Why Electric Transmission Lines are Important to Illinois Consumers
And how action by the Illinois General Assembly could result in higher electricity prices
Transmission is the movement of bulk electricity from power generators from both inside and outside Illinois to consumers. Transmission lines are an expensive component in the infrastructure that gets power from where it is generated to where it is needed. As technology changes, populations expand or shift and new sources of power generation become available, new transmission lines are needed to keep the grid reliable.
Major construction on new transmission lines is planned throughout the Midwest, with costs estimated to be as much as $100 billion. The cost of transmission lines is factored into consumer’s electricity bills.
“Right of First Refusal (ROFR) Legislation and Transmission
Right of First Refusal legislation, or ROFR, gives special rights to utilities, like Ameren, by limiting competition on who can build electric transmission lines and automatically grants current utility providers the right to build any new transmission lines in their service area. Tens of billions of dollars in new transmission lines are slated for development in the Midwest in the coming years.
Consumers Save Money When there is Competition for New Transmission Line Construction
Consumers could save between 20-30% from competition for the construction of new transmission lines according to a study by the Brattle Group.
These savings are in addition to Brattle’s findings that competition drives innovation which further mitigates cost and risk to consumers. Since the Brattle report, actual experience with transmission competition has shown the possibility of even higher consumer cost savings.
“Jim Chilsen, spokesman for the Citizens Utility Board of Illinois, told the Prairie State Wire, ‘We have grave concerns that Ameren is trying to slip a rate-hike proposal through at the last minute. Amendment 4 to House Bill 3445 would give Ameren a monopoly over transmission projects, at potentially higher, more lucrative prices for the company. This proposal will likely raise costs and is bad for consumers.’”
Read the full article about why ROFR is bad for Illinois consumers.
“The Illinois Commerce Commission believes that competition among transmission developers spurs innovative results and helps control costs.”
--Comments of the ICC to the Federal Energy Regulatory Commission
Some Illinois Utilities Want to Prevent Competition for Transmission Lines
Some incumbent utilities like Ameren and ComEd want to stop the competitive development of transmission. In short, they want to be the only ones with the right to build transmission lines in their service areas in Illinois.
“…[eliminating] the opportunity to bring competitive suppliers and competitive pressures into play for the benefit of consumers is the wrong policy direction.”
Illinois Legislature Sided with Incumbent Utilities Instead of Consumers
Unfortunately, the Illinois legislature voted to eliminate transmission line competition, siding with Ameren and ComEd over consumers. In May the legislature passed a law called “ROFR” which stands for Right-of-First-Refusal.
ROFER means there is no competition for billion-dollar transmission line construction – unless the incumbent utility company in the service area “refuses” to build. Under ROFR in Illinois Ameren or ComEd get the contracts if they want them, without submitting competitive bids.
Governor Pritzker Vetoed ROFR
Governor Pritzker vetoed ROFR but Ameren and ComEd are expected to mount a heavy lobbying effort to persuade the legislature to override the governor’s veto in October.
Others in Illinois also recognize the value of competition. The Illinois Citizens Utility Board stated that merchant electric transmission projects and their enhancement of competition would “exert a downward pressure on electricity and transmission costs for Illinois consumers, while also improving the quality of service provided by enhancing the resiliency and reliability of the grid.”