Justice Department and the FTC Issue Joint Comment to Federal Energy Regulatory Commission to Preserve Regional Electricity Transmission Competition.

The Justice Department and the Federal Trade Commission have issued a joint comment to the Federal Energy Regulatory Commission (FERC) in order to preserve regional transmission competition.

United States / National – On August 17, 2022, the Department of Justice and the Federal Trade Commission filed a joint comment with the Federal Energy Regulatory Commission (FERC) urging it not to restore a right of first refusal that would allow incumbent electricity transmission owners to prevent competitors from bidding on certain new interstate transmission facilities.

The Federal Energy Regulatory Commission (FERC) is considering restoring the right of first refusal, or ROFR, which was eliminated in some cases in 2011 as long as incumbent transmission owners agree to a joint ownership arrangement with one or more unaffiliated, non-incumbent partners. On April 21, 2022, the FERC released a Notice of Proposed Rulemaking. This could imply that particular transmission infrastructures’ design and construction are less competitive, resulting in higher prices or inferior quality.

“We commend FERC for undertaking this rulemaking, which is aimed at encouraging needed regional transmission planning and construction,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The rulemaking comes at a critical time when the nation is undertaking major grid modernization efforts, and competition can make transmission design and construction less costly, more resilient, and more innovative for the American consumer. Thus, we urge FERC not to abandon competition, through the reinstatement of a federal right of first refusal, but to first evaluate the effects of its other proposals, which are consistent with competition, on achieving its goals.”

The joint remark highlights the advantages and significance of competition and new entrants in the design and development of interstate electric transmission facilities. These facilities are required to support stable wholesale power markets and to connect renewable generation facilities. The response emphasizes that when FERC removed the ROFR under certain conditions in 2011, it recognized the benefits to consumers of having competition for transmission design and construction. The statement asks FERC not to abandon competition, citing examples of how competition in transmission design and construction has resulted in lower prices and innovation.

The comment also supports proposals made in FERC’s Notice of Proposed Rulemaking to require regional transmission planning to be done on a sufficiently long-term basis, to involve state regulators to reduce disputes over cost allocation, to make transmission planning for local projects more transparent, and to require neighboring utilities to improve their interregional coordination. The statement also mentions other procompetitive alternatives proposed by stakeholders in the ongoing case, such as establishing an independent transmission monitor (or regional monitors) to reduce incumbent utilities’ influence over the planning process.