Rally a Great Opportunity for Learning, Networking
Marshfield Utilities officials recently attended the American Public Power Association’s legislative rally in Washington D.C. for an opportunity to learn, advocate for issues, and network with congressional representation.
A complex entity that serves more than 13,800 ratepayers, the experts at Marshfield Utilities appreciate the opportunity to learn and lobby, to better ensure the best results for all ratepayers.
“This rally presents an opportunity to meet with our congressional representatives at a time when their focus is entirely on Municipal Electric Utility concerns,” said Bob Trussoni, Marshfield Utilities General Manager. “As a group of over 600 public power professionals, we are able to impress upon them the importance of our issues. We give them the opportunity to gather information from us as well to help them formulate positions on important issues.”
Commissioners Mike Eberl, Harry Borgman, and John Maggitti, along with Mayor Chris Meyer, attended the annual event, each participating in various discussions and workshops pertaining to Utilities issues.
“The tax exempt financing has been the front and center item for the last few years,” said Trussoni. “We have seen support build over the years in congress to maintain this financing method. This item alone can save the utility millions of dollars over the years. This is also a very important issue for every city in the nation including Marshfield.”
INTERACTING WITH PEERS
The rally also provided a prime opportunity for Marshfield representatives to interact with their peers from around the nation.
“We discuss not only the issues related to legislative action, but also other operational issues,” said Trussoni. “Many best practices and advance alerts to potential concerns are shared. We have the opportunity at conferences like this to learn from others as to what they have tried, what worked, and what did not work.”
Additionally, local legislation that has been introduced or discussed elsewhere in the nation may be indicative of what might be coming to Wisconsin.
“For example, pole rental fees and potential related FCC regulations have been discussed,” said Trussoni. “Many times we are on opposite sides of an issue from large companies and our efforts as a organized group will better ensure that we get our view heard in Washington. Electric transmission and generation issues that directly affect cost to our customers is one such issue.”
Mayor Chris Meyer explained that many of the issues faced by locally-owned utility faces are inconsistent with issues facing large investor-owned utilities that have powerful lobbyists working full time on their behalf.
“They need to not only provide reliable power, but they need to make a significant profit for their shareholders,” said Meyer, who provided the following information from the Public Service Commission:
The Public Service Commission’s website provides information, including rate comparisons, on all public and private utilities. The following calculations use the 600kWh/Mo. consumption rate used by the PSC to determine average rates.
- The average Wisconsin Electric bill for customers who purchase power from a privately owned utility is $84.17 per month.
- The average Wisconsin Electric bill for customers of publicly owned utilities is $74.39 per month.
- The average Electric bill for Marshfield Utility Customers is $66.63/mo.
“Annually, MU’s electrical rates keep an average of $93.12 in each customer’s pocket. When you consider the 13,000 customers MU serves, this results in $1.2M annually staying in our community, and in our pockets,” added Meyer. “This is not easy to accomplish. We need to remain engaged with our elected officials at the state and federal level, work with other public utilities to present a uniform voice to our elected officials on issues we all face. That requires that leaders of our utility and city take time to go to our elected officials, discuss pending legislation and ensure they understand the impact to the ratepayers.”
Legislative involvement is critical, whether it be face time with representatives or education on the issues.
“APPA provides a great deal of timely information at these rallies about important issues,” said Trussoni. “We take this opportunity to hold a Legislative and Regulatory committee meeting to discuss and pass resolutions that solidify our organizational support for various issues.”
He added that the discussion that takes place also helps to prioritize the many public power concerns to ensure that they fully understand the issues, the ramifications of potential actions, and that they formulate good plans for moving forward as a group.
“As more than two thosand independent utilities, we may have little significance in the big picture, but as an organized group, we can have an impact,” he said.
Outside of the specific educational benefits of the conference, attendees also have the opportunity to build a relationship with other Marshfield participants.
“In our down time, the commissioners, mayor, and I get a chance to get to know each other better,” said Trussoni. “This relationship building is very important to the smooth operation of the utility and to build understanding and support between the City and the Utility.”
He added that this bonding is crucial as everyone works towards a common goal.
“Our ratepayers benefit from the efficiencies that result from good working relationships and from the knowledge that we gain from others,” he said.
Trip costs are covered in the Utility budget, which is approved by the commission. Though expensive, the value of the experience outweighs the cost, and is arranged with due diligence to ratepayers.
NOT A PLEASURE TRIP
“This is not a pleasure trip. Our utility policy on such trips balances the need to cover expenses with being responsible to our ratepayers,” said Trussoni, adding that the APPA selects the hotel based on accommodation for its 600+ attendees.
As with any business trip, evaluating costs and benefits is key. Trussoni provided an example of how the cost of the trip pales in comparison to what the loss of tax exempt financing would incur.
“It has been estimated that the loss of tax exempt financing would add about 25% to the cost of each project. Our generating station was a $35 million dollar project. That means that loss of tax exempt financing on that project alone would have added $8.5 million to our costs,” said Trussoni.
“That one project would cover the cost of this trip for 772 years. The city borrows money every year and the utility borrows for major projects. Imagine the ramifications of just this one issue. This is just one issue, a very important one, but there are many others.”
TAKING A PROACTIVE APPROACH
It is this proactive approach that has helped Trussoni and Marshfield Utilities continue as industry leaders, with one of the the highest customer satisfaction ratings in the nation (according to a study conducted in spring 2016 by GreatBlue Research).
“We have won several awards in the last few years in recognition of our system reliability,” he said. “Our employees have worked to ensure that we have excellent response times on outage restoration and that we have a well maintained system to help to avoid outages.”
Trussoni and the Marshfield Utilities team is dedicated to continuing to work hard to advocate for ratepayers, and rallies such as the recent APPA rally in Washington D.C. are critical to their continued success.
Mayor Chris Meyer provided just a few examples of recent discussions conducted during these trips, all of which ultimately benefit ratepayers. In his own words:
Recent topics of discussion on these trips have included:
Tax Exempt Municipal Bonds:
Tax Exempt Municipal bonds, or Munis are how we fund projects for the utility and city. They have been tax exempt for 100 years. Congress has considered changing this, and making the bondholders (banks) pay taxes on the interest they earn. I doubt many of us would shed a tear to hear big banks are going to pay more taxes, but the fact is, they will pass those costs down to us through increased interest rates. It is estimated that we could expect an increase of 1/2% if tax exemption were lost. Consider the impact. On a $1M bond over 10 years, the cost to tax or ratepayers would be a annual payment of $110,412/year at 2% interest. Increasing that to 2.5% would increase that payment to $113,124/yr. An increase of nearly $3000 in interest costs per year. Multiple that by the actual bonding we do, the peaking power plant, for example, was a $35M project. If interest rates rose 1/2%, all ratepayers would be paying an additional $94,920 every year; and that’s just one project.
Many people may be aware that we have law in the United States that prohibits businesses from monopolization. Many may not be aware that there are exceptions to the law, the Sherman Antitrust Act. One of those exceptions is railroads. Over the last several decades, rail costs for transporting coal have skyrockets. There is evidence of collusion and price gouging. Senators Rockefeller and Kohl were champions for Public Power when they took on this issue, as a direct result of our lobbying efforts.
Grid Physical and Cyber Security:
We all trust that when we flip a switch, the lights will come on at home. That can only happen if we have a reliable power grid. Physical security of our production plants and transmission systems is critical to maintaining reliability. Today, we have the added threat of hacking and the need for cyber security in addition to physical security. Congress knows this, but have struggled to figure out how to legislate what should be required. We advocate for a scalable solution, recognizing that what New York City must do to protect their power grid is vastly different from what a community in Kansas, or Marshfield, WI must do. We remind our legislators that a one-size fits all approach would not be appropriate and would generate high price increases for ratepayers. Not surprisingly, large utilities feel they would be at a disadvantage if they needed to implement costly systems for protection and smaller utilities would have less costly alternatives. These large investor owned utilities spend millions lobbying congress. Municipally owned utilities spend 3 days in DC annually doing the same thing on behalf of our ratepayers.
While it may seem to be science fiction, the threat of solar flares on power grids is real. We’ve had examples of this around the world. There is little that can be done to protect our power grid from damage from such an event, but we can be prepared to respond to this natural disaster should it occur. We remind elected officials that we can not legislate this threat away and we must plan for how we will react in the event this occurs
Publicly owned utilities, such as MU are cheaper. Publicly owned utilities do not have stockholders expecting a rate of return. They don’t need to generate a profit to be successful, but they also can’t generate a loss. The result is cheaper power for all of us. While this is great for a residential customer, we can all imagine the significant impact on a large business. Lower utility rates are a powerful recruiting tool that we can use to bring in new businesses which create jobs and opportunities for the people who live here.
One of our most significant challenges is the policy decisions made at the federal level that impact all utilities, public and private. Too often, these are a one-size fits all approach. A recent issue surrounded the issue of carbon credits to encourage renewable energy production.
MU has worked hard to increase use of renewable energy in our power portfolio. We’ve discussed the concept of a solar farm to generate solar power locally. In the recent past, MU along with other Wisconsin public utilities considered purchasing old hydroelectric dams to generate more renewable power, but the maintenance costs on these nearly 100 year old dams was prohibitive.
Wisconsin can produce wind, solar and hydro power, but not at the same levels as other states such as Arizona for solar, Mountain states for hydro and the great plains states for wind. Wisconsin will always have a higher dependence on conventional sources of energy such as coal and natural gas. Energy policy that is applied universally hurts states like Wisconsin. We lobby for consideration of this when legislation is being considered.
-Chris Meyer, Mayor
For more information, contact Marshfield Utilities at 715-387-1195.