Wisconsin's Energy Future Hangs in the Balance

Wisconsin's Energy Future Hangs in the Balance

While politicians in Washington picked energy winners and losers, Wisconsin families picked up the tab. But last week, by a single vote, we moved closer to energy freedom—though our fate still hangs on the Senate.

The House's nail-biting 215-214 passage of the budget reconciliation bill, the One Big Beautiful Bill Act—which addresses Medicaid, tax cuts, the debt limit, and spending—would eliminate $197 billion in green energy subsidies by 2028. The bill now heads to the upper chamber, where senators are debating a slower phase-out of energy subsidies. Among everything else in the bill, whether the energy subsidies are partially removed or taken out completely will matter to Wisconsin's future.

Our state's manufacturing economy depends on reliable, affordable electricity. With nearly 500,000 manufacturing jobs across 9,000 companies, the stakes couldn't be higher. Just producing Wisconsin's 10 million barrels of beer requires more than half a trillion watt-hours of power.

Wisconsin's energy grid was recently designated as "high risk" by the North American Electric Reliability Corporation (NERC)—meaning energy shortfalls may occur as early as this summer. This 'high risk' designation means Wisconsin faces not just expensive electricity but actual power shortages, putting manufacturing jobs at serious risk from a failed regulatory system.

Our state's grid operates under a fundamentally broken regulatory structure. Like many states, to distribute electricity, Wisconsin law enables regulated monopolies. Instead of earning a return by providing value, the utility companies negotiate guaranteed rates of return on their capital investments with the Public Service Commission. Because of this, the utilities make more profit by building expensive new infrastructure than by maintaining the existing plants. This creates perverse incentives where utilities benefit financially from costly projects while captive ratepayers bear all the costs and risks.

For example, in the face of growing energy demand, WEC Energy Group, owner of We Energies, has retired 2,500 megawatts of mostly functional fossil fuel capacity since 2018—enough to power nearly 2 million homes. WEC plans to retire another 1,200 megawatts of reliable coal-fired generation by 2031.

But because of the increase in energy demand, the Wisconsin Public Service Commission just approved a 1,100-megawatt gas plant in Kenosha County last week. Data centers and industrial users drive the need for new generation, but residential and small business customers pay the bill through utility rate increases.

Federal production tax credits turbocharge this dysfunction. Rather than allowing market forces to determine the most reliable and cost-effective energy mix, subsidies twist the system where utilities profit from regulatory knowledge rather than serving customers better. We're seeing these perverse incentives play out across our state's energy landscape right now, where wind and solar power are artificially cheap.

As reliable, dispatchable energy sources retire, replacing it with the same capacity in solar or wind doesn't actually replace it. According to the Energy Information Administration, solar power produces just 23 percent of its installed capacity on average, and wind just 33%. These capacity differences require systematic overbuilding of intermittent capacity. The true cost of this economic distortion has been hidden by federal tax credits in the Inflation Reduction Act (IRA).

If Wisconsin wants to be a leader in manufacturing and artificial intelligence, our state needs rapid innovation to address reliability challenges. Ending the IRA subsidies would be a major first step in achieving this. But to follow our state motto and lead forward, Wisconsin needs to explore regulatory pathways for independent energy suppliers to serve large industrial customers without entangling themselves in our outdated grid system or burdening ratepayers. This would make our state a magnet for manufacturing and artificial intelligence investment, while states that resist such reforms will watch businesses relocate to more competitive energy markets.

If the One Big Beautiful Bill Act reaches President Trump's desk, Congress must reject anything short of a complete elimination of IRA subsidies. The House gave our state's families hope with a single vote. Now our senators must finish the job. Wisconsin's prosperity—and 500,000 manufacturing jobs—depend on it.