Oklahoma legislators are preparing to start exploring the controversial issue of ROFRs, the power of Right of First Refusal by electric companies. At the same time, one state agency is already studying the issues.
In an interim Oklahoma House hearing that will be streamed live over the Internet, the subject will be discussed and reviewed on Monday, October 23. The hearing will begin at 11 a.m. with a discussion of OneNet followed by an afternoon review of Performance Based Rates and Right of First Refusal of electric companies.
Oklahoma has an existing ROFR law but it only applies to small transmission projects. It is among 11 states nationally with a Right of First Refusal Law for utilities. Two bills were proposed in the most recent legislative session but they were later withdrawn. They would have expanded the ROFER ability by utilities.
An expansion would allowed larger transmission projects such as those necessary for major wind farm production and transmission of electricity. It would give utilities the right to refuse competition bidding for the construction of the projects.
Opponents contend it would create even another and perhaps wider ability of utilities to not only build the transmission projects, but the ability to collect guaranteed longterm income from their use.
What’s so controversial about ROFR laws? Critics contend they allow electric utilities the ability freeze out competition in the transmission line projects, thus raising concerns about higher energy costs for consumers. What critics prefer is competitive bidding that could be overseen and ultimately decided by the grid operator.
Ari Peskoe of the Harvard Law School Environmental and Energy Law Program is one of those critics.
“If we give the utility industry a monopoly, our transmission system is going to evolve to meeting utilities’ needs—and those needs are not always aligned with public interest or with the clean energy transition.
Oklahoma legislators aren’t the only state officials studying the issue. So is the Oklahoma Corporation Commission, which approved a “Notice of Inquiry” on August 1 of this year. A spokesman indicated at the time that the study was “routine” and not anything special.
The inquiry, according to the approved inquiry is “to examine alternative ratemaking methodologies for and issues of electric public utilities, including but not limited to, performance based rates and right of first refusal.” It also lised at least six basic questions.
- What are the issues and or problems with traditional ratemaking practices that implemention of the proposed Alternative Ratemaking would solve?
- What additional benefits would be passed through to customers, and what additional benefits would be received by utilities with the implementation of the proposed Alternative Ratemaking?
- How would the implementation of the proposed Alternative Ratemaking more efficiently align the interests of the utilities, ratepayers, and shareholders than through traditonal ratemaking?
- What impact would the implementation of the proposed Alternative Ratemaking have with regards to the participation of utilities in the Southwest Power Pool?
5. Actions in other states:
a. Identify other states that have adopted a form of Alternative Ratemaking.
b. Include statutory citizations and/or rules implementing the Alternative Ratemaking in those states.
c. Describe any benefits or issues seen by the utility, customers, customer advocates, intervenors, and the regulatory agency following implementation of the Alternative Ratemaking methodology in these states.
6. To the extent a party opposes a move from the traditional ratemaking practices, what concerns does such a potential move create, whether in general or with regard to a specific Alternative Ratemaking plan?
The Corporation Commission’s study includes several questions about Right of First Refusal.
- How would a ROFR on 300+ kV transmission projects provide greater benefits to Oklahoma utility ratepayers?
- Describe the benefits and implications of a ROFR for 300+ kV transmission projects versus the SPP competitive bidding Order 1000 process.
- How does our current system of competitive bidding compare to ROFR on saving utility ratepayers money?
- How would your company differentiate between transmission projects over 300kV?
- What is your company’s interaction between planning and building transmission projects and the SPP planning processes?
- Does your company plan and/or build/construct transmission projects in Oklahoma over 300kV outside the SPP planning processes?
- How would a ROFR on 300+kV transmission projects impact the Commission’s ability to regualte the customer rates and proposed transmission projects of IOUs?
Comments to the questions were due by Oct. 1 of this year the Commission scheduled a technical conference for Nov. 9 at 1:30 p.m. in the Concourse Theater, Suite C50 of the Will Rogers Memorial Building in the Capital Complex.
The technical conference will be followed by a public meeting on Feb. 6, 2024 at 1:30 p.m. in the same location whwere the issues and comments will be considered by the three Corporation Commissioners.