed his members to hide behind a voice vote.

Instead of forcing a roll call, in which every member’s vote would be recorded, Vos called a voice vote that protected his caucus from the natural consequences of their creation of a cartel. This year, sources indicate that Vos will again call for a voice vote and again allow Republicans to avoid responsibility for passing a law that is almost assuredly unconstitutional.

Article I’s Commerce Clause, which gives Congress the power to “regulate commerce…among the states,” includes what has become known as the Dormant Commerce Clause—a “prohibition, implicit in the Commerce Clause, against states passing legislation that discriminates against or excessively burdens interstate commerce.”

The United States District Court for the Western District of Texas in 2022 determined that that state’s ROFR law—and all ROFR laws—are “unconstitutional because they violate the dormant Commerce Clause and are therefore invalid and unenforceable, to the extent that they grant in-state transmission owners the exclusive right to build or acquire transmission lines.”

The following year, both a federal court and the Iowa Supreme Court agreed with this assessment and halted the state’s ROFR law pending a full hearing on its constitutional merits.

In December, a federal court in Indiana followed suit, issuing a temporary injunction against that state’s ROFR law, which it held “facially discriminates against out-of-state economic interests, and it cannot survive strict scrutiny.”

Both Minnesota and Montana’s legislatures are attempting to recall their own ROFR laws, with Montana’s Senate giving preliminary approval on a 50-0 unanimous voice vote this week.

Wisconsin’s legislators, however, are pushing harder than ever before to pass an anti-constitutional, anti-capitalist monstrosity that hands a multibillion-dollar monopoly to a cartel. This would be nauseating enough if Democrats were behind it, but Wisconsin’s GOP—led by Senate Majority Leader Devin LeMahieu and Representative Kevin Petersen—is abandoning its principles in service of the cartel.

They aim to cobble together just enough anti-constitutional, anti-capitalist Republicans to join a united Democratic Party in selling out ratepayers and doing their kingpins’ bidding. Those in the Assembly will be protected by the supposed anonymity of a voice vote, while those in the Senate will either be lured by the promise of campaign donations or bullied by the prospect of a cartel-backed challenger in their next election.

If, however, they reject the unprecedented pressure campaign and instead stand up for a free market and constitutional governance, their voters will stand behind them. If they stand on principle instead of a pile of cartel cash, the people will stand with them.

The choice is theirs and theirs alone: Stand with the cartel or stand with a free Wisconsin.