August 26, 2022

FTC and U.S. DOJ Urge FERC to Protect Competition in Electricity Markets

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

The FTC and U.S. DOJ have submitted a joint comment to the FERC in response to an April 2022 Notice of Proposed Rulemaking, Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, expressing concern regarding the impact of a possible reinstatement of a federal Right of First Refusal (ROFR) on competition in the market for providing electricity to consumers.
Under an ROFR, incumbent utilities have the exclusive right to own, construct, and operate transmission lines within their service territory, and competitive bidding is not allowed unless the incumbent declines to construct transmission lines. Such an ROFR existed until 2011, when it was eliminated in certain instances by FERC Order 1000, but the current Notice of Proposed Rulemaking envisions a “conditional” ROFR, which would require the incumbent transmission provider to establish joint ownership of new facilities.
The joint comment argues that the reinstatement of an ROFR will deprive consumers of the benefits of competition, “including lower rates, improved service, and increased innovation, leading to a more efficient, reliable, and resilient grid,” and also asserts longstanding antitrust policy that “generally disfavoring regulatory barriers to entry.” The comment also contends that the other proposals in the Notice of Proposed Rulemaking may meaningfully improve regional transmission development such that the ROFR would be unnecessary.

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