They Said “No” to Cost-Saving Competition for Electric Transmission Projects. What Happened Next Should Scare You
Victor Frankenstein regretted the monster he created and set loose on the world. Despite the good intentions of its creator, the monster wrought destruction wherever it went.
Not all monsters are created in the lab and not all are fictional. Public policy, even born from good intentions, can wreak havoc unintended by its creators.
Legislators in Minnesota unleashed such a monster that is now creating a nightmare for consumers there.
The state passed a law known as the "Right of First Refusal" (ROFR), giving the incumbent utility the exclusive right to build new transmission lines without any competition from other developers. 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. And guess who pays for those cost overruns? There’s no waking from that nightmare when Minnesotans open their electric bills each month.
Other states are considering following Minnesota’s path with their own ROFR laws. Recently Iowa, Missouri, Oklahoma, Illinois and Kansas all considered versions of what happened in Minnesota – and they may try again. That’s why consumers like you need to be prepared and ready to speak out, lest you suffer Minnesota’s fate.
Cost-Saving Competition Results in Best Outcomes for Consumers
Dr. Frankenstein erred in thinking he could cheat the natural order of things. In a free-market society, the natural order calls for competition. Trying to eliminate cost-saving competition can only deliver a monstrous result.
The race for affordable, reliable energy should never be preordained. Let's make sure it's a competition where the best ideas and lowest costs come out on top—because, in the end, it's consumers who should win.
Imagine watching a race where the outcome is already decided. One runner stands alone at the starting line, casually jogging towards the finish, knowing they don’t have to break a sweat. Meanwhile, in a different race, two evenly matched runners are side by side, pushing each other to their limits, striving for peak performance. Which race is more thrilling? More competitive? More efficient? Features stronger athletes?
This same dynamic plays out in electric transmission construction, where the stakes are much higher than just a trophy. Instead, the reliability and affordability of the electric grid is at stake. The process of selecting who builds high-powered electric transmission lines can either look like fierce competition between elite athletes or a predetermined outcome with an entitled winner, with no regard for performance. The difference is critical for consumers.
When only one runner (or developer) is allowed in the race, they don’t have to worry about anyone catching up. This lack of urgency leads to inefficiencies and soaring costs, and Minnesota is paying the price. The absence of competitive bidding there means there was no incentive for the utility to find the most cost-effective, timely, or innovative solutions. Minnesota’s consumers will ultimately shoulder the burden of these inflated costs on their energy bills for years to come.
Here's How Cost-Saving Competition Leads to Affordable, Reliable Electricity
When multiple developers compete for the opportunity to build transmission lines, something powerful happens—just like in a close race, every competitor pushes themselves to perform at their absolute best. Here are the key benefits that competition brings to the table:
Lower Costs: Studies show that allowing competition in transmission line construction can save consumers 20-30% compared to sole-source projects. Developers who are competing for the bid are motivated to offer the best possible price, which translates to real savings for consumers.
Greater Efficiency: When developers know they’re being compared to their competitors, they streamline their processes and deliver projects faster. In states without Right of First Refusal laws, transmission lines are often built ahead of schedule, helping to prevent bottlenecks in the grid.
Improved Reliability: Competition doesn’t just reduce costs; it improves the overall quality of the work. Developers bring forward their best designs, ideas, and technologies, all aimed at ensuring that the transmission lines they build are durable, reliable, and future-proofed for the energy needs of the next generation.
The Path Forward
Consumers in Minnesota are learning a hard lesson about the consequences of their Frankenstein experiment with sole-source bidding, but other states can avoid its fate. With the right policies in place, we can make sure energy infrastructure is built with both performance and price in mind, securing a better deal for everyone.
The race for affordable, reliable energy should never be preordained. Let's make sure it's a competition where the best ideas and lowest costs come out on top—because, in the end, it's consumers who should win.