Electric companies in the Midwest say new large scale powerlines are needed to get more energy onto the grid to serve big power consumers such as artificial intelligence data centers. Now, the utilities argue reducing competition is the fastest way to do it.
A group of nine electric transmission utilities, including Ameren and Evergy, is asking federal energy regulators for the right of first refusal to build and operate new multi-state, large-scale powerlines.
The group, called “Grid Acceleration Coalition,” filed a request with the Federal Energy Regulatory Commission (FERC) in April to exempt certain projects from the competitive bidding process or to put it on hold for five years. If approved, utilities operating in both the Midcontinent Independent Systems Operator (MISO) territory and the Southwest Power Pool (SPP) would be the default developer for any large multi-state transmission projects.
Northeast and mid-Missouri is situated in MISO territory while the western part of the state and some of southern Missouri’s grid is facilitated by SPP.
In their plea to federal regulators, transmission utilities stress how delays on infrastructure projects hurt progress.
“To meet spiking load growth, we must build the transmission needed to connect new large loads and generation,” the request reads. “If we succeed, we will win the race to achieve dominance in artificial intelligence (‘AI’), rebuild our nation’s manufacturing base, and ensure we have the infrastructure needed to extract our nation’s oil and gas resources.”
Davis Strobridge is director of regulatory strategy for ITC, one of the largest transmission companies in the country. He said it can take 16 to 20 months to select a company to build a large-scale powerline.
“We need rules and regulations that do things quickly and don't have red tape involved, and removing this solicitation requirement would absolutely do that,” Strobridge said.
But in recent months, a number of state lawmakers have spoken out in opposition. Legislators from Missouri, Iowa, Montana, Wisconsin and Kansas have sent letters to the FERC urging the agency to deny the transmission companies’ request.
State Sen. Tracy McCreery, D-St. Louis County, said she fears there would be “no regard for cost” if the utilities had the right of first refusal. She said halting the competitive bidding process would raise project costs that then get passed onto customers.
“Without competition, there would be no motivation for these investor-owned utilities to do things in an economical manner,” she said.
In a letter to federal energy commissioners, McCreery said infrastructure costs for transmission and distribution are the primary driver of her constituents' rising utility bills. McCreery writes that nearly a quarter of Missourians have unaffordable energy burdens, meaning they spend 6% or more of their household income on utility bills.
“We are putting so much strain on Missouri families and we have to just say stop. Let's use some common sense,” McCreery said.
State Rep. Ben Keathley, R-Chesterfield, also sent a letter to FERC echoing McCreery’s concerns.
Faster and cheaper is the goal
More than a year ago, President Donald Trump declared a national energy emergency and made new electric generation and transmission infrastructure a priority.
Transmission utilities say the project solicitation process to bid on and win the ability to build powerlines delays grid upgrades and hurts the ability to get new power plants online. But consumer advocates and lawmakers say without competition costs will increase.
Prior to 2011, the transmission companies operating as a regulated monopoly in a certain area had the right of first refusal for building new transmission lines. A policy called “Order 1000” changed that, opening up large scale powerline projects to a competitive process. Developers from across the country, as well as incumbent utilities, could submit proposals to win the project.
“In 2011, the environment we were in was a really low load growth environment … and so we almost had the time to experiment with the policy and it wasn't impacting our electric grid,” Strobridge said. “Fast forward, obviously, we're in an unprecedented time. The demands that are coming that utilities are experiencing right now are almost incomprehensible.”
Paul Cicio is chairman of the Electricity Transmission Competition Coalition, a group advocating against the utilities’ recent request. He said lobbying in state legislatures to reduce competition has been intense in the MISO region.
“Because these same utilities couldn't get legislation in their home state, now they're petitioning the federal government to bail them out to help them and prevent competition,” he said.
The companies’ request before federal energy regulators states that electricity demand is “increasing at a rate unseen since World War II, particularly in MISO and SPP."
The transmission utilities’ request makes clear utilities want to take advantage of the current AI data center development boom and build assets to facilitate the increased electricity demand — which they say the competitive project “solicitation” process hinders.
“Any purported benefits of solicitations — which are uncertain and, at best, small — are almost certainly overwhelmed by the costs of foregone benefits of AI development,” the request reads.
In an email to KBIA, Evergy spokesperson Courtney Lewis said the current way the country goes about building large powerlines hurts the ability to meet growing electricity demand and threatens the region's ability for economic growth.
“As one of the home utilities in the region, Evergy is well positioned to build transmission,” Lewis said. “We own and operate the local power grid that the lines connect to, and we are staffed to monitor and quickly respond anytime there is an issue that could impact service to our customers.”
The Federal Energy Regulatory Commission is expected to rule on the utilities’ request this fall.
