Wisconsin’s Rural Infrastructure Crisis Agri-View: Capitol News

A column by State Senator Dale Schultz

Wisconsin, like America, must wake up to the need to save our infrastructure - the foundation of our economy. The word ‘crisis’ fits the concerns for rural Wisconsin infrastructure and is meant to provide the wake up call policy makers need.

Farmers know a leaking barn roof needs to be fixed quickly, but let the foundation go and before you know it the barn is lost. Similarly, infrastructure serving rural Wisconsin communities and agriculture interests must be maintained and updated through sustained investment to maintain a sound rural economy.

The needs of rural Wisconsin infrastructure vary by community and region. For example, for many communities in the southwest region I represent, a lack of adequate natural gas service presents a major barrier to achieving agri-business development goals. This column discusses three areas of infrastructure need found throughout rural Wisconsin: roads, freight rail and electricity.

Roads

The crisis in Wisconsin’s road infrastructure is well-documented. We have a $700 million-plus annual gap between funding and the needs for our transportation system. That was the finding of the ‘Road to the Future’ task force I created in 2005 while serving as senate majority leader.

Today, as we enter a bad recession, polls show the public wants tax dollars used to fix roads or mail another rebate check - anything but reward corporate execs. As a result, many state and federal politicians are jumping on an infrastructure bandwagon. Yet, as the alarm has rung for years about our declining roads, those same politicians slept.

Will a federal bailout to Wisconsin mean more rural road building? Funds from Washington to Madison would more likely be consumed to fill major deficits in state programs serving children, elderly and persons with disabilities.

It’s true that infrastructure investments create jobs that help during a recession. But good roads are always vital for farms and agribusiness, and the needs in rural Wisconsin are more than temporary. Of course we should expedite road and other infrastructure projects now. But what we really need is leaders committed to sustained infrastructure investment, not just as a brief economic stimulus.

If Wisconsin receives federal aid for infrastructure, and it can’t be transferred for other uses at the state level, let’s start with the numerous rural communities reeling from the cost to rebuild roads and other infrastructure lost to June 2008 flooding. Second, let’s just shorten the list of rural road projects we’ve had to delay, often repeatedly, due to the lack of political commitment to our roads right here in Wisconsin.

Governor Doyle’s Department of Transportation recently released its long-range transportation plan, called Connections 2030. Reading the plan at http://www.wiconnections2030.gov shows a focus on multi-modal (read urban and suburban needs) and the struggle to just maintain the road system in light of our funding crisis.

Unless we are ready to have town roads revert to gravel and delay more and more road projects, the long term fix must restore trust to our state transportation trust fund by not raiding it repeatedly and find alternative revenues to our over-reliance on state motor fuel taxes.

Freight Rail

Wisconsin agri-business employers increasingly use rail transportation as they compete in the global market. The state helps communities and rail shippers save freight rail service through its Freight Rail Preservation Program (FRPP). FRPP grants fund up to 80 percent of projects to rehabilitate tracks and bridges on public rail lines, buy essential rail lines so they aren’t abandoned and save rail corridors for future rail service. In return, we taxpayers benefit from local jobs, tax base from business investments, and roads lasting longer.

Dozens of rural Wisconsin communities are served by a railroad system owned by the state. The state is in the rail corridor business because rail companies abandoned hundreds of miles of rail lines last century and no other railroad companies would take it. While the state owns the real estate, the steel rail and other improvements are the province of county-run Rail Transit Commissions (RTCs). The RTCs lease the line to a short-line rail company, currently Wisconsin and Southern Railroad Company (WSOR).

In the past two years, in just the region I represent as a state senator, our public rail system has led to new jobs and tax base through major agri-business projects in Boscobel and Rock Springs and steel and trucking jobs in Reedsburg. For numerous rural communities, rail service has been an essential asset to save jobs and create new jobs.

While freight rail traffic is growing in Wisconsin, FRPP funding falls far short of the need. WSOR alone has identified projects totaling $21 million annually for the next 12 years to meet needs for new steel rail and ties and rebuild numerous railroad bridges.

The shortfall in FRPP funds is forcing delays of badly needed projects to replace rail infrastructure up to 80-90 years old. Today, there is more freight rail traffic on those lines and the rail cars are much heavier. As a result, the steel rail must be replaced with a heavier gauge. Steel is an energy-intensive product and its cost has jumped in the past four years.

Dozens of communities and thousands of families depend on the jobs and other benefits our public rail system provides. Those jobs and other benefits explain why I believe, despite a tough fiscal climate, in the next state budget we should increase FRPP funding to meet rehabilitation needs and preserve the infrastructure of our public rail system.

A second freight rail issue relates to the lack of competition between the major railroads. Their anti-competitive behaviors artificially raise interstate rail shipping costs for coal, agricultural products and other goods. As senate majority leader in 2006, I advanced a resolution in support of a bill authored by Sen. Herb Kohl and Rep. Tammy Baldwin to remove the anti-trust exemptions that limit competition among the seven remaining Class A railroad companies. The bill has yet to prevail over the lobbying efforts of the major railroads.

Electricity

November 2008 may have marked the end of the coal era to power new U.S. generation plants with the election of Barack Obama who had this to say during a January 2008 interview: "If somebody wants to build a coal power plant they can, it's just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that's being emitted. Under my plan, of a cap and trade system, electricity rates would necessarily skyrocket."

November also saw the federal EPA, based on a 2007 U.S. Supreme Court interpretation of the federal Clean Air Act, block a permit for a Utah coal plant and put into serious doubt coal power plants nationwide.

And in Wisconsin, November saw the state’s Public Service Commission (PSC) deny Alliant Energy a permit to build a coal-biomass plant in Cassville or Portage.

What does this mean for rural Wisconsin farmers and agri-business? I think predictions of electricity rates at least doubling due to a cap and trade system are reasonable.

For Wisconsin, 70 percent of all electric power comes from coal and for cooperatives it’s closer to 90 percent. Recent state laws require utilities to increase renewable power, requiring new plants and transmission capacity. Recent laws require costly environmental upgrades to meet state mercury regulation and federal clean air standards. All these factors combined could cause current electric rates to triple.

Development of the biomass energy industry in rural Wisconsin was slowed when the PSC killed the Cassville project. The plant would have burned up to 400,000 tons of biomass per year with its flexible-fuel design. Moreover, several businesses were under development to harvest, transport, pelletize and store biomass for the plant. The biomass infrastructure developed for the Cassville project would have been transferable throughout Wisconsin and beyond.

The PSC denial of the Cassville plant was counterproductive in light of the loss to biomass development, the fact it forces utilities to keep older, less efficient coal plants operating longer, and the dozens of new coal plants going on line each year in nations like China.

The efforts of Wisconsin farmers and agri-business to conserve electricity won’t offset the rise in base load electricity demand. Natural gas is a poor alternative to coal, given its dramatic price spikes, supply vulnerabilities of recent years and its use by agri-business and for home heating nationwide. The ability of wind, solar and other alternatives to offset base load demand, at least in Wisconsin, may be many years off.

In our new reality of carbon constraints, our best hope to meet rising base load electric demand may be new nuclear power plant construction. The Wisconsin legislature and governor should act promptly in 2009 to repeal a state law prohibiting utilities from even considering new nuclear power plants.

Rural Wisconsin could face brown outs and power interruptions in just a few years, due to a shortage of generation and transmission capacity. Wisconsin is in one of ten regional electric systems covering North America. By 2010, Wisconsin’s region will fall below the 15 percent reserve standard for electric capacity according to the North American Electric Reliability Corporation (NERC). And, by 2016, NERC forecasts all ten regions will fall below the 15 percent margin.

It’s not hard to forecast an electric infrastructure perfect storm approaching Wisconsin farmers and agri-business. Even if we committed today to build base load plants and transmission lines to meet projected demand, we may not have time to design, permit, fund and construct the projects before the storm hits. With a cap and trade system, ever-ratcheting environmental regulations, and generation and transmission capacity shortages looming, predictions for electric rates to triple in a few years may be prudent or even conservative.

Ask your state and federal legislators what they will do to avoid a crisis in these three areas of rural infrastructure. Especially, ask what they will do to avoid suffering by our low-income, rural neighbors when electricity rates double and triple.

Senator Dale Schultz (R-Richland Center) represents a large region of southwest Wisconsin. Contact Schultz at www.senatordaleschultz.com or sen.schultz@legis.wi.gov.