Distributive policy

Raise the price of climate policy

The Biden administration is continuing its puzzling approach to climate policy without too high a price tag. Need solar panels? Make sure the tariffs increase the price. Do you want to build a renewable electricity production? Be sure to employ the most expensive labor possible. Interested in shifting buyers to electric vehicles? Impose enough restrictions on domestic content to ensure there are very few affordable choices. We can now add another error to the list. Need a national network? Make sure there is no competition for construction contracts and raise the cost.

This is the bottom line of FERC from Fred Ashton Dims the Lights on Competition. It’s more than just a change. AAF research estimated that it would take between $300 billion and $500 billion to build new transmission facilities to meet the 2035 goal for a zero-emission electricity sector. Analysis by the Brattle Group has shown that competition can lower these costs by around 40%. These are real savings that are lost.

At issue is a “right of first refusal” in the construction of transmission lines. With a right of first refusal, a utility can simply decide to build the facility itself and not put it out to tender. The key moment is this: “In 2011, the Federal Energy Regulatory Commission (FERC) issued Order 1000, a rule designed to increase regional transmission development, limit the monopoly power of incumbents and promote competition. The order provided that “providers of transportation utilities shall remove from Board-approved tariffs and agreements a federal right of first refusal [ROFR] for a selected transmission facility in a regional transmission plan for cost allocation purposes.

Great. Unfortunately, it didn’t work. Using a variety of policies that operate within state boundaries – and, therefore, are not bound by FERC regional transmission rules – monopoly power has been preserved or restored. Apparently, the correct next step would be for FERC to exhaust its powers to fight these practices and achieve better competition.

Instead, FERC is proposing to rescind Order 1000. As Ashton puts it: “If the proposed rule becomes final, Federal ROFR would be reinstated on the condition that incumbent transmission owners agree to a joint ownership structure. with a non-titular partner. Such a change would likely limit competition.

The administration says climate is the most important policy area. But his actions constantly let other priorities slip by.