Right of first refusal to incumbent RTO members advanced

Senators advanced a bill from general file April 3 that would change the selection process for state electric transmission projects approved by a regional transmission organization (RTO).

The Natural Resources Committee sponsored LB388, which would provide incumbent RTO members the right of first refusal for such projects.

Holdrege Sen. Tom Carlson, chairperson of the committee, said the Federal Energy Regulatory Commission (FERC) recently issued an order requiring an RTO to allow qualified entities to bid on state transmission projects instead of deferring such projects to incumbent utilities. However, he said, the public power industry believes the first right to expand such projects should be provided to incumbent utilities that are familiar with Nebraska’s regulatory processes.

FERC recognizes state laws that provide incumbent utilities the right of first refusal, Carlson said, so passage of the bill would ensure the state maintains authority over transmission line projects.

A committee amendment, adopted 28-0, would eliminate standardized definitions and would retain the right of first refusal provisions of the original bill. The amendment also provides incumbent facilities 90 days to notify the Power Review Board of their intention to construct, own or maintain the RTO-approved transmission line. If no such notice is provided to the board, the right of refusal would be surrendered and any other incumbent transmission owner would be allowed to file for the right within 24 months after the first right notice is provided.

Omaha Sen. Steve Lathrop said he was concerned that the bill would limit competition among transmission project builders and could create a state public utility monopoly.

Papillion Sen. Jim Smith disagreed, saying that incumbent facilities still would be required to undergo a competitive bidding process. LB388 would ensure that more qualified local utility companies would own and maintain state transmission lines, he said.

“Certain design standards are required in the Midwest that may not be required in other areas of the country,” Smith said. “If [state transmission] projects were available to all qualified contractors they may provide a lower bid, but the project may not meet Nebraska’s design standards.”

The bill was advanced from general file on a 30-0 vote.

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