The Federal Trade Commission and the Department of Justice have submitted to the Federal Energy Regulatory Commission a joint comment urging it not to restore a right of first refusal that would enable incumbent electricity transmission owners to block competitors from bidding to design, construct, and own certain new interstate transmission facilities.
The Federal Energy Regulatory Commission, or FERC, is considering reinstating the right of first refusal, or ROFR – which was eliminated in certain instances in 2011 – as long as incumbent transmission owners agree to a joint ownership structure with one or more unaffiliated, non-incumbent partners. FERC issued a Notice of Proposed Rulemaking on April 21, 2022.
“Competition is still the best way to ensure that our electric grid is built out in a way that lowers rates, increases innovation, and improves sustainability and resiliency,” said Director of the Office of Policy Planning Elizabeth Wilkins. “Granting a right of first refusal for transmission upgrade proposals to incumbent monopoly electricity providers without first exhausting procompetitive alternatives ill serves electricity customers.”
The joint FTC-DOJ comment addresses the benefits and importance of competition and new entry for the design and construction of interstate electric transmission facilities. These facilities are necessary to ensure robust wholesale electricity markets and interconnecting renewable generation facilities. The comment notes that when FERC eliminated the ROFR under certain circumstances in 2011, it recognized the benefits to consumers of having competition for transmission design and construction. The comment urges FERC not to abandon competition, and it cites examples of where competition for transmission design and construction has resulted in lower costs and innovation.
The comment also supports proposals made in FERC’s Notice of Proposed Rulemaking to require that regional transmission planning be done on a sufficiently long-term basis, that planning involve state regulators to reduce disputes over cost allocation, that transmission planning for local projects be more transparent, and that neighboring utilities improve their interregional coordination. The comment also notes other procompetitive solutions offered by stakeholders in the ongoing proceeding, including creating an independent transmission monitor (or regional monitors) to limit the influence of incumbent utilities over the planning process.
The Commission voted 5-0 to submit the joint comment to FERC.