Critical Review of “The Economic Impacts of Right of First Refusal (ROFR) Legislation”

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Critical Review of “The Economic Impacts of Right of First Refusal (ROFR) Legislation”, G. Roberts, published by The Pelican Institute, October 2024

The Federal Energy Regulatory Commission (FERC) has implemented various policies since the 1990s to enhance electric transmission planning and efficiency. In 2011, FERC Order No. 1000 removed the Right of First Refusal (ROFR) for regional transmission projects, aiming to promote competition. However, studies have shown that competitive bidding has not significantly reduced costs and has delayed infrastructure development.

The Pelican ROFR Report (2024) attempts to assess the impact of a Minnesota state ROFR law on electricity prices from 2012-2017 but contains major methodological flaws. The study incorrectly assumes that the removal of the federal ROFR was effective immediately in 2011, fails to account for key economic factors influencing price changes (e.g., fuel mix differences between Minnesota and Wisconsin), and provides implausible estimates, such as a 60% increase in Minnesota transmission rates due to the state law. Additionally, no competitive transmission projects were completed in the studied timeframe, making it impossible to assess their impact on retail rates.

The report also ignores Wisconsin’s unique transmission investment history, which improved grid reliability and reduced costs independently of FERC Order No. 1000. Given these issues, the Pelican ROFR Report is statistically invalid, misrepresents electricity sector operations, and fails to provide meaningful insights. More reliable methods, such as evaluating actual competitive bidding results, suggest that competition has not delivered cost savings and has instead slowed transmission development.

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, and Xcel Energy.

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