The Real Owners of ATC

Utilities and ROFR

Not once, not twice, but three times have the people of Wisconsin rejected the idea of a Right of First Refusal law. Each time it's been introduced it has either failed to pass in the legislature or has died in committee. But that hasn't stopped Wisconsin's utilities from introducing it a fourth time in the form of the Wisconsin Energy Reform Act (AB174).

Like a zombie rising from the grave or Dracula's predictable return from hell, Right of First Refusal simply will not die.

And why would it? After all, Wisconsin's largest transmission company, ATC, may be owned by "state-regulated" monopolies, but when has a monopoly ever been interested in improving the lives of its customers?

The reason ROFR doesn't get dead and stay dead is because consumers are not in charge. You might think that the State is in charge, or the PSC, or even FERC. But no, the real boss isn't in the utility headquarters, the lobby of the capitol or even in the state. The real boss is far away on a warm, sunny beach––a little beach called Wall Street.

ATC's Owners

ATC is jointly owned by 5 different utility groups (p.11). The group with the largest ownership share is WEC Energy Group, with 60% ownership. Next is Wisconsin Power & Light (owned by Alliant Energy) with 16.3%, then Madison Gas & Electric with 3.5%, Allete Transmission owns 8%, and the various municipal utilities own 12%.

The first 3 utilities in this list are particularly important because they not only serve the majority of Wisconsinites, but are also Investor-Owned Utilities; i.e. for-profit companies with monopolistic powers granted to them by the State (see: The Green Conspiracy for more on IOUs).

This unholy matrimony between for-profit businesses and the coercive power of the state means that these utilities are incentivized––authorized, even!––to use the law to force consumers to pad their bottom line. ATC and its owners are under no threat whatsoever from free-market forces because the State does not allow the free-market to operate in their sector. The result of this anti-competitive situation is utilities' push for green energy mandates and monopoly-enhancing laws like ROFR.

But while WEC, WPL and others are certainly responsible for the protectionist energy policies in this state, they are merely vessels for those with true power; for those who stand only to benefit from the ruinous policy decisions implemented in this state.

Who Owns the Owners?

Those with true power in the energy sector are not the utilities themselves, but those who own the utilities. In the state of Wisconsin, 28-33% of WEC, MGE, Alliant and Xcel are owned by just three institutions. These three institutions are:

• Vanguard Group
• BlackRock
• State Street

WEC, the largest owner of ATC, has more than 1,500 institutional investors who control over 83% of the company. And the top 10 investors control almost 50% of WEC Energy's stock. And these Big 3 investors own roughly 30% of that company.

The same is true for MGE. The Big 3 own 33% of the utility, 369 institutions own 64% of the company's stock, and the top 10 investors own 56% of the company.

With respect to Alliant, the Big 3 own 29% of the company, 951 investors control 84% of the company's stock, and the top 10 investors control 52% of the company.

And last on the list is Xcel Energy. The Big 3 own 28% of Xcel Energy, 1,450 investors control 86% of the company's stock, and the top 10 investors own 50% of the company.

In other words, these are not Wisconsin-based companies humbly employed in serving their fellow Wisconsinites, and carefully regulated by the watchful eye of government––they are profit-driven firms, reassured by their status as guaranteed monopolies, perverting Wisconsin law to suit their purposes.

They do not care how Wisconsinites may suffer because of their lobbying efforts to pass favorable legislation or regulations...they don't even live here.

And yet, ATC and their supporters in the capitol would have us believe that this time, in their efforts to pass a ROFR law, they are acting in the interest of Wisconsinites!

But the utilities do nothing that is not in their interest. Their game is the most lucrative one in town, and they want to make sure we keep playing.

As the graph below shows, the State's utilities are no worse for wear despite their constant pleading for more money from ratepayers––whether that's in the form of higher electric rates or a ROFR law.

Conclusion

There is nothing wrong with remote or private investment from large firms. Capital investment is a necessary prerequisite for any advanced economy and a requirement of capitalism itself. In a way, the Wisconsin capitol's insistence on passing Right of First Refusal legislation is not even the fault of investors or utility companies.

That fault lies with the State.

And it lies with the State because it has failed to preserve and enhance the free market. Instead, it has written rules for a game that ensure one team wins while the other team always loses. Not only that, it has also allowed and encouraged the winning team to write rules of their own while denying the same privilege to the losers.

In this case, the winning team consists of the utilities and the investment firms who own them, playing a game within the confines of a system designed to confer every advantage on the favored team, while never permitting the losers to invoke a mercy rule.

Because the State has permitted foul play, the utilities and their owners will continue to push for ROFR no matter how many times it strikes out. For them, the game never ends. The goal is simply to run-up the score as high as possible.