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* From Gov. Pritzker’s amendatory veto message on HB3445…
House Bill 3445 contains many valuable provisions to advance energy policy in Illinois. However, the right of first refusal language inserted by Senate Amendment 4 will eliminate competition and raise costs for rate payers by giving incumbent utility providers in the MISO region a monopoly over new transmission lines. Raising costs for rate payers is particularly concerning in the MISO region, where there is currently over $3.6 billion in planned transmission construction in the Ameren service territory.
Without competition, Ameren ratepayers in downstate Illinois will see higher electricity bills to pay for the higher cost of these transmission projects. Competitively bidding transmission construction, instead of giving the utility a monopoly, has been proven to lower project costs significantly.
Just last year, the federal Department of Justice and Federal Trade Commission criticized a similar right-of-first-refusal proposal at the federal level, citing the benefits of competition to consumers through lower rates, improved service, and increased innovation. (Comment of U.S. Department of Justice and Federal Trade Commission to Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, FERC Docket No. RM21-17-000 (Aug. 17, 2022)).
My administration has always been committed to working with stakeholders and our partners in the General Assembly to enact meaningful energy policy. However, I cannot support the ROFR provision of this legislation that will unnecessarily put a higher cost burden on consumers.
* From Ameren Chairman and CEO Leonard Singh’s recent letter to the General Assembly…
• FERC has fallen short – Out-of-state energy developers embrace the Federal Energy Regulatory Commission (FERC) model because, absent state intervention, it bypasses local control and increases their profits. But the reality is these FERC policies have failed to produce innovations or generate cost reductions for expanding the nation’s electrical grid transmission capabilities. According to a recent study, “… competitive solicitations have not delivered innovation, cost savings, or timely development of transmission… it is important to consider the real results of competitive processes to date, compared against claims of significant cost savings.”
• ROFR maintains competition – At Ameren, our contractors earn their opportunities through a competitive bidding process. Under ROFR, Ameren will maintain the competitive bidding we have always utilized when building transmission lines. Maintaining Ameren’s current ability to build needed transmission lines ensures projects are not awarded to out-of-state developers with no vested interest in Illinois.
• ROFR holds down costs – At Ameren, we have a responsibility to build and manage transmission projects in a cost-effective manner to keep rates reasonable. Here’s an example of what can happen in Illinois if transmission development costs from out-of-state developers are not closely managed, with oversight given to Washington D.C.: A non-incumbent developer recently asked FERC to allow it to recover more than double the cost of a 125-mile transmission line project in California. The developer “won” the project with a bid of $259 million and asked FERC to allow it to charge consumers $553.3 million. If ROFR does not become law today, potential cost overruns by out-of-state developers with a track record of project mismanagement will drive costs higher and raise customer bills.
• ROFR protects local jobs – Without local-build provisions, the outsourcing of transmission construction to inexperienced non-union workers and out-of-state entities is imminent. Illinois-based contractors will be shut out of significant transmission work. Our local communities will lose the high-paying skilled jobs and the resulting economic benefits. Safety and reliability will be compromised.
• ROFR ensures service reliability – Contrary to what you’re being told, Illinois-regulated utilities like Ameren are the only companies capable of accelerating construction of new transmission lines on our systems. If ROFR does not become law today, construction delays will risk realization of reliability and clean energy benefits for downstate customers.
* Center Square…
Corey Stone with Illinois Brotherhood of Electric Workers 51 said out-of-state companies that could land these projects won’t use Illinois workers.
“These members and the members of the other Illinois labor unions who work on these transmission projects live here, are active in their community, and contribute to the Illinois economy,” Stone said during a Wednesday news conference in Springfield.
* Tribune…
State Rep. Larry Walsh, the Elwood Democrat who sponsored the original measure, vowed to return in the spring with an even broader proposal to give utilities statewide the permanent right of first refusal on transmission projects. That would include scandal-plagued Commonwealth Edison. […]
It’s unclear whether such a campaign would prove convincing to Pritzker, who could once again wield his veto pen to stop it from becoming law.
* Capitol News Illinois…
Beyond the controversy surrounding the right of first refusal, transmission line construction has become a front line in the fight over climate change in recent years, particularly regarding who will profit from and regulate new construction.
This is because as new energy sources like solar or wind farms come online, they need new lines to deliver their power to the grid.
The International Energy Agency, an intergovernmental advisory group based in Paris, released a report this month that found the world will need to build or replace around 50 million miles of grid by 2040 to meet clean energy goals, which is roughly equivalent to replacing the entire current global grid. That report also found grids are becoming a “bottleneck” in the transition to zero-emission electricity systems.
* Lee News…
Eight states in MISO have right-of-first-refusal laws on the books. Many were enacted after the Federal Energy Regulatory Commission in 2011 eliminated the federal right-of-first refusal for regionally-planned transmission lines in hopes of spurring more competition and lower costs.
* Rep. Ann Williams, who chairs the House Energy & Environment Committee…
I agree that we must use skilled Illinois union labor for these energy-related infrastructure projects. I look forward to more conversations this spring with organized labor, Ameren and environmental advocates to consider transmission issues as part of a broader conversation about creating the infrastructure to ensure a clean energy future, build capacity, put consumers first, and address the climate crisis.
Rep. Williams’ statement leads us to this…
* The Question: Would you support statewide Right of First Refusal for incumbent utilities like Ameren and ComEd, or a statewide law mandating the work be done with requirements like project labor agreements and prevailing wage, which is the same standard for large wind and solar projects? Take the poll and then explain your answer in comments, please.
posted by Rich Miller
Thursday, Oct 26, 23 @ 11:12 am
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Labor protections without a doubt. Utility companies cannot be trusted to put citizens first.
Comment by Excitable Boy Thursday, Oct 26, 23 @ 11:15 am
Labor protections is definitely the better answer to protecting union jobs.
Sure, Ameren might be using union contractors now, but in five years when the current CEO bows out (as is inevitable), there is no guarantee that the new leadership will have any interest in “keeping prices low” or using local labor.
Enshrining labor requirements for new transmission lines into law is the best way to ensure labor is protected, not by instead taking a corporations word. God know’s that changes as the price of the share changes with the share price.
Corporate Monopolies are always bad for the consumer.
Comment by That Guy Thursday, Oct 26, 23 @ 11:20 am
By far Labor Protections are the true solution to this issue - instead of once again handing keys to the Illinois utility companies, who have continued to raise rates while violating public trust
Comment by SportShoz Thursday, Oct 26, 23 @ 11:24 am
Voted labor protections.
Ask Jordan Zalauf what an improperly grounded wire looks like.
https://tinyurl.com/bp99mc7z
Comment by Jocko Thursday, Oct 26, 23 @ 11:28 am
I voted for ROFR. I prefer direct state ownership over the regulated monopoly structure, but either is better than the so-called “free market” approach to public goods like electricity. Texas is the clearest test case for libertarian approaches to utilities, and they have the worst power grid in the country. Opening up that system to patchwork infrastructure is a step in the wrong direction.
Comment by vern Thursday, Oct 26, 23 @ 11:31 am
The issue for IBEW and Rep Walsh is ensuring these jobs go to unionized Illinois workers. Ameren is almost exploiting that goal for their own benefit (which is not the first time a utility has asked labor to do its heavy lifting). Therefore, the obvious compromise solution for Rep Walsh and IBEW should be labor protections. This would also address the Administration’s concerns with ROFR.
Comment by The Office Thursday, Oct 26, 23 @ 11:47 am
Labor Protections.
Support the worker first.
Comment by Cool Papa Bell Thursday, Oct 26, 23 @ 11:54 am
A bill guaranteeing PLAs and prevailing wage for transmission projects will sail through the GA like a resolution honoring Jesse White. There would be no issues with such an approach. But since this issue is not really about that but about giving monopoly utilities control over the competitive markets, that won’t cut it.
Also, now we know that what some of the opponents have been saying - that this is just laying the groundwork for ComEd to get this goodie - was 100% true. Thanks, Rep. Walsh, for saying the quiet part out loud.
Oh yea, and the disingenuousness of the Ameren/IBEW arguments is really breathtaking. Newsflash: the ICC regulates transmission lines whether they are developed by independent companies or utilities. So the idea that allowing other companies to develop transmission means there would be no regulations is just so silly. As Joe Biden might say, cmon man.
Comment by New Day Thursday, Oct 26, 23 @ 12:23 pm
Against ROFR. No need to strengthen the monopolies
Comment by Phineas Thursday, Oct 26, 23 @ 12:28 pm
Forget ROFRs. Utilities can’t be trusted to look after their customers’
interests.
Comment by froganon Thursday, Oct 26, 23 @ 1:26 pm
I agree with the above comments: Corporate execs are interested in lining their pockets. They would dump the unions in a heartbeat if they thought they could get away with it. To think they wouldn’t use the monopoly power of ROFR is simply absurd. A labor protection bill would meet the stated goals without handing over monopoly power.
Comment by Pot calling kettle Thursday, Oct 26, 23 @ 1:43 pm
“Just remember this, Mr. Potter, that this rabble you’re talking about, they do most of the working and paying and living and dying in this community.”
- George Bailey, Bedford Falls, NY
I’m with labor on this question.
Comment by Oswego Willy Thursday, Oct 26, 23 @ 1:46 pm
Labor. We have to use prevailing wage on any project we do, it isn’t a problem and it does not mean it has to be a union project.
The utilities have shown time and again that they cannot be trusted.
=Texas is the clearest test case for libertarian approaches to utilities, and they have the worst power grid in the country.=
To be fair, Texas has almost total deregulation. Illinois is not endanger of that at all.
Comment by JS Mill Thursday, Oct 26, 23 @ 1:52 pm
As large corporations have proven time and time again, if labor protections aren’t required, workers won’t get any.
Comment by Anonymous Thursday, Oct 26, 23 @ 3:07 pm
I’m anon @3:07
Comment by Politix Thursday, Oct 26, 23 @ 3:07 pm