Expanding the high-voltage grid to meet rising demand from data centers and industry is a top priority, yet the United States faces significant hurdles in building the necessary infrastructure. Most high-voltage projects in the country are decided through transmission planning processes. Recent filings before the Federal Energy Regulatory Commission (FERC) have intensified a long-running debate centered on the balance between market competition and control held by incumbent utilities. [1] Transmission Grids: Collaboration, Competition, and a Path Forward
Competition versus incumbents
The discussion gained urgency with two separate FERC proposals: one urging the agency to scale back market competition by restoring the right of first refusal (ROFR), and another calling for greater competition. A report sponsored by a coalition of transmission owners and investors argues that current antitrust policies restrict the information sharing necessary for efficient grid investments. It suggests that FERC should reinstate a federal ROFR for power lines selected by regional transmission plans.
However, the report also notes that federal antitrust law treats different types of collaboration very differently. It identifies two forms of collaboration that could be beneficial but are currently restricted: utility joint ventures to develop specific projects and coordination among competitors on which projects should move forward. Mark Niefer, a former deputy chief legal adviser in the Department of Justice’s Antitrust Division, explains that project-specific joint ventures can align incentives and spread risk, potentially lowering costs for generators. In contrast, coordination on which projects to build carries a higher risk of restricting output, which Niefer characterizes as “the greatest risk to competition.”
The current debate over ROFRs often overlooks the potential for interregional and cross-interconnection projects to deliver the greatest system-wide benefits. These high-capacity lines can most efficiently deliver gains for affordability and reliability. Evidence suggests that advocates of ROFRs for regionally approved transmission may be more open to competition in areas with little existing infrastructure, such as offshore networks. Similarly, Exelon Corporation has suggested in a 2021 filing that competitive processes may make sense for high-capacity, high-voltage interregional greenfield projects.
Building a new framework
Despite the agreement that interregional and cross-interconnection projects are vital, there is no formal framework for planning them. FERC has an opportunity to initiate a rulemaking to address this gap. Such a rule could define cost allocation for multiregion projects, reduce regulatory barriers to high-voltage direct current (HVDC) development, and improve coordination between regions operated by Regional Transmission Organizations (RTOs) and those that are not.
Developing a dedicated planning framework for interregional connections could resolve the regulatory uncertainty currently stifling these projects. While the push for a federal ROFR focuses on existing regional plans, a parallel effort to structure interregional planning could unlock different efficiencies. The Niskanen Center has asked the Department of Justice to confirm that nonexclusive transmission joint ventures are generally procompetitive, which would support a broader shift toward competition in these areas. [2] Do You Have To Renew Home Insurance Every Year?
