While the Oklahoma legislature handles a bill that started out as a Right of First Refusal Act to eliminate competitive bidding in the construction of major transmission lines by utilities, a national organization remains critical of efforts to eliminate mandated competition bidding.
The Electricity Transmission Competition Coalition charged that the latest inflation data release confirms that electricity prices continue to outpace the Consumer Price Index with electricity prices increasing by 3.6% compared to 3.2% for the CPI over the last 12 months. With the Federal Energy Regulatory Commission (FERC) poised to finalize its transmission planning rule as early as next month, the latest inflationary data should remind them of the importance of competition for new transmission projects.
Paul Cicio, Chair of the Coalition called the report “especially damning because electricity generation costs have fallen due to low natural gas prices, but transmission costs continue to accelerate.”
He said FERC can take immediate steps to reduce inflation and lower consumer prices.
“The only way to check the power of incumbent monopoly utilities and ensure the cost of electricity is affordable for households and businesses is to enforce Order 1000 and competitively bid large transmission projects.”
His Coalition contends that competitive bidding for electricity transmission projects has been showing to cut costs for consumers by up to 40%. The claim is based on a study by The Brattle Group which stated that if all new transmission projects were competitively bid at an average cost savings of 40%, ratepayers could save an estimated $840 billion by 2050. Transmission costs have grown as a share of the price of electricity, and only competition can bring the price of electricity back down.
The ETCC charged that incumbent monopoly utilities are against competition for the simplest reason of all—corporate profits.
“Utilities profit by applying a 10% to 12% rate of return6 on every dollar spent, with returns on their transmission investments
lasting for 40 years or more. Naturally, these wanna-be monopolies fear competition and have opposed federal
and state policies to advance competition.”
“The 2011 FERC Order No. 1000 was designed to usher in a new era of competition by eliminating the utility’s self-granted right of first refusal (ROFR). But, because FERC has failed to enforce Order No. 1000, or left gaps that wanna-be monopolies have seized upon, on a regional basis, only 3%-8% of all transmission projects have been competitively bid,” charged the ETCC.
Read more about the benefits of transmission competition in ETCC’s comprehensive report.