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* Background is here if you need it. From the Iowa Supreme Court…
In this appeal, we must decide whether the district court correctly ruled that qualified would-be competitors in the electric transmission market lacked standing to challenge new legislation that blocks them from bidding against existing Iowa operators on future projects. The statute at issue, Iowa Code section 478.16 (2020), grants “incumbent” Iowa [electric utilities] a right of first refusal (ROFR) that forestalls competitive bidding. […]
We are not surprised the ROFR lacked enough votes to pass without logrolling. The provision is quintessentially crony capitalism. This rent-seeking, protectionist legislation is anticompetitive. Common sense tells us that competitive bidding will lower the cost of upgrading Iowa’s electric grid and that eliminating competition will enable the incumbent to command higher prices for both construction and maintenance. Ultimately, the ROFR will impose higher costs on Iowans. The data back this up: amicus Coalition of MISO Transmission Customers offers data collected from two recent bid-based projects that indicate competition reduces costs by fifteen percent compared to MISO’s estimates. As the Coalition summarizes, “Without competition, there are fewer checks and balances on cost estimates, and no pressures or incentives to curb project costs and prevent cost overruns.”
Both Illinois chambers approved a similar bill at the 11th hour last week that would hand Ameren the right of first refusal to build regional electricity lines. You’ll recall that this “quintessentially crony capitalism” and “protectionist” legislation was fervently backed by Rep. Chris Miller (R-No Relation) during floor debate.
* This is how Ameren pitched the bill in Missouri, its home state…
In states with right-of-first-refusal laws, these LRTP projects can begin as soon as they are approved by MISO, but that won’t be the case in Missouri unless HB 992 is passed by the General Assembly and signed into law by the governor. Without the Missouri First Transmission Act, these projects will be forced to go through a lengthy bid process that could take up to two years to complete — putting Missouri behind schedule when it comes to these important transmission projects.
The legislation did not pass.
* Capitol News Illinois…
Critics of the proposal said that it would reduce competition, leading to higher costs for construction projects and ultimately higher costs to energy consumers. But proponents said that it will streamline the billions of dollars of construction planned for the coming years while creating union jobs for Illinoisans. […]
While it needs only a signature from Gov. JB Pritzker to become law, he vowed last week to veto the bill. Pritzker spokesperson Alex Gough said the governor opposes the bill because it “puts corporate profits over consumers.”
The legislature could override Pritzker’s potential veto, but it would require three-fifths majorities in both chambers, a margin that it earned in the Senate, but not the House. […]
The bill’s house sponsor and the House Public Utilities Committee chair, Rep. Larry Walsh, D-Elwood, said that the proposal came to him from the union. In a Friday evening committee, Walsh said it would streamline the process of expanding the grid.
“If you have an entity that controls the transmission of our electric power throughout whatever region you’re in… It’s easier for them to do this type of work, interconnecting their system,” Walsh said.
* Crain’s…
Interestingly, the bill applies only to Ameren Illinois, which serves downstate Illinois, and not Commonwealth Edison. Ordinarily, the IBEW, which represents thousands of workers at both utilities, would have pushed to favor both companies.
But ComEd’s admission of an elaborate bribery scheme aimed at currying favor with former House Speaker Michael Madigan, and the recent convictions of the so-called “ComEd Four,” including former ComEd CEO Anne Pramaggiore, on conspiracy and bribery charges, led backers to focus only on Ameren.
Where things go from here is uncertain. Pritzker left no doubt he would veto the bill. Once that happens, Welch and Harmon will have to decide whether to try to override a fellow Democrat — a rarity during Pritzker’s five years in the governor’s mansion. […]
IBEW has pushed for bills giving incumbent utilities the “right of first refusal” on new transmission in states all over the U.S. and have been successful in more than 10. Indiana passed a similar law earlier this month, while Missouri lawmakers rejected a similar proposal.
…Adding… Sun-Times editorial…
In a sneaky maneuver, the Legislature slipped through a Senate amendment that would give the downstate energy utility Ameren monopolistic control over anyone building regional power lines across its territory. Such an enormous corporate giveaway could make it harder and more expensive to decarbonize the state’s and nation’s power grid just when it is crucial to connect new renewable energy sources, such as wind and solar power installations, to customers in population centers.
The regional power lines Ameren could control possibly would include those that would connect the Chicago area to new solar and wind energy. But Ameren has an apparent conflict of interest: its parent company owns fossil fuel plants that generate electricity.
We’re not saying we know what Ameren would do, but slow-walking any new regional power lines appears as though it could be in its financial interest. And, as in all situations in which a company gains monopoly power, there is a risk of customers paying unnecessarily high prices for less service.
posted by Rich Miller
Wednesday, May 31, 23 @ 9:32 am
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As I asked previously, why is the union shilling for Ameren?
Comment by very old soil Wednesday, May 31, 23 @ 10:11 am
=== why is the union shilling for Ameren? ===
They often work hand in glove with their employers.
Comment by Rich Miller Wednesday, May 31, 23 @ 10:18 am
We know what the Iowa Supreme Court thinks of the statute. What did they rule about standing?
Comment by Excessively Rabid Wednesday, May 31, 23 @ 10:24 am
Is Pritzker gonna use the Veto “Brand” like Montana or whoever does that?
Comment by James Wednesday, May 31, 23 @ 10:28 am
===What did they rule about standing? ===
You can’t click the link? Maybe you should call yourself Excessively Lazy lol
Comment by Rich Miller Wednesday, May 31, 23 @ 10:28 am
Well, I guess the governor can kiss all of that union campaign money goodbye.
Comment by McCloon Wednesday, May 31, 23 @ 10:30 am
===can kiss all of that union campaign money===
lol
He’s a self funder.
Comment by Rich Miller Wednesday, May 31, 23 @ 10:35 am
Amy Monopoli was an intervenor in Iowa? Wow.
Comment by Robo Wednesday, May 31, 23 @ 10:36 am
“…fervently backed by Rep. Chris Miller (R-No Relation) during floor debate.”
when “No Relation” is for something, it’s gotta be great. S/
Comment by Bruce( no not him) Wednesday, May 31, 23 @ 10:38 am
“guess the governor can kiss all of that union campaign money goodbye.”
Plus the 2 or 3 votes he got from downstate IBEW members in the general!
Comment by Larry Bowa Jr. Wednesday, May 31, 23 @ 10:39 am
This whole thing is odd. Unions are going to build transmission lines whether they are done through the utilities or not so it’s not clear why this was such a high priority.
Comment by New Day Wednesday, May 31, 23 @ 10:41 am
I absolutely hate government granted monopolies if the government can’t actually control what is happening. I feel the same way about utilities as I do about telecoms, defense contractors, casinos, etc. If the government (whether local, state, or federal) gives a private party the sole right to do a thing, they should be doing it at the direction of the government entity in question.
Government granted monopolies should solely be for the benefit of the people, not a license to exercise rent seeking behavior.
Comment by Homebody Wednesday, May 31, 23 @ 10:47 am
- why is the union shilling for Ameren? -
I’m sure Ameren pledged to use union labor, you never know with the competition.
Even so, this is a good veto. Ameren has made some pretty poor decisions for their ratepayers lately, there’s no reason to hand them additional monopoly powers.
Comment by Excitable Boy Wednesday, May 31, 23 @ 11:07 am
“I’m sure Ameren pledged to use union labor, you never know with the competition.”
Yes you do. Every major energy project and most smaller ones other than residential solar are all built with union labor.
Comment by New Day Wednesday, May 31, 23 @ 11:22 am
The fact the union felt this was needed is a bit nuts. Unless they have a long term goal of making this a nationwide standard?
Who else could do a project that size except for union contractors?
Plus if any of this goes through public land or because it’s a public utility doesn’t it fall under responsible bidder/prevailing wage requirements anyway?
Comment by Frida's boss Wednesday, May 31, 23 @ 11:24 am
- Every major energy project and most smaller ones other than residential solar are all built with union labor. -
As someone who works in the industry, this is not true. We see more and more non-union companies doing work in Illinois every year.
Comment by Excitable Boy Wednesday, May 31, 23 @ 11:32 am
“As someone who works in the industry, this is not true. We see more and more non-union companies doing work in Illinois every year.”
I work in the industry as well and it’s absolutely true in the renewable sector. In fact, both CEJA and the IRA require at least prevailing wage and in the case of larger projects a PLA. If the unions had any reservation whatsoever about the requirement of union workers for competitive transmission projects, that could be easily passed (and it has been offered). Even if this were sustained, it would have zero impact in Illinois.
Frankly, this seems to be part of a larger push in nonunion states which is why they tried to pass this in Indiana (passed) and MO (failed).
Comment by New Day Wednesday, May 31, 23 @ 11:38 am
- Who else could do a project that size except for union contractors? -
There are lots of very large non-union contractors across the country. If some private equity types decide they want to build and operate a transmission line they can hire anyone they want. They might have a few problems along the way but it is absolutely possible it could go rat.
Comment by Excitable Boy Wednesday, May 31, 23 @ 11:39 am
“There are lots of very large non-union contractors across the country. If some private equity types decide they want to build and operate a transmission line they can hire anyone they want. They might have a few problems along the way but it is absolutely possible it could go rat.”
Not in Illinois. Not going to happen.
Comment by New Day Wednesday, May 31, 23 @ 11:55 am
The downstate IBEW locals have existing contracts with Ameren. So if MISO gives Ameren the project, those Illinois locals have the work locked down. If the project is awarded to another company, the work is up for grabs. It will likely be done by union labor, though there is no guarantee. But the union labor could come from out of state. That’s why Illinois IBEW and the state AFL-CIO wants the projects assigned to Ameren — to ensure that in-state unions do the work.
Comment by STP Wednesday, May 31, 23 @ 12:27 pm
I know this is a crazy thought from me as I am pro-small-government, but my one exception is monopolies (or oligopolies). That is why I am thinking that energy needs to be state-run. And I think this not only on the State level but on the Federal level. Electricity, gas, all of it.
Comment by Lurker Wednesday, May 31, 23 @ 12:33 pm
@New Day: on the one hand, you say that transmission lines are not going to be built without union labor in IL. On the other hand, you know that before CEJA’s labor protections renewable energy developers routinely used out-of-state contractors that trucked in workers making little more than minimum wage to build huge solar farms. Why the disconnect? You apparently do not know that one of those very non-union-contractor-using developers also builds transmission lines.
@Frida’s boss: none of the circumstances you referenced triggers labor protections.
Comment by Hyperbolic Chamber Wednesday, May 31, 23 @ 12:45 pm
Lurker,
But that is the very definition of socialism. Look at what is happening in Nebraska where the state owns the electricity providers. s/
Comment by very old soil Wednesday, May 31, 23 @ 1:49 pm
“I know this is a crazy thought from me as I am pro-small-government, but my one exception is monopolies (or oligopolies). That is why I am thinking that energy needs to be state-run. And I think this not only on the State level but on the Federal level. Electricity, gas, all of it.”
Why? Utilities routinely take longer and cost way more to produce the same end product. Why would you think competition works everywhere except in energy development?
Comment by New Day Wednesday, May 31, 23 @ 2:03 pm
I agree with Lurker, I’d prefer all the utilities were government-run. Particularly nuclear power plants. But also water and gas. The focus on “shareholder value” versus service on something that is a natural monopoly isn’t healthy.
Comment by Give Us Barabbas Wednesday, May 31, 23 @ 2:32 pm