The Case Against Regional Transmission Monopolies

Abstract

Over the next decade, the US will need to build significant regional transmission infrastructure to achieve the country’s goal of net zero power by 2035. However, there is a significant barrier: the transmission system is almost entirely owned by private monopolies. As a result, the grid has grown not to serve the public interest but in accordance with the economic priorities of these monopolies, which are not incentivized to innovate, find efficiencies, or lower costs. Past attempts to encourage competitive bidding for regional transmission projects have been stymied by laws intended to protect the monopolies, including the right of first refusal (ROFR) to build regional transmission lines. After years of legal battles over the Federal Energy Regulatory Commission’s (FERC) removal of the federal ROFR, a circuit split has emerged over whether state ROFRs violate the Dormant Commerce Clause. This Article argues that the circuit split obscures the stronger legal analysis, which is that FERC’s withdrawal of the federal ROFR was within its exclusive jurisdiction under the Federal Power Act and thus renders state ROFRs per se invalid. Additionally, FERC must maintain the withdrawal of the federal ROFR despite monopoly pressure, as doing so would result in the blanket removal of both federal and state ROFRs. Lifting the gatekeeping effects of the ROFRs would finally allow more robust competition for regional transmission projects and facilitate building the decarbonized grid we need.

Keywords: energy law, environmental law, regulation, statutory interpretation, constitutional law, climate change