FERC competitive transmission reform fails to gain traction

A debate over whether to reserve large transmission projects for incumbent utilities is set to continue in 2026 as federal efforts to promote competitive bidding have failed to unleash a boom in new construction.

In 2011, the Federal Energy Regulatory Commission's Order 1000 mandated major changes to the US transmission-planning system with the goal of accelerating development of new projects. One of the order's provisions removed the federal right of first refusal (ROFR), which gave incumbent utilities the first opportunity to build regional transmission projects under FERC jurisdiction.

But that reform has not led to major reductions in the speed or cost of transmission construction. The Electricity Transmission Competition Coalition, which supports competitive bids, estimates that only 3%–8% of all transmission projects have come from such processes.

The Midcontinent ISO, which is conducting a major transmission build-out as part of its long-term planning process, has awarded just eight transmission projects through competitive bids since launching its first post-Order 1000 tender in 2016. MISO currently has six other projects with active requests for proposals.

Revisiting federal ROFR

Incumbent utilities have largely opposed Order 1000 and sought to encourage states to impose their own ROFRs, arguing that competitive bids delay construction times and have failed to yield the hoped-for cost savings. But former President Joe Biden's administration supported transmission competition, and in 2022 the Biden-era US Justice Department and Federal Trade Commission submitted a joint comment asking FERC not to restore the federal transmission ROFR.

Now, with President Donald Trump emphasizing the need to expand new transmission, some in the industry view the time as ripe for FERC to reconsider reinstating the federal ROFR. A FERC spokesperson said no one at the agency was available to speak on the matter.

Larry Gasteiger, executive director of transmission trade organization WIRES Group, said in a recent interview that restricting competitive transmission solicitations could help the Trump team achieve its goals. WIRES has publicly called for the return of the federal transmission ROFR.

"Frankly, speed and getting infrastructure built faster is a big emphasis of the administration right now, so I know they are on the lookout for any type of regulatory obstacles that may lengthen the time it takes to get needed infrastructure built," Gasteiger said.

"In my mind, that requires at some point an examination of why and how Order 1000 competitive transmission processes are inhibiting the ability to get transmission built faster," he added.

Davis Strobridge, interim director of regulatory strategy at transmission developer ITC Holdings Corp., in an interview echoed the assessment that Order 1000 has failed. "A regulation without results is just red tape," he said. "And Order 1000 has no results."

Strobridge agreed that reinstating the federal ROFR would facilitate the Trump administration's infrastructure build-out goal, although he said it remains unclear whether FERC will move down that path. "This should fall perfectly into their policy agenda," he said.

Strobridge said that regional grid operators often take about two years to conduct a public transmission solicitation, select a winner, and proceed to a contract. In addition, he said, the competitive process sets up an unnecessary adversarial relationship that hinders projects.

"As a regulated industry, when you provide a ROFR, it brings people together," Strobridge said. "Neighboring utilities aren't competing against each other. We're sharing best practices; we're collaborating. When you inject competition into that space, those conversations stop happening."

Incumbents' advantage

One reason that competitive transmission solicitations represent such a small share of overall projects is that current FERC rules feature numerous carve-outs. Among the projects that do not need competitive bids are those deemed "local," those that meet an immediate reliability need, and improvements or replacements of existing utility-owned infrastructure.

Johannes Pfeifenberger, a principal at consultancy Brattle Group, in an interview estimated that at least half of annual transmission investments in the US reflect rebuilds and upgrades of existing infrastructure and thus are not subject to competition. In addition, he said that many greenfield projects are sited entirely on incumbent utility-owned rights of way as a means of avoiding the competitive bid requirement.

"It's clear that incumbents will play a very significant role in modernizing the grid we have," Pfeifenberger said.

Still, Pfeifenberger said Brattle has studied competitive transmission solicitations in the US and abroad and found that competitive bids reduce costs by as much as 20%–30%. He also noted that incumbent utilities' projects are not immune to delays and cost overruns.

"Competitive processes have a role to play," Pfeifenberger said. "They are useful for controlling costs and schedules. They can't be used for all transmission we're building."