ETCC Challenges FERC Order 1920 ROFR Carve-Out in Fourth Circuit

RICHMOND, Va. — The U.S. Court of Appeals for the Fourth Circuit heard oral arguments in a consolidated challenge to the Federal Energy Regulatory Commission’s (FERC) Order No. 1920.

At the center of the petition by the Electricity Transmission Competition Coalition (ETCC) is whether FERC lawfully established a new federal “right of first refusal” (ROFR) provision, which allows incumbent electric utilities to rebuild and expand aging transmission lines without opening projects to competitive bidding. If successful, the challenge could reopen billions of dollars in transmission upgrades to competitive bidding, potentially lowering electricity costs for consumers.

Legal & Operational Context

Allegations of Federal Power Act and APA Violations

The legal challenge centers on FERC’s May 2024 regional transmission planning rule, Order No. 1920, which establishes a 20-year horizon for regional grid planning and cost allocation. While requiring utilities to replace aging lines with higher-capacity infrastructure, the rule grants incumbent utilities federal ROFR privileges, shielding those upgrade projects from non-incumbent competition.

ETCC contends that granting monopoly privileges for line upgrades exceeds FERC’s statutory authority under the Federal Power Act and undermines the market-opening precedents set by Order No. 1000 in 2011.

Paul Cicio, Chair of the Electricity Transmission Competition Coalition, stated:

“FERC’s attempt under Order 1920 to bestow monopoly rights on incumbents to upgrade the nation’s transmission system violates the Federal Power Act. Even if the court finds that FERC has authority to grant incumbents monopoly rights, FERC violated Section 206 of the Federal Power Act and the APA in exercising that authority.”

“The monopoly carveout in Order 1920 is a multi-billion dollar loophole that will drive up electricity costs for ratepayers. Competition is the most effective tool we have to drive down transmission costs, and the record proves it: when transmission projects have been opened to bidding, competition reduced costs by an average of 30% for consumers.”

Administrative History and Procedural Timeline

ETCC previously sought an administrative rehearing regarding Order No. 1920’s ROFR provision in June 2024. FERC subsequently maintained the exemption across its follow-on rehearing orders, Order Nos. 1920-A and 1920-B, prompting the consolidated judicial petition before the Fourth Circuit.

• May 2024: FERC issues Order No. 1920 with ROFR exception for incumbent upgrades
• June 2024: ETCC files petition for rehearing on monopoly carve-out
• Subsequent FERC Orders (1920-A & 1920-B): FERC upholds ROFR provision
• September 2026: Fourth Circuit hears oral arguments in consolidated challenge

FAQ: ETCC Challenge to FERC Order No. 1920

What is the central issue in ETCC’s lawsuit against FERC Order No. 1920?
The ETCC argues that FERC unlawfully granted incumbent utilities a federal Right of First Refusal (ROFR), allowing them to upgrade and rebuild aging transmission lines without competitive bidding, in violation of the Federal Power Act and the Administrative Procedure Act.

How does Order No. 1920 differ from FERC Order No. 1000?
FERC Order No. 1000 (issued in 2011) eliminated federal ROFR rights to encourage competitive bidding for regional transmission buildouts. Order No. 1920 creates an exception for incumbent utilities upgrading existing transmission corridors.

What financial impact does ETCC claim the ROFR carve-out will have on ratepayers?
The ETCC estimates the carve-out serves as a multi-billion dollar loophole, noting that competitive bidding historical data demonstrates an average 30% reduction in transmission project costs for electricity consumers.