Senate panel advances bill allowing utilities to avoid bidding on transmission lines

An Indiana Senate panel voted narrowly Thursday to advance a controversial bill that would give state utilities the right of first refusal to build, own and operate new transmission lines in their service area, avoiding competitive bidding from outside companies.

The bill was heavily supported by Indiana utilities, organized labor, manufacturers and farmers, who said it would keep local control of expensive, specialized construction projects.

Opponents, including consumer groups, out-of-state energy companies, and large industrial companies, said it could result in higher prices, stifle innovation and lead to more control by monopoly utility companies.

The Senate Utilities Committee voted 6-5 to pass the bill. All three Democrats on the committee voted against it, as did two Republicans, Sen. Andrew Zay of Huntington and Sen. Spencer Deery of West Lafayette. More than 15 witnesses offered testimony for more than three hours.

The issue looms large for the energy landscape, with huge sums of money at stake. About $10.3 billion in transmission projects were recently approved by the Midcontinent Independent System Operator, the organization responsible for managing the power grid across Indiana, 14 other states and the Canadian province of Manitoba.

Another group of transmission projects, worth up to $20 billion, is now under consideration. Much of that is due to the need to bring on additional capacity for energy to meet huge consumer and business demand as the nation shifts to cleaner energy sources.

“This transformation has been progressing at an astonishing pace in recent years,” said Bob Kuzman, MISO’s regional director for regulatory affairs. “It will speed up even more due to the substantial financial incentives for clean energy that the U.S. government enacted in 2022.”

The bill’s author, Rep. Ed Soliday, R-Valparaiso, said transmission lines are being congested, as existing lines are struggling to move electricity from generating plants to customers.

“We need more transmission,” he said. “… It’s about being able to move electricity from one place to another.”

The Indiana Energy Association, which represents large, investor-owned utilities, said recent tornadoes damaged transmission lines, and that local crews rapidly repaired them, getting more than 100,000 customers back online within days. The group said allowing out-of-state energy companies to bid on construction and repair projects could slow such repairs.

“Our transmission system is the backbone of the energy grid, and one of our most critical assets,” said Danielle McGrath, the trade association’s president.

Under a recently filed amended that was adopted Thursday, local utilities that exercise their right of first refusal and handle the projects would be required to notify state utility regulators and outline their construction plans and give an estimated costs.

Utilities currently have rights of first refusal for transmission projects within their own territory, but federal regulators passed a rule 10 years ago eliminating that right for projects that cross the borders of utility service areas.

Some opponents of the bill said the bill would hurt innovation and competition.

Neil Chatterjee, former chairman of the Federal Energy Regulatory Commission, said competition is a key part of energy development, and said utilities should compete for business.

“Competition is essential when it comes to transmission,” he said. “Competition drives innovation, and it drives cost discipline.”

Citizens Action Coalition of Indiana, a utility consumer group, said the bill would hand more power to local monopoly utilities.

“This bill would expand monopoly control and entrenches monopoly pricing,” said Kerwin Olson, the group’s executive director.

The bill passed the Indiana House in February by a vote of 59-39. Because it was amended, the bill must be returned to the House for another vote if it is approved by the full Senate.