Illinois Gov. J.B. Pritzker, D, on Wednesday vetoed provisions in a bill that would have given incumbent utilities like Ameren a right-of-first-refusal, or ROFR, to build transmission projects in the state.
“Without competition, Ameren ratepayers will pay for these transmission projects at a much higher cost, putting corporate profits over consumers,” Pritzker said in a statement on the right-of-first refusal provision.
The provision was part of an omnibus energy bill, HB 3445, passed by the Illinois General Assembly in June.
There is more than $3.6 billion in planned transmission projects in Ameren’s service territory, according to Pritzker.
Ameren Illinois and other transmission owners are slated to build four Midcontinent Independent System Operator projects totaling about $1.9 billion, according to the grid operator. The projects are part of MISO’s first phase of its long-range transmission plan. The grid operator is developing a second round of projects for its north and central regions, which include Illinois.
Ameren supported the ROFR provision. “As the local utility, we believe we are well positioned to efficiently build, operate and maintain these transmission assets over time,” Martin Lyons, Ameren chairman, president and CEO, said Aug. 3 during an earnings conference call.
The ROFR would allow construction to begin sooner, he said, noting the utility company bids out each component of its projects. Ameren is bidding on MISO projects that are open to solicitations in Illinois and Missouri that have total estimated costs of $743 million, according to the earnings presentation.
The governor's veto will result in delays to transmission projects, which will increase costs and put the benefits of the clean energy transition at risk, according to Ameren.
“To do it fast and do it right, with accountability for results, these projects should be managed by trusted local energy companies with a proven track record of success, who already competitively bid the projects with local contractors and union workers,” Shawn Schukar, Ameren Transmission Co. of Illinois chairman and president, said in a statement Friday.
However, the Citizens Utility Board of Illinois, a ratepayer advocacy group, contends the ROFR provision would have increased consumer costs.
“Building new transmission can be a good thing for consumers, but such projects need to be cost-efficient, and a competitive bidding process helps that,” CUB Director of Governmental Affairs Bryan McDaniel said in a statement. “That’s why CUB opposed the amendment.”
LS Power, a company that builds power plants and power lines, said the veto would help keep costs lower.
“Allowing competition for ownership of new transmission projects is essential to advance the energy transition in a cost-effective manner,” Paul Segal, LS Power CEO, said in a press release.
Competition can cut the cost of transmission projects by 20% to 30%, LS Power said, pointing to a study by the Brattle Group.
Pritzker’s action was the first veto of ROFR legislation, according to LS Power. Eight MISO states have ROFR laws.
Lawmakers in several states have been exploring adopting ROFR laws this year while the Iowa Supreme Court ruled against that state’s law in March. ROFR bills became law in Indiana and Mississippi while legislation was defeated in Montana and Oklahoma.
The U.S. Supreme Court in March asked the U.S. Solicitor General to file a brief in a dispute over a ROFR law in Texas. The brief is expected this fall, according to LS Power.
Editor’s note: This story has been updated to include comments from Ameren and CUB.