Electric utilities in other states are asking federal regulators to allow monopoly control over projects, while some critics want Texas to have more competitive bidding.
Calls are growing for Texas to end monopoly dominance over major electric transmission projects — just as other regions hope to follow its approach and reduce competition.
The Lone Star State is preparing for a $33 billion build-out of power lines from El Paso to East Texas, and critics are urging Texas lawmakers to repeal a 2019 law that largely bans competition for transmission projects within the state’s main grid.
The Electric Reliability Council of Texas doesn’t have to allow competitors for transmission projects because it sits outside the jurisdiction of the Federal Energy Regulatory Commission. FERC rules for the rest of the country require large transmission projects to undergo a competitive bidding process.
But the status quo is under threat inside and outside of Texas. Utilities say they could further streamline projects if they had Texas’ pro-utility law, while critics argue that more competition would help lower transmission costs shared by customers.
“If we can save 20, 30, 40 percent by bidding out a project, that gives the transmission company the flexibility to be more accommodating in twisting and curving the line in a way that makes landowners less unhappy,” said Barry Smitherman, a former regulator who chairs the Texans for Affordable Transmission advocacy group.
Utilities in a middle swath of the country, meanwhile, are looking to bring Texas’ incumbent-only model to their backyards.
Nine Midwest and Great Plains utilities wrote a letter in April asking FERC to suspend competitive bidding for regionally planned transmission projects within two regional transmission organizations — the Midcontinent Independent System Operator and Southwest Power Pool.
The utility companies argued that suspending those rules for five years would accelerate the construction of power lines needed to help meet surging load growth and help the U.S. win the artificial intelligence race against China.
In Texas, incumbent utility groups say keeping the state’s no-bid system helps ERCOT — the grid operator — see that transmission is built more quickly and efficiently.
“It doesn’t make sense to have these ad hoc, patchwork systems being built by different utility companies,” said Mark Bell, CEO of the Association of Electric Companies of Texas. “It has worked for a very long time, and I think it will continue to do so.”
Those companies could soon see a windfall with a massive transmission build-out and a new wave of data centers seeking to plug into ERCOT.
Earlier this month, the Department of Energy said it closed a loan worth up to $3.26 billion for AEP Texas to work on grid projects and seek to lower power costs. The subsidiary of Ohio-based American Electric Power said it had signed letters of agreement supporting 41 gigawatts of potential new demand. By comparison, the all-time record demand in ERCOT’s region is 85.5 GW.
In a statement, Energy Secretary Chris Wright said the money will help “support the energy needed for AI, advanced manufacturing, the Permian Basin, and help keep electricity costs down for Texans.”
Texas Gov. Greg Abbott (R) did not respond to a request for comment. But Rich Parsons, a spokesperson for the Public Utility Commission of Texas, said in a statement that the PUC “must follow state and federal laws, which dictate the process for granting permission to a utility to build a transmission line.”
Public interest?
Electricity and transmission issues have become a lightning rod of controversy in Texas in recent months.
Ranchers and rural voters have expressed outrage over thousands of miles of extra-high voltage power lines that are being routed to bring power from Central Texas to the Permian Basin. Much of the new transmission infrastructure would involve 765-kilovolt lines — the highest voltage level in North America.
Average residential electricity costs have risen by 30 percent from 2020 through 2025 within ERCOT’s region, driven largely by rising transmission and distribution costs.
And anger this year over the proliferation of data centers and their need for more transmission prompted Abbott to write a letter to the PUC, ordering them to initiate action to “reduce residential ratepayer transmission costs” by July 31.
The confluence of those political issues may open the door for the Texas Legislature to take up repealing the state’s anti-competition transmission law when it convenes for the 2027 legislative session, said Joshua Rhodes, a research scientist focused on energy at the University of Texas, Austin.
“Electricity infrastructure and costs are just a huge political issue right now, so we may see a lot of things pass in that sector and space because everybody wants to feel like they did something,” Rhodes said.
Repealing that law would be one of the biggest changes the ERCOT market has seen since 1999, when the Texas Legislature deregulated the power market.
Power plants within ERCOT are owned by private companies that must compete in real time, and whichever generator can make the cheapest form of energy is the one that makes the money.
But lawmakers carved out transmission projects from being subject to similar competition, Smitherman said.
The scene is flipped in other regional transmission organizations across the country. Those markets pay incumbent generators to supply a certain amount of power in the future, but they’re required to competitively bid out transmission projects.
That transmission competition was enshrined in FERC’s Order No. 1000, which eliminated federal “right of first refusal” to open transmission development to competitive bidding.
Paul Cicio, chair of the Electricity Transmission Competition Coalition, said the order was passed in 2011 when FERC members realized the country needed to build more transmission.
“And they recognized that it was in the public interest that these large, regionally planned transmission projects would face competition to reduce costs,” Cicio said.
Some states balked at the order and passed their own right of first refusal laws.
Texas’ own right of first refusal law was largely thrown out by the 5th U.S. Circuit Court of Appeals in 2022. U.S. Circuit Judge Gregg Costa in his opinion said banning new entrants for interstate transmission projects is like “saying that only those with existing oil wells in the state could drill new wells.”
Texas Republican Attorney General Ken Paxton (R), who is locked in a heated race for a Senate seat with Democrat James Talarico, petitioned the Supreme Court to overturn the decision. But the higher court declined to review the case.
But there was a catch — courts did not ban the right of first refusal within ERCOT or Texas. So long as a transmission project stays within the state, it is not subject to competitive bidding.
And other utilities are hoping to extend the right of first refusal beyond ERCOT.
‘Give us five years’
A coalition of Midwest utilities filed a complaint in April asking federal regulators to suspend competitive bidding for regionally planned transmission projects in regions managed by the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) for five years.
The utilities argued halting the competition would accelerate the construction of power lines needed to help meet surging load growth and help the U.S. in its AI race against China.
The push is backed by parties including the International Brotherhood of Electrical Workers and data center developer QTS. But numerous consumer advocates, business groups, state regulators and lawmakers from across MISO and SPP have called on FERC to reject the utilities’ plea.
Opponents argue that the utilities are trying their luck at FERC after several states’ right of first refusal rules were struck down by courts or failed to pass in state legislatures.
Among the utilities asking FERC to pause competitive bidding in MISO and SPP is Minneapolis-based Xcel Energy, which operates across both regional grids.
In an interview last month, Xcel CEO Bob Frenzel said it’s indisputable that the competitive bidding process adds months to the development timeline for power lines — time he said the industry can’t spare.
Frenzel described the five-year pause sought by the utilities as a pilot to see if the industry can get regionally planned power lines built more quickly and at a lower cost.
“Give us five years, give us a slice of the country, and let’s see if we can do something different … if we can build transmission better, cheaper, faster,” he said.
Frenzel said the proposal would serve as a trial, after which it could lead to a repeal of the competitive bidding requirement in Order 1000. Or not.
“I’m not asking people to get a tattoo that’s forever, right? I’m asking you to get a haircut that might grow out,” he said. “Let’s try something different.”
But advocates for a competitive process say a lack of competition could cost ratepayers billions of dollars.
Smitherman pointed to research by the Brattle Group consultancy, which found estimated cost savings of 20 percent to 30 percent for competitive transmission projects between 2013 and 2017.
A more recent study by the free-market think tank R Street released in May found that transmission projects stemming from competition generated a roughly 30 percent savings for ratepayers.
Those savings, Smitherman said, could ultimately lead to better projects and better routing of certain high-voltage lines, like those that have ignited the ire of rural Texans.
“I think competition is good for the consumer,” Smitherman said. “After all, these transmission costs get uplifted to every customer.”
By Shelby Webb, Jeffrey Tomich | 07/22/2026 06:39 AM EDT
Source: https://www.eenews.net/articles/texas-transmission-policy-sharpens-us-competition-fight/
