In deciding not to review a Fifth Circuit Court of Appeals decision, the U.S. Supreme Court let stand a lower court ruling that found the Texas Right of First Refusal law is unconstitutional.
The case was Lake vs. NextEra Energy and the Supreme Court decided not to grant certiorari, which means the Justices agreed not to review the ROFR case. It prompted a statement from the Electricity Transmission Competition Coalition which called it a clear signal in support of transmission competition.
ROFR is being debated in Oklahoma where legislators withdrew two Right of First Refusal bills last legislative session. It prompted a recent interim legislative study as well as a Notice of Inquiry by the Oklahoma Corporation Commission. Both studies are looking into the pros and cons of ROFR, which would allow utilities to deny competitive bidding on major transmission line projects in the state.
In both studies and reviews, utilities in the state came out in support of a ROFR law.
“Courts across the country have held that ROFR laws are unconstitutional, and the Fifth Circuit got it right that the Texas law was unconstitutional,” said Paul Cicio, Chair of the Electricity Transmission Competition Coalition.
“Blocking new entrants from competing on transmission projects isn’t just unconstitutional, it’s anti-consumer, anti-free market policy that costs consumers billions of dollars in higher electricity rates.”
He said the Federal Energy Regulatory Commission should see this denial of cert as a clear signal in support of transmission competition. FERC has an opportunity to take action now in a pending complaint in Docket EL22-78 to ensure that the FERC-regulated grid operator in the Midwest no longer applies state ROFR laws when conducting transmission planning.
Since Order No. 1000 was issued in 2010 by FERC to usher in competition for ownership of new regional transmission lines, incumbent transmission owners have sought to pass what Cicio called “state protectionist, pro-monopoly laws” to block new entrants and competition. Cicio further charged that ROFRs put utility profits over captive electric consumers.
ROFR is gaining steam across the country. Utility Dive reported this week that several utilities, labor unions and environmental groups are encouraging FERC to adopt transmission planning rules to include a right of first refusal. Exelon, Pacific Gas & Electric and Xcel Energy were among those that sent a Dec. 7 letter to FERC.
“We support the Commission’s proposal for regional, long-term, scenario-based transmission planning and urge the Commission to issue, as soon as practicable, a final rule that will facilitate needed transmission investment,” the utilities and others stated in the letter.
