• WisBusiness

Stuart: Wants WIEG to `Reestablish Relationships'
7/7/2006

By Brian E. Clark
WisBusiness.com

In the mid-1990s, a light bulb flashed inside Todd Stuart's brain as he traveled around the state visiting manufacturers with then-Lt. Gov. Scott McCallum.

It was an appropriate metaphor for someone who could be accurately described as an energy policy wonk. When McCallum became governor, Stuart served as his energy and economic development adviser.

In May, Stuart became executive director of the Wisconsin Industrial Energy Group (WIEG). He replaced the outspoken Nino Amato, who was ousted by the WIEG board.

"I figured out about a decade ago that economic growth and energy supplies and costs are intimately linked," said Stuart, who served as chief of staff for Sen. Rob Cowles, R-Green Bay, for the past three years.

Stuart worked closely with Cowles, chairman of the state Senate energy, utilities and information technology committee, to push energy legislation through the Legislature, including the new renewable power and energy efficiency law.

WisBusiness Editor Brian Clark recently spoke with Stuart, a boyish-looking, 33-year-old former Marine.

Brian Clark: When did you start your new job?

Todd Stuart: May 8 was my first official date.

Clark: What did you do on Cowles' staff that dealt with energy?

Stuart: I was the committee clerk for the Energy and Utilities Committee in the state Senate and then before that worked on energy in Gov. McCallum's office.

For good or for ill, I've had my fingerprints on almost every piece of energy legislation out there for the past five or six years. I've been around the utilities, WIEG and the interest groups since 1999-2000.

Clark: What have you done that you consider significant from that time?

Stuart: There were two really big highlights over the past few years. One was Act 89, a regulatory streamlining initiative that took place in 2003. I would say it simplified for siting power lines and power plants without harming the environment.

The biggest one, though, is Act 141 - the Renewable Energy and Efficiency Act. Cowles and Rep. Phil Montgomery, chairman of the Assembly Energy and Utilities Committee and Gov. Jim Doyle all worked to make it happen.

Clark: What are the key parts of Act 141?

Stuart: It's a 55-page bill with four major provisions. One expands the amount of renewable energy utilities must have in their portfolios, such as wind, solar and biomass. I think biomass has a lot of potential for the future. So does wind, which is cost-competitive now. That section got the most headlines because it is the sexiest.

But what I care the most about is the public benefits reform. That is the state's conservation and efficiency programs, and the reform makes sure that money never again can be used to balance the state's budget. It also has greater energy savings and is now more cost-effective, too. The program was very good; we just made it better.

The third part upgrades building codes, and the fourth part gives regulatory certainty. Utilities now know that if they spend X amount on conservation and if they do X amount of renewable energy in their portfolios, they can get tradeoffs at the Public Service Commission and can go forward with a power plant. This is what is called the energy priorities statute. All these things kind of came together. There was compromise, but it worked out in the end. It looked impossible this time a year ago, but all parties worked hard on it.

Clark: Are you a Wisconsin native?

Stuart: Yes. I've been in and around Madison about 20 years and I now live in Fitchburg. I spent my childhood in Fort Atkinson, where my grandmother pretty much raised me.

Clark: How did you get interested in energy?

Stuart: It started in the mid-90s. I began as a policy assistant to then- Lt. Gov. McCallum, and we traveled around the state to visit just about every widget maker. We toured hundreds of manufacturing plants and businesses.

At the same time, utilities were becoming a lot more politically active nationally with deregulation. There were also blackouts then. The debate was always about needing more reliability and power plants and is deregulation the way to go.

I was also very interested in economic development issues and was hearing the discussions and in some cases being part of them.

At some point, the proverbial light bulb clicked on in my brain and I realized that energy policy and economic development go hand-in-hand. The economy tracks energy policy. When I figured that out, all of the sudden I began to notice where the power plants were.

I started work on my MBA about that time, too, on top of 60-hour weeks here in the lieutenant governor's and then governor's office. My job for McCallum was to advise him on energy infrastructure and development issues. I got to work with a lot of big companies, while at the same time I was learning about accounting and finance. It all came together.

Clark: What prompted you to jump to this post?

Stuart: I'd say this is pretty much my dream job, though I didn't know if it would become available. I guess I always thought that I might work at the Public Service Commission (PSC) or for a utility some day.

With my passion for energy and economic development issues, though, this was the perfect fit. When it opened six-plus months ago when they let go former director Nino Amato, I went for it. I also had a fairly good feel for their board because I'd been brought in a few times to talk to them about legislation.

Clark: What will be the major issues you'll be working on?

Stuart: I'm still relatively new on the job, but I want to make sure this organization is the premier and most credible voice for ratepayers in the state. I want to reestablish relationships with the PSC and the governor's office and the utilities, too.

This organization needs a leader that can work with the utilities so that we can talk about issues up front before they become a huge, nasty blowup. I'd much rather quietly get things done, or at least get them on the table and talk about them instead of having a public fight. I'd like to have quarterly meetings with utility executives to discuss issues of concern. And to see where we have common ground. We are their largest customers, so there is something of a symbiotic relationship. We'll see. I hope they'll want to help us out.

Clark: Though you say want to have a good relationship with the utilities, you likely will end up on the opposite sides of issues, too, right?

Stuart: Yes, of course. That's fine, and everyone knows that.

I have a lot of contradictions in my personality, as we all do. On one hand, I'm pretty go-along and get-along and pretty calm. But I was in the Marines for six years and no one has ever accused me of being a "panty waist."

Again, I think we have things in common. But where we diverge, I'll be firm and upfront on that, too. The goal of the organization is to become a lot more effective at the PSC, with the Legislature and with the governor.

Clark: Your predecessor was known for being pretty outspoken. Do you think that cost WIEG some of its effectiveness?

Stuart: To some extent, yes. But I'm not going to say anything ill about Nino. There is nothing to gain from that.

Clark: What do you think about utility executives' compensation here in Wisconsin? Gale Klappa, the CEO at WE Energy, got nearly $3 million in pay and bonuses last year.

Stuart: No comment.

Clark: Natural gases were awfully volatile last winter. Is there anything that can be done to keep those prices down?

Stuart: They are controlled by federal policy, and natural gas prices are deregulated at the well head. That has probably served our country fairly well over the past 30 years. There is not much we can do about that at the state level, though we can nibble at the edges a bit.

There have been talks at the PSC over fuel rules. Painting with a broad brush, utilities want more of a pass-through to customers when prices go up. Right now, they must increase a certain percentage or bandwidth before they can be raised. My members don't want the rules changed because if there is too much of a pass-through, there is little incentive for the utilities to watch their purchasing. We want to encourage them to watch their costs. We'll see what happens.

Clark: What is your sense of how the Wisconsin economy is doing?

Stuart: I think it's OK but not going great guns, especially on the manufacturing side. I'm getting to know that better as I talk to WIEG's members. Paper-making has had a tough go of it and we are the best state in the nation for that. Margins are tight and there have been job losses.

Clark: How many members does WIEG have?

Stuart: About 35 companies that employ more than 60,000 people. In the past, companies didn't want to advertise that they were members for proprietary and other reasons. I'd like to change that and be more up front about our membership, like Wisconsin Manufacturers and Commerce is. I think our list is pretty impressive. We have members like Stora Enso and Georgia Pacific, Patrick Cudahy and GM - some of the biggest companies in the state.

Clark: Would you like to expand the organization?

Stuart: Yes, that's one of my top priorities. I'd like to have a broader cross section of members and have the dues spread out more. We could also make a stronger case before the PSC if we represented all the foundries in the state instead of just three of them. I'd like to get every energy- intensive company on board. If you have a member in every Senate district, people will sit up and take notice.

Clark: Has the number of members gone down in recent years?

Stuart: It was as high as 40, and it has fluctuated with the economy. Memberships in trade organizations are one of the first things to go when times get tight.

Clark: Are there any other groups that are like yours?

Stuart: I'd say Customers First is somewhat like ours. They have a broad umbrella of members. They have co-ops and municipal utilities, some businesses, labor and environmental groups. And CUB (Citizens Utility Board) is a consumer and homeowners group. So it's different than ours. There is WMC, but we are probably most like the Paper Council, which represents paper makers. A lot of our members belong to the paper council. But we have different issues.

Clark:Will WIEG continue to work closely with CUB?

Stuart: We'll work with them on a case-by-case basis on areas of common interest, probably at the PSC. But I'm leaning toward partnering with the paper council a lot because of our similar interests. And with WMC.

Clark: Are you satisfied with how the Midwest Independent System Operator system is working?

Stuart: That's one of the things we are looking at. It's supposed to be like the interstate highway system for energy. But the problem is that while it gives access to power we didn't have before, it is very expensive and we're not getting a lot of benefit from it now. The question is will we gain from it in the long-term. My group may advocate pulling out of MISO at some point. It has had huge ramp-up costs, and it is very confusing and complex. If someone tells you he understands it, he's probably lying.

Clark: Does your group support more transmission lines in the state?

Stuart: In general, yes. But we don't want them gold-plated. We need to be able to import energy to guarantee our companies power. So generally, it's a pretty good investment. Consumers should benefit. Still, we don't want to see over-engineering. Wisconsin has one of the weakest transmission systems around. It is weak, congested, aging and needs to be upgraded. We have concerns about the American Transmission Co.'s costs and accounting, but we don't dispute the need.

Clark: A number of new power plants are being built in the state. Are you pleased with that?

Stuart: It's a step in the right direction. But we are concerned with the costs. Wisconsin Public Service is building Weston 4 and doing it by traditional rate making, which means a 15-percent rate increase for some of our members. That's a huge hit, and recently they said maybe they can spread that out a bit.

We Energies will probably be in good shape through the end of the decade infrastructure-wise. But that said, they have an aging workforce and power plants. There will probably be another round of building in the next decade. There is no free lunch, someone is going to pay for it. We'll be keeping an eye on that. And we'd like to have options on how to pay for it.

Clark: Does your group have a position on coal gasification, which is generally considered a cleaner, more environmentally friendly way to produce energy from coal?

Stuart: Rate payer-wise, it's a bit of a risk. It's more expensive because it is like building two power plants. You have to pay a premium for it. But is it the way of the future, especially if there is a carbon tax some day. The federal government is investing a lot in R&D. And the Chinese are said to be making great strides. They need to build something like one giant power plant per week to keep up with their needs. For now, my members would be very cautious because of the costs.

Clark: What does WIEG think of more nuclear plants for Wisconsin?

Stuart: I personally think we'd want it on the table as an option. But it won't be a top priority. Wisconsin law right now is a hindrance to building nuclear. It says you can't build nuclear unless there is a federal depository for waste. But Yucca Mountain in Nevada is nowhere close. What plants do now is store it on site.

Clark: Do you think the PSC has enough staff?

Stuart: Nope. They are at one of the lowest staffing levels since the early 1980s. I think the world of the PSC and its staff, but with all the rate and rule cases coming up and the new construction, they need more people. They will be very busy. I think the utilities would support more staff because it would mean they would be permitted faster and better. I would love to help them add staff back. I believe they are down about a third.

Clark; Is the current rate system fair to industrial customers?

Stuart: The commission is studying that now, but the dirty little secret out there is that large industrial customers are subsidizing other rate classes. That's a political dilemma, because in an age or rising prices, no one wants to have the shaft shifted to them. And what is more popular than having big business pay more of the load? We face an uphill battle, but I think the facts are on our side. Truth be told, some members of my organization are probably subsidizing other members.

Clark: Any other issues you'll be working on?

Stuart: Well, we're interested in having rates that would encourage economic development like some other states have. But there is a statute that limits special contracts that benefit one class of user over another. But we might be looking at revising that law. There is an argument that this could save jobs or promote growth. It might not be politically popular to shift the burden, but some of these communities wouldn't be there if it weren't for our member companies. The question is, how do you do this so you don't harm other customers.

We'll also be watching how the rule-making is done for the renewable energy bill. I'll be in pretty good shape to help with that because I probably know it better than anyone else. There are some errors that need to be corrected with it in the Legislature, too.

And we're also concerned about clean air and mercury standards. We don't want the state to go very far beyond the federal rules because that could turn Wisconsin into an economic island and have a huge impact on utilities and big business. I think we'll be partnering with utilities and big business on that issue. I'm pretty sure we'll all be on the same page. I'd argue state law says we shouldn't go beyond federal standards, but the devil is in the details.
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