ROFRs—are they good for Oklahoma electricity consumers?


The debate is expected to swell soon in the Oklahoma legislature over a growing issue—Right of First Refusal.

ROFRs as they are commonly called are being urged by some state legislators. ROFRs would allow existing electricity-grid operators from refusing competitive bidding for expanded transmission projects. Those projects are ballooning across the nation as the government encourages more and more renewable energy systems. After all, you have to have some manner of connecting the wind or solar powered-driven electricity to transmission lines, right?

But the rub comes in when the existing utilities can deny competitive bidding for those projects. They have Right of First Refusal.

Oklahoma has two such measures in the legislature. SB498 by Sen. Lonnie Paxton is now in the hands of the Senate Energy and Telecommunications Committee where it has yet to be taken under consideration. SB1103 by Sen. Greg Treat was also assigned to the same committee. Durant Sen. David Bullard joined the effort Feb. 20 as a co-author.

Utility Dive reported that should Oklahoma adopt those bills into law, giving incumbent utilities a right-of-first-refuse to build transmission lines, it would be one of five states to join the movement.

State ROFR laws are holding back transmission buildout in MISO and must go  away

The movement is not without opposition. In a Feb. 24 guest column written for The Oklahoman, Josiah Neeley, a senior fellow of energy policy for R Street Institute, argued that such “Right of First Refusal” laws would result in increased electricity rates for what he called “bloated new transmission projects.”

Neeley contended the bills by Sens. Treat and Paxton would eliminate competition for new transmission projects in Oklahoma.

“SB 498 and SB 1103 work by giving each utility the exclusive “right of first refusal” (or ROFR) to build and operate new transmission projects in their territory. Once given this right, utilities would no longer have to compete to be able to build projects, and no other energy company would be able to do so,” wrote Neeley.

He also claims that a ROFR law in the state would lead to wasteful spending by utilities.

“Oklahoma law governing electricity should be based on what is good for the consumer, not what benefits monopoly utilities. Expanding ROFR would be a step in the wrong direction for the state.”