The competitive solicitation policy in Order No. 1000, is not direct competition of the kind ordinarily understood to be beneficial to society. Rather, it is a form of “competition for the market” which results in winning bidders becoming a regulated monopoly. The processes can lead to costly oversight and underperformance under the resulting contract, due to the incentives inherent in the contracting process (i.e., the competitive solicitation process), rendering the result substantially similar to traditional regulation and, potentially, inferior due to: (1) high administrative costs and delay from added process; (2) the potential to distract the planning entities from their core mission; and (3) the loss of collaboration needed to develop the support for these types of large infrastructure investments.
The competitive solicitation processes, as implemented because of the competitive solicitation policy in Order No. 1000, has led to administrative costs and project delays. In addition, the competitive procurement processes deployed following the issuance of Order No. 1000 have not led to the identification of better regional transmission outcomes, which might be expected from traditional competition theory.
As the transmission system becomes larger and more complex, largely due to the uncertainties inherent in the transition to more intermittent resources dispersed geographically, the competitive procurement processes are likely to suffer from more costly design, implementation, and enforcement challenges. In addition, the competitive process likely conflicts with the necessary cooperative approach to planning and adaption needed by transmission developers and planners to effectively address new uncertainties and address system needs when arising on the integrated transmission grid.
This report was prepared on behalf of the DATA Coalition: Ameren Services, Eversource Energy, Exelon Corp., ITC Holdings Corp., National Grid USA, Public Service Electric and Gas Company, Xcel Energy.
Competitive Transmission: Experience To-Date Shows Order No. 1000 Solicitations Fail to Show Benefits