Capitol Fax.com - Your Illinois News Radar

Pritzker opposes fast-moving bill to hand Ameren a monopoly on building regional transmission lines

Posted in:

Illinois

* The governor has rarely used his veto pen, but we might possibly see that happen if this bill reaches his desk. This language proposal was included as a late Senate amendment on HB3445, the energy omnibus yesterday. It’s now awaiting House concurrence…

Illinois is only the latest in a string of states to consider “right of first refusal” bills pushed by incumbent utilities. The effort comes as investment in new transmission wires grows. Federal cash from the Inflation Reduction Act and actions by regional power-grid managers are leading to more spending on infrastructure to connect renewable power sources like wind farms in remote areas to population centers like Chicago.

Utilities, monopoly owners of local power grids, want to exert monopoly control, too, over the portions of interstate power lines within their service territories.

Advocates for competition say these laws will inflate costs of the projects, which could benefit from competitive bidding. Ultimately, ratepayers will cover those costs in their electric bills. Likewise, clean-energy advocates are concerned, worried that inflated costs of needed high-voltage connections will hold back renewable power development as rate shock leads to consumer pushback. […]

The sudden momentum didn’t emerge because of some newfound Ameren clout. Instead, the International Brotherhood of Electrical Workers moved yesterday to make passage of the Ameren bill a high priority in Illinois, sources say, with the international president based in Washington, D.C., making calls to Illinois lawmakers.

* These “right of first refusal” laws are popping up all over the place.

But, last August, the United States Justice Department and the Federal Trade Commission called on the Federal Energy Regulatory Commission not to allow this to happen…

The 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. This could mean that the design and construction of certain transmission facilities is less competitive, resulting in higher prices or lower 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 full comment is here.

* We’re talking big bucks here. Energy Wire…

The U.S. is on the cusp of a transmission boom, a high-voltage rewiring to enable the switch away from electricity generated with fossil fuel to a grid dominated by renewable energy and batteries. And the Midwest and Great Plains regions are poised for huge investments, said Sharon Segner, senior vice president of LS Power, a competitive energy developer.

Just in the Midwest, MISO approved $10.3 billion of new regional transmission last year to enable renewables and batteries to plug into the grid and boost reliability (Energywire, July 26, 2022). Another set of Midwest projects worth an estimated $24 billion could be approved next year. Ultimately, $100 billion of new high-voltage power lines could be approved across the grid operator’s 14-state territory this decade.

Since organized labor is backing the bill and organized labor gets just about whatever it wants at the Illinois Statehouse, and since it zoomed out of the Senate 41-9, you wouldn’t be wrong to expect that it will also fly out of the House. But 8 of the 9 “No” votes in the Senate were Democrats and several other SDems took a walk. Rank and file House Democrats are working to find the votes to stop it.

And the bill’s opponents have a major ally.

* From Gov. Pritzker’s office…

We oppose a measure that puts corporate profits over consumers.

They added that the bill would all but lock in rate increases for Ameren.

…Adding… From the AG’s office…

While we have not yet reviewed the language in detail, we echo comments issued by the Department of Justice and FTC, which state that the 2011 federal elimination of “Right of First Refusal” resulted in new benefits for consumers: lower rates, improved service and increased innovation. We are concerned about the impact that of a right of first refusal will have on consumers, as a right of first refusal generally increases transmission costs. Research has demonstrated that competitively-bid projects are typically more affordable, costing 40% less than projects that are not competitively bid. We are concerned that right of first refusal stifles competition and discourages new entry to the market.

posted by Rich Miller
Friday, May 26, 23 @ 1:01 pm

Comments

This bill is an abomination and completely contrary to the competitive and decarb goals of the state. Good for the governor.

Comment by New Day Friday, May 26, 23 @ 2:15 pm
Where was the Governor’s comment from?

Comment by Question.... Friday, May 26, 23 @ 3:54 pm
Why is the union pushing for this so hard. It sounds like the construction will happen no matter what. Why are they shilling for Ameren>

Comment by very old soil Friday, May 26, 23 @ 4:37 pm