With infrastructure the talk of the town in D.C., the Electricity Transmission Competition Coalition (ETCC) and other organizations are pushing Congress to support competition and oppose monopolies on new electric transmission projects. As transmission spending from investor-owned electric utilities rose dramatically over the last decade, the Coalition was crystal clear in their ask: “The legislation should ensure that electric transmission projects will be competitively bid, thereby reducing ratepayer cost increases that will result from increased transmission capital spending.”
The Energy Choice Coalition supports this call on Congress to not buckle to monopolies, and instead allow for competition that lowers consumer costs and increases cleaner and more reliable energy sources.
Read more about the letter to Congress below or at R Street.
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“Dear Chairman Manchin, Chairman Pallone, Ranking Member Barrasso and Ranking Member McMorris Rodgers:
On behalf of the Electricity Transmission Competition Coalition (ETCC) and the undersigned organizations, we urge you to protect electric ratepayers in any electric transmission infrastructure legislation, including H.R. 3684, the Infrastructure Investment and Jobs Act, now being debated. The legislation should ensure that electric transmission projects will be competitively bid, thereby reducing ratepayer cost increases that will result from increased transmission capital spending.
The transmission component of our members’ electric bills has soared. According to the Edison Electric Institute (EEI), transmission spending from investor-owned electric utilities surged 42 percent from $17.7 billion in 2013 to $25.1 billion in 2019. U.S. demand increased by 2.3 percent. Transmission projects subject to competition represent only about 3 percent of U.S. transmission investments between 2013-2017. Transmission additions subject to competition, however, have projected reductions of up to 33 percent and include a variety of other ratepayer protections.
The undersigned are not opposed to appropriately planned expansions of the transmission grid or transmission enhancements. We do, however, oppose transmission monopoly market power that leads to transmission capacity additions that are not holistically planned and costs that are not checked against alternative transmission and non-wires solutions. We support the addition of needed transmission capacity at the lowest possible cost.
It is important to remember that for every dollar spent on transmission, ratepayers will carry those costs every year for 40-50 years, plus maintenance costs that increase annually, plus a utility rate of return on equity in the range of 9-12 percent per year. The costs are significant.
A Princeton University study addresses the cost of President Biden’s net-zero emissions goal. It states, “High voltage transmission capacity expands ~60% by 2030 and triples through 2050 to connect wind and solar facilities to demand; total capital invested in transmission is $360 billion through 2030 and $2.4 trillion by 2050.”5 If transmission investments are competitively bid, consumers could avoid hundreds of billions of dollars in higher electricity costs.
In 2011, FERC issued Order No. 1000 to usher electric transmission competition into national policy. FERC took the position that transmission competition was in consumers’ interests and the public interest. FERC ordered that “rights of first refusal” for incumbent transmission owners be removed from all federal tariffs across the country. FERC’s order requiring that federal transmission expansion processes should have competitive pressures to ensure just and reasonable rates was upheld by the United States Court of Appeals for the DC Circuit and appellate courts across the U.S. But successful lobbying efforts by monopoly utilities at the state level quickly led to the enactment of additional state “right of first refusal” laws across the country, which preserve or reinstate transmission monopolies for incumbent transmission owners. Where state rights of first refusal have not been put in place, local planning has supplanted regional planning, due in part to necessary local upgrades to an aging grid, but also as an effort to circumvent transmission competition under FERC Order No. 1000. Some utilities have relied on local planning as a means to avoid competition, contrary to the intent of FERC Order No. 1000, and consumers are paying the price through increased transmission costs.”