R Street Responds: DATA Whitepaper Unhelpful in Discerning Causes of Transmission Development Delays

Whitepaper: “Recent Experience with Competitive Transmission Projects and Solicitations,” DATA: Developers Advocating Transmission Advancements, February 2025. https://www.modernizethegrid.com/wp-content/uploads/2025/02/DATA-Whitepaper-2024_2-5-25_vF_edit.pdf.

Introduction

Until the issuance of Federal Energy Regulatory Commission (FERC) Order No. 1000 in 2011, local utilities planned, initiated, dictated, built, and owned FERC-regulated transmission. FERC effectively gave these utilities a federal right of first refusal (ROFR) to build regional transmission out of deference to the utilities’ state-granted monopolies and incumbency. Under cost-of-service regulation, utilities make their profit as a function of investment—the more they invest, the more money they make. Order 1000 requires that certain regional transmission needs or projects be subject to competition, wherein some entity other than the incumbent utility might be chosen to build and own a transmission facility that the incumbent could have otherwise built and owned. Stated plainly, the order inserted competition into a process that was previously the exclusive domain of monopolies. It is understandable that utilities have not supported a rule that might cause them to miss out on more profit.

To that end, a group of utilities recently formed a coalition—Developers Advocating Transmission Advancements (DATA)—and issued an unauthored whitepaper titled “Recent Experience with Competitive Transmission Projects and Solicitations.” It presents “qualitative observations based on case studies of recent competitive solicitations and competitive project experiences” to suggest that, contrary to FERC’s policy objective, Order 1000 represents an impediment to regional transmission development.

Qualitative Observations

DATA’s whitepaper looked at three instances of competitive transmission processes submitted by the paper’s sponsors as “examples [that] are all instructive as to the numerous deficits of Order No. 1000 competitive solicitations and similar regulatory frameworks.” The projects are located in PJM, Maine, and the California Independent System Operator. None of the case studies are particularly helpful in determining the efficacy of Order 1000, but the first two are particularly troublesome and, as such, are addressed below. The authors also discussed how state transmission ROFR laws, including a litigated law in Iowa, add uncertainty to transmission development. Although the whitepaper does present projects that were less successful than initially intended, DATA’s limited review of case studies and its methodology leave much to be desired. Additionally, the conclusion drawn from these case studies is unreasonable given the evidence presented.

Before getting into the details of DATA’s case studies, it is important to note several methodological flaws that undermine the paper’s conclusion.

1. There are no stated criteria for the case studies. Instead of conducting an objective review of projects chosen under Order 1000, competitive or otherwise, DATA cherry-picked four instances of competition-related transmission development that have experienced difficulties.
   
2. Given the incredibly small and one-sided sample of case studies, DATA’s preferred conclusion— that Order 1000’s competition policy is irreparably problematic—cannot be drawn from the evidence presented. Because DATA failed to review other projects, there is no way to discern whether the problems exhibited by the studied projects relate to competition or result from broader issues with transmission development.  
   
3. Related to the preceding flaw, DATA provides no evidence of the counterfactual to competition in concluding that the stated problems would not occur in the absence of competition. For instance, DATA critiques the flexibility in cost caps offered by competitive developers but fails to disclose that in the absence of cost caps (or competition), utilities would only have regulation as an outer bound for cost management—and that regulation is wanting. There is overwhelming evidence (and acknowledgement from FERC’s chair) that there is little cost-mitigating regulation of transmission expenses in the absence of competition.
   
4. The whitepaper uses litigation by competitive developers over state-level transmission ROFR as an argument to get rid of competition but conveniently fails to mention that incumbent utilities, including DATA members, support and work to pass those kinds of state legislative measures. This one-sided perspective clarifies the biased nature of the case studies.

Selected Case Studies

PJM

The whitepaper discussed a project, referred to as the MidAtlantic Resiliency Link (MARL), chosen by PJM pursuant to an Order 1000 process to address load growth in Northern Virginia. DATA notes that after the project was selected, the project sponsor determined that its initial proposed route was infeasible. This prompted them to work with local utilities to either modify existing rights-of-way or reroute the line to run adjacent to them. Based on the reworking, PJM cancelled a portion of the project—thereby permitting an incumbent utility to build that portion on existing and expanded rights-of-way.

Regarding MARL, DATA concerningly asserts (without support) that, in a hypothetical “pre-Order No. 1000 world, [RTOs and utilities] from the outset would have worked together through an iterative process to identify projects and routes that would address the transmission needs stemming from data center-driven load growth.” Such an assertion ignores our country’s pre-Order 1000 experience with the lack of regional planning FERC noted in creating the rule and breezes past the fact that the incumbent utilities could have made a coordinated proposal similar to the final routing ultimately used by the competitive proposal. DATA provides no evidence that the incumbents ever considered doing so.

It is also notable that DATA expresses concern at competitive developers’ lack of “rigorous siting analysis” in proposing their transmission solutions while ignoring instances in which incumbent utilities experienced similar issues with siting transmission solutions at the same stage of development. For instance, in 2023, PJM designated Dominion, the primary incumbent utility in Northern Virginia, to build a transmission project involving the reconductoring of current lines. Due to the immediate need and its use of current facilities, the project was not subject to competition. However, in 2025, PJM disclosed that the Dominion project required rescoping that would increase the cost by more than 50 percent. This is because, during the transmission line conceptual review of the original project scope, the facilities were found to be in poor condition, necessitating replacement. Again, the Dominion project was exempted from competitive processes.

Maine

DATA also discusses a competitively solicited transmission project in Maine, for which a non-incumbent was chosen as the developer. Massachusetts was later added as a beneficiary and paying participant of the project. The whitepaper notes that LS Power informed the Maine commission that added complexities later in the process, including the addition of Massachusetts, would drive delays and costs. Once informed of the cost increase, the Maine Public Utilities Commission terminated the original procurement and initiated a separate process.

DATA presents the Maine case study as an example of why competitive developers’ cost commitments are illusory, supporting its conclusion that FERC Order 1000’s competitive policy must end. However, only at the end of its critique does the whitepaper reveal that the project at hand resulted from a competitive transmission procurement run by the Maine Commission—separate from a regional, federally jurisdictional process and had nothing to do with Order 1000. In perpetrating this bait and switch to convey its displeasure regarding developers committing and being held to cost-containment measures, DATA conveniently ignores the reality that without commitments to cost cap (or similar measures), no serious economic regulation occurs.

Conclusion

DATA’s whitepaper is not a serious endeavor to provide regulators and legislators with objective information to inform their decision-making. Instead, its methodology, cherry-picking of evidence, and biased information-sharing makes clear that the effort merely intends to confirm DATA’s preexisting, self-interested bias.