Dramatically expanding the high-voltage grid is a top priority to address surging demand from data centers, industrial growth, and electrification. In the U.S., most high-voltage projects are decided through transmission planning processes. Particularly in the wake of FERC’s Order 1000, the transmission planning policy discussions have often centered on longstanding disagreements over competition versus incumbent utility control. The debate has intensified with two recent FERC filings — one urging FERC to suspend or scale back market competition; the other to expand it.
Let’s set aside the first proposal, which would limit competition by restoring incumbents’ right of first refusal (ROFR) for power lines in regional transmission plans. Instead, let’s focus on two areas of potential common ground for accelerating the high-capacity buildout: the need for clearer guidance on how antitrust law applies to transmission development, and the need for a workable framework for interregional and cross-interconnection transmission.
As to the first, a Grid Strategies report, sponsored by a coalition of transmission owners, investors, and public power utilities, argues that antitrust policies and transmission planning rules, particularly FERC Order 1000, limit the kind of information sharing needed for efficient investments in the U.S. high-voltage grid. The recommendation that FERC should reinstate a federal ROFR was central to the report, but the report’s conclusions regarding federal antitrust law are worth considering.
The report describes two types of collaboration that Grid Strategies favors but maintains may be barred by antitrust policies: 1) utility joint ventures to develop specific transmission projects; and 2) coordination among competitors on which projects should move forward. Antitrust law treats these two types of collaboration very differently.
On the one hand, project-specific joint ventures among competitors can align incentives, spread risk, and enable projects that might not otherwise move forward. According to Mark Niefer, a former deputy chief legal adviser in the Department of Justice’s Antitrust Division who teaches at George Mason Law School, joint ventures “can, with appropriate safeguards, facilitate the construction of additional or lower-cost transmission capacity, thereby inducing greater competition among generators.”
On the other hand, coordination among competitors over which projects should be built raises a more familiar antitrust concern — namely, output restrictions — that Niefer characterizes as “the greatest risk to competition.” The Niskanen Center has asked the DOJ to formally confirm that nonexclusive transmission joint ventures are generally procompetitive and consistent with antitrust principles.
At the same time, the current ROFR debate, which focuses on projects selected by regional transmission plans, overlooks the potential source of the largest system-wide benefits from new high-voltage transmission: Evidence suggests that interregional and cross-interconnection transmission projects can most efficiently deliver the greatest gains for affordability and reliability.
There are signs that advocates of ROFRs for regionally approved transmission may be more open to competition for interregional and cross-interconnection projects. Even the 2024 Grid Strategies report, which called for a federal ROFR for regionally approved projects, avers that “[i]n areas with no or little existing transmission, such as offshore networks and interregional lines, there is likely to be a greater role for independent developers and transmission competition. In those cases, there is less interaction with the existing network and rights of way.”
Similarly, in a 2021 FERC filing, Exelon Corporation suggested that competitive processes may make sense for high-capacity, high-voltage interregional greenfield projects.
While many traditional advocates of ROFRs for regional transmission projects may be more open to competition for interregional and cross-interconnection transmission projects, there is no formal framework for interregional/cross-interconnection planning. And that’s an opportunity for FERC to initiate an interregional planning rulemaking to address, among other things, cost allocation for multiregion projects, reduce regulatory barriers to HVDC development, and improve coordination across RTO and non-RTO regions.
