Delgado: ATC Ad Campaign to Ease Approval of Future Projects
By Brian E. Clark
PEWAUKEE – José Delgado, president and chairman of the American Transmission Co., is an engineer by training.
So it was something of a leap for him to sign on to a new radio advertising campaign that extols the virtues of his nearly five-year-old company.
“This was not in Engineering 101,” said Delgado, a 58-year-old native of Cuba who holds advanced business and engineering degrees from Marquette and UW-Milwaukee. “You’re not the only one asking about this.”
“We do not sell to the consumer, so we would not seem to need a brand name,” said Delgado, whose company is owned by utilities in the eastern half of Wisconsin and the Upper Peninsula of Michigan.
“However, having an identity in the mind of the public is terribly important to us,” said Delgado, whose firm has spent more than $500 million in new lines and improvements in the past few years.
ATC operates more than 8,900 miles of transmission lines with a total investment of approximately $1 billion in transmission facilities in parts of Wisconsin, Michigan and Illinois. The owners with the largest shares of the company are We Energies, Wisconsin Public Service Corp., Wisconsin Power & Light Co. and Madison Gas & Electric Co.
WisBusiness Editor Brian Clark interviewed Delgado on Tuesday about the company's advertising efforts and its new 10-year, $3.4 billion building program. Officials have said the plan's pricetag, which is up more than 20 percent over last year, is due in part to rapidly rising costs for steel. They note, however, that the transmission portion of a consumer’s bill will stay below 10 percent.
Brian Clark: Why is it important for ATC to have an identity?
José Delgado: Local utilities tend to have a high level of trust. When they approach you, you know who they are. But we are relatively new. So when ATC approaches people, they wonder if you fix cars.
That has a big impact for us, especially because we do so much work that affects the public either with existing equipment or with new lines.
We did a strategic analysis on what it would take for us to facilitate understanding in such a way that if regulators were to approve a project, then the public already would have a basic understanding and hopefully, an acceptance, of the nature of the project.
We began the effort with the Arrowhead-Weston (Duluth-to-Wausau) line, which has been a been a multi-year effort to get off the ground and was very contentious. [It was opposed by several environmental groups and Douglas County.]
Through communication, we were able to reverse a lot of opposition to the project and gain support because it makes sense.
Now, we are trying to work in a proactive way. It is important for a company like ours that is in the street a lot to have an identity. We are not selling people anything, but they need to know who we are.
This is not anything that engineering taught me.
Clark: Do you think it will be easier to have future projects approved because of this effort?
Delgado: It has been proven. We do a lot of polling that validates this. It’s the difference between a question mark and trust. If you begin with trust, then you are already ahead. We are behind the eight ball.
We cannot expect the commission (Wisconsin Public Service Commission) or other public officials to do this for us. We have an obligation to explain who we are and what we do.
Clark: It almost sounds like a political campaign. Either you define yourself or your opponents do it.
Delgado: Exactly. We are campaigning to elect poles and wires to public office. That analogy is very powerful. In fact, some of us spent a time going around the Wisconsin and Michigan legislatures figuring out how to do this. It became very clear in talking with a former speaker of the Assembly.
We have to talk to all the key people early on so that when people approach them with complaints, they will know the facts. We also need to talk to chambers of commerce, labor groups, factories and cooperatives to build support.
This way, when somebody calls the mayor or some other representative and screams at them, they can deal with it and know what the person is talking about.
Clark: Is that one of the main things you learned from Duluth-to-Wausau power line fight?
Delgado: Yes. It was learning experience and we wanted to make sure we only paid tuition once. In other words, we had to integrate that knowledge and use it. You need to do more than show up at a meeting and stand up in the front.
You need to talk with the public, officials and the press early on to answer questions. If you don’t, it adds to the costs and delays. Those are bad when there is no benefit to the public. We want to address issues before they become expensive delays.
Clark: Has this new policy paid off yet?
Delgado: Yes. In March, we filed for a 150-mile, 345,000-volt line in central Wisconsin to serve a new Wisconsin Public Service power plant in Wausau. This project has the most intrusive kind of line. And there was no opposition.
The preamble to that were meetings with thousands of people in the area with a lot of mapping information and basic reasons about why it is needed and how we would go about it.
We rented space in a hotel and put up booths and invited people to come and ask specific questions about the environment, rates or whatever and get them answered on a one-to-one basis. We did that several times.
By that time, the public was satisfied something had to be done. And if they had requests to avoid something, we could take that into account. If there is something that should not be done, then we won’t do it.
Clark: There was no opposition from environmental groups?
Delgado: Nope. In the U.S. of A, that is remarkable. Most people are reasonable. And I think the majority appreciated the work we did up front.
Clark: Did you learn anything else?
Delgado: Every transmission project is local, no matter how big it is. It is like politics, the impact must be justified on the local level. There are always benefits at the local level, but we have to convince people of that.
Clark: Is Wisconsin up to speed yet in terms in coping with the power crunch?
Delgado: Not yet. But we are doing a lot to get there. One of the benefits of the upgrades we are doing is that energy losses have been reduced significantly.
The new wires have bigger wires and higher voltages lose a lot less energy. The capacity for moving energy around the state also has improved a lot. Also, we have connected and are transporting energy from generators built by utilities in Port Washington, Sheboygan, Fox Valley and Janesville.
We also have been able to bring more energy into the state. And we have other projects, like Arrowhead Western, which will come on line in 2008 and the one in central Wisconsin that will be available in ’09 that will continue to improve the ability of the system.
It is our intention that within five years, we will have solid integration into the power network so that our customers can participate in the market with reasonable costs and no major congestion points.
Clark: Where are major congestion points now?
Delgado: There are several surrounding us. The Midwest ISO (the non-profit organization that operates the regional market) has a color-coded map on its Web page. The warmer the color, the higher the price. Invariably, Wisconsin is warm and the UP is the warmest. Pink or red means a big price difference than blue.
We can’t buy the cheap energy because it can’t get here. We can’t buy it because we are at the limit of our transmission system. If your inexpensive energy is used up, the next kilowatt hours at the margin are more expensive when the load goes up. Illinois, Iowa and Ohio are very well connected, because they are in the east-west path. Parts of Wisconsin, Minnesota and Michigan are off the path.
Clark: How has growth in Wisconsin affected transmission needs?
Delgado: A lot. Traditionally, the load, generation and transmission were on the Lake Michigan coast. But Madison, the Fox Valley and other parts of the state have grown and the load has grown dramatically. Our transmission system was very effective for southeast Wisconsin. But not now, I’m sorry to say.
The state has grown in the past 15 years in places where there was little transmission or generation. It is great that there are new businesses and people outside of the Milwaukee area, but it takes energy to supply them.
Clark: Some people were alarmed recently when ATC unveiled its $3.4 billion, 10-year plan because it was up $600 million from a similar plan presented a year ago. Can you explain why it has gone up so much?
Delgado: Our costs are going up. We have five or six projects right now that are going to carry us at the level of $400 million a year in capital expenditures just to finish them. They are expensive, but they are essential to make things better.
And then we are looking at a variety of other projects to pick up weak areas where we have a lot of problems in north central Wisconsin. Around Eagle River, there is not enough of anything, except load. People are building big vacation houses up there and there is some industry, too.
We have about $1 billion in there for just rebuilding existing things. Some of our power lines are 80 years old and our system is heavily depreciated. Power transmission started in Wisconsin because of hydro-electric power coming from the UP. So we have a lot of small, old lines and old towers.
If we need a bigger wire, we may need a bigger tower to support it and handle the wind. But if we can reuse the tower, we will.
Because of this rebuilding, we will have an operating system that reacts better to lightning and wind and has more capacity, less loss and is more stable.
Clark: What is ATC doing to hold costs down?
Delgado: We are doing many things. From the finance side, we have a top rating. That means we can borrow money at a good rate.
We also save money because our building efforts are coordinated. If we were building under a fragmented ownership scenario, it would not be as efficient.
We are looking at the needs of everyone. It would be different if we were just building for one company serving one area. We changed a lot of projects we got from the original companies because we were able to show that while they were well-designed for one utility, they weren’t for the overall system and it represented a missed opportunity for overall needs. That is a significant benefit.
We also contract a lot, so we do not have a significant workforce with peaks and valleys. We contract all of our construction and design, for example. We keep the functions that are essential to provide service, such as operations so we can keep the lights on. We have two control rooms to back each other up that are fully staffed 24 hours a day.
We do planning and we manage maintenance and construction. But the work is done by many contractors, including our owner utilities, and that reduces our costs. We don’t own a warehouse. We manage.
Clark: ATC is participating in the Department of Natural Resources’ new environmental Green Tier program, which rewards good actors with reduced red tape. How will it affect you?
Delgado: We are totally committed to build in an environmentally sound way and be good stewards. The consumer wants a clean environment and lower costs.
That means that we won’t build something that is not needed. It means that we will do the right thing locally, keep proper records that will be checked by independent consultants so that the DNR can chase the bad guys around and not us.
We have had incidents with construction crews and immediately reported them and taken corrective action. Things happen. But we deal with them. We also have a training program and procedures to deal with problems.
We look forward to working with the DNR so we are auto-regulated so the consumer doesn’t have to pay for something that is not needed.
Ultimately, you get better environmental impact at a lower cost. It’s a huge commitment on both sides. But we have promised that we will do the right thing when no one is watching.