Milwaukee mulls municipalization of electric utility

Milwaukee is considering a bond-financed municipalization of its electric utility, which is currently run by investor-owned We Energies, to give the city more say on rates, which it claims have increased.

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In a municipalization, the municipality acquires the assets and operations of an investor-owned company through a negotiated sale or condemnation, often issuing revenue bonds to finance the purchase, allowing the local government to own and operate the utility.

“Revenue bonds are the typical and really the most common financing tool” for the acquisition of utility system assets during municipalization, said Ursula Schryver, senior vice president at the American Public Power Association. “And that’s because, obviously, electric utilities are revenue-generating assets. They generate predictable cash flow.”

Milwaukee officials are considering creating a task force to develop a feasibility study, Alderman Robert Bauman said in a recent meeting of Milwaukee’s Public Transportation, Utilities and Waterways Review Board.

“We do expect We Energies to fight us,” Alderman Alex Brower told The Bond Buyer. “We are coming at them existentially, as we should. … Rates are obviously the biggest piece of this. We are frankly sick of rate proposals being made behind closed doors.”

Brower said in the midst of an affordability crisis, electricity bills for Milwaukee residents have been surging. Giving residents more say in their electricity rates was part of the socialist alderman’s platform when he was voted in after a special election last year, he said. 

“We want to do what we can to mitigate any harm from the climate crisis, as well, and we do believe that we should switch to a renewable energy economy,” he said. “And obviously, the shareholders, being driven by profits, have not been moving fast enough to address the climate crisis.”

Brower confirmed the city would issue revenue bonds to acquire any electric utility assets if municipalization proceeds.

Three We Energies spokespeople contacted by the Bond Buyer did not respond to requests for comment.

“Generally speaking, the primary difference between investor-owned utilities and public power or municipal-owned utilities is the profit motive,” said Marissa Gillett, former chairman of Connecticut’s Public Utilities Regulatory Authority and now a senior fellow at the American Economic Liberties Project, a nonpartisan policy nonprofit that supports antitrust reform.

“Investor-owned utilities have a fiduciary duty to drive a profit toward their shareholders,” she said. “And that profit motive in the utility space is derived from the return on equity … which investor-owned utilities earn on all capital infrastructure. 

“That incentive for an investor-owned utility to sometimes overinvest in capital infrastructure in order to drive its profits can be a key distinction between the business model of an investor-owned utility versus a public power (that is) municipal-owned,” Gillett said.

The growth of data centers in Wisconsin has only exacerbated that dynamic, she said. 

“Data centers are a really interesting layer of this for a couple of reasons,” Gillett said. “Back to that profit motive. … Data centers are going to drive the need to build out the grid more, whether it’s more poles and wires or more generation. And I think most folks who aren’t in the industry assume that the utility is going to challenge the forecasts that come in from the data centers.” 

Data center developers “are sort of notorious at this point” for forum-shopping, pitting different states and municipalities against each other to get the best deal, she said. 

“The problem with the energy world is, it takes a while to build stuff, and so the utilities are starting to overbuild the system,” she said. “They say to their regulator, ‘Well, we have 50 gigawatts of projected demand, and so we need to get started right now.’ Well, it might be that 1/100th of that demand will actually come to fruition, because the data centers are not all going to locate there.”

And yet, she said, “the utilities absolutely will build it, regardless of whether the data center is going to come, because the business model tells them to. They get recovery on any dollar that they spend.” 

Legal checks — requirements that the buildout be “prudent and reasonable” — don’t matter, Gillett said. “They’re not judged based on whether the infrastructure is used correctly, or fully subscribed. … (And) it’s ratepayers who are going to have to be on the hook for it, not the utility.”

In April, the state Public Service Commission overhauled We Energies’ tariff to protect ratepayers from data center costs. As part of those changes, data center developers whose bond ratings fall below A-minus were required to make certain financial guarantees to protect ratepayers. 

Oracle, which is building a Stargate data center in Port Washington, a suburb about 30 minutes north of Milwaukee, sued the Public Service Commission last month over those changes. Oracle has a triple-B rating with a stable outlook from Fitch Ratings and the same rating from S&P Global Ratings, but with a negative outlook.

In the lawsuit, Oracle, which has a market capitalization of $378.9 billion, complained, “the financial security/credit support requirements the commission ultimately approved will impose significant costs upon Oracle, which could exceed $100 million annually.”

PSC commissioners had not only increased the credit rating threshold, but also removed We Energies’ ability to waive the financial support requirements at its sole discretion. We Energies appealed the commission’s final decision shortly before Oracle filed its lawsuit. 

Alderman Brower said We Energies has proposed new infrastructure, including power plants, and “it’s not out of the question” that courts could side with We Energies and Oracle.

“This is all the more reason why we need to have utilities under public ownership,” he said. “So the people, through their elected representatives or directly, are making decisions about how these utilities operate.”

In a January 2025 report, The Brattle Group, an economic consulting firm based in Boston, urged caution around municipalization, saying among other things that over the last 25 years, about 92% of municipalization efforts have fallen short in some way — either through rejection by voters, abandonment by the municipality or decisions to sell municipalized utilities back to the original investor-owned firm.

Brattle noted of five municipalizations between 2000 and 2025, the utilities acquired tended to be small: one served 4,900 customers, and two served communities in Alaska with less than 75 customers each. And between 2013 and 2025, 21 municipalization efforts fell short.

The firm further warned “municipalization can be lengthy, litigious, and costly.” 

Brattle staff declined to comment on Milwaukee’s municipalization, “as we are working with an involved party on a different matter,” a spokesperson said. 

“Obviously, communities start the municipalization process because they are unhappy with the current service that they’re receiving,” said the APPA’s Schryver. “So the goal of starting municipalization isn’t always to form a utility. Sometimes the real value is understanding the options that are available and creating leverage to secure a better outcome for the community.”

Sometimes initiating the process gives communities leverage in negotiations over franchise agreements, or allows them to secure commitments for better service, lower rates, economic development or increased renewable energy, she said. 

“The decision to stop the municipalization process doesn’t necessarily mean that it was a failure,” Schryver said. “It just means that the community explored its options and either got the concessions that they needed or determined that it wasn’t feasible for their community.”

She added, “It’s somewhat disingenuous for anti-municipalization advocates to say that they typically fail, because often the reason that some of these efforts fail is because the incumbent utility spends an inordinate amount of money to defeat the effort. It’s not necessarily that it doesn’t make sense for the community; it’s that there are PR campaigns, legal battles that the incumbent utility will utilize to encourage the community to to drop its effort.”

The American Economic Liberties Project’s Gillett pointed to a recent ballot initiative in Maine, the Public Power Initiative, that would have created the Pine Tree Power Co. from the assets of Central Maine Power Co. and Versant Power. 

“Ultimately, the PACs that were aligned with the regulated utilities in that state outspent proponents of the measure,” and defeated it, Gillett said. 

A report by the Open Markets Institute, a policy, legal and market structure nonprofit, found opponents of municipalization outspent proponents by 34 to one.

Regarding some of Brattle’s criticisms, Brower pointed out Wisconsin’s municipal utilities are subject to the Public Service Commission’s oversight, so a municipalized electric utility in Milwaukee would get the advantage of third-party review of operations and costs as well as local accountability.

“There are infinitely more opportunities for participation and accountability when the utility is locally owned and operated,” he said.

As for Brattle’s concern about exploration costs, including legal, engineering and consulting, Schryver said feasibility studies typically are paid for from the municipality’s budget, appropriations from city council, or through fundraising by community groups.

St. Petersburg, Florida, just approved a $590,000 feasibility study, she noted, and Clearwater, Florida, conducted a $500,000 study. Consultants typically charge around $100,000 for a preliminary study, and more detailed studies range from $200,000 to $500,000, she said.

“It’s important to do a thorough analysis to make sure that it makes sense for the community,” Schryver said. “It’s better to spend some money upfront to do the analysis rather than not do a good job with that, and then realize further down the line after you’ve invested a lot of money that it doesn’t actually make sense. 

“So the feasibility study is critical, and then the education of the community and stakeholders, and just having that community support, that’s critical,” she said.

Milwaukee’s general obligation bonds are rated A-plus by Fitch, A3 by Moody’s Ratings and A-minus by S&P. The outlooks are all stable.

According to Public Service Commission data, in June, the average bill was $132.25 for a Milwaukee customer using 600 kilowatt-hours of energy, up from $124.95 in June 2025 and $118.32 in June 2024.