Competition for Electric Transmission Line Projects is Saving Consumers Millions of Dollars

We’re always looking for ways to save money on our electric bills. There’s one way to save money that doesn’t involve freezing in winter or sweating in summer – using a competitive bidding process to select who will build new electric transmission lines. It may not sound exciting, but competition is a proven way to save you money – millions of dollars, in fact. Let’s look at some real-world examples.

Real-World Savings from Competitive Bidding

Several states have seen dramatic savings from allowing competitive bids for transmission projects. Here’s a closer look:

Kansas and Missouri: The 94-mile, 345-kilovolt Wolf Creek to Blackberry transmission line was put out for competitive bidding. The winning proposal saved ratepayers $58 million by selecting the least expensive option without compromising quality.

Missouri: In October 2023, the Missouri Fairport to Denny Transmission Project was awarded through competition. Thanks to this competitive bidding process, Missouri consumers saved significantly.  Without competition, the project would have cost more than double the winning bid, with the original estimate at $161 million compared to the final $74 million. In addition, Missouri ratepayers gained extra protections and benefits through three cost caps provided thanks to competition.

Oklahoma: The 48-mile Minco-Pleasant Valley Draper transmission line, a 345 kV project, was competitively bid, resulting in a cost savings of $26 million. Oklahoma regulators selected the least costly proposal, proving again that competition reduces costs for large-scale transmission projects.

New Jersey: In the largest competitive bidding process for a transmission project in the country, New Jersey saved $900 million on a project that will now provide lower-cost electricity to millions of residents. Recently, the New Jersey Board of Public Utilities initiated a second round of competitive projects, which are expected to save ratepayers billions more in the years ahead.

New York: The Empire State Transmission Line was the first competitively bid transmission project awarded and built in New York, saving $500 million. This project was selected through the New York Independent System Operator’s (NYISO) competitive process, setting a precedent for cost-effective transmission development in the state.

The Potential for Billions in Savings

According to the Electricity Transmission Competition Coalition, allowing competitive bidding in transmission projects can lead to cost savings ranging from 15% to 60%. In addition to reducing costs, competitive processes can bring much-needed innovation to the grid and help connect renewable energy sources.

Assuming just 33% of new transmission projects are competitively bid with an average savings of 40%, consumers could save $277 billion by 2050. And if all new projects were competitively bid, the potential savings are projected to reach $840 billion by 2050.

Despite Savings Some States Seek End to Competition

Despite these demonstrated and significant cost savings, some states want to do away with competition for these projects. States including Illinois, Kansas, Missouri, Oklahoma and Iowa may consider legislation called “Right of First Refusal (ROFR)” which gives incumbent utilities exclusive rights to these multi-billion-dollar projects without having to go through a competitive bidding process.

ROFR not only eliminates savings it increases costs. For example, Minnesota passed a ROFR law.  As a result, the construction cost of one major transmission line ballooned—more than doubling—from initial estimates to an eye-popping $1.14 billion (Read more about the Minnesota ROFR nightmare).

Competition is Essential for Consumer Savings

The message is clear: competitive bidding saves consumers money, provides more efficient project options, and encourages innovation. Without competition, transmission costs are likely to rise as projects are awarded to a single, incumbent utility without alternative bids.

As more states embrace competition, American consumers are positioned to benefit from a more affordable, innovative, and resilient electricity grid.