LANSING, Mich. — Michigan’s Senate on Tuesday voted 28-6 to grant incumbent transmission owners the right of first refusal (ROFR) to build and operate new transmission lines in the state — legislation that could particularly boost the fortunes of ITC Holdings and American Transmission Co.

There were no comments during the floor vote on the Transmission Infrastructure Planning Act (TIPA) (SB 103). The bill, which was opposed by the most conservative Republican members, now goes to the House of Representatives, which under the state constitution must wait at least five days before acting.

The bill would apply to “regionally cost-shared” transmission projects, such as those resulting from MISO’s Transmission Expansion Plan. It takes advantage of the exception under FERC Order 1000 that allows states to create a ROFR. The order prohibited such rights in tariffs filed with the commission in a bid to create competition, although some incumbents have recently urged FERC to reverse the prohibition in the commission’s Advance Notice of Proposed Rulemaking proceeding. (See FERC Tx Inquiry: Consensus on Need for Change, Discord over Solutions.)

ITC Holdings

Sen. Wayne Schmidt (R), who co-sponsored the bill with Sen. Curtis Hertel (D), told RTO Insider that Michigan “will need more transmission, with growing electrification, especially with electric vehicles.” The legislation would give the state “a more organized way” to develop additional transmission, he said.

Schmidt also said it could assure a more orderly system in building transmission lines, avoiding a “patchwork system.”  It can take five to 10 years to get transmission lines built and operating, he said.

The bill was reported from the Senate Energy and Technology Committee on an 8-2 vote Oct. 6, with all of the panel’s Democrats and all but two Republicans in support. The opponents did not explain their opposition and have not responded to several requests for comment.

The minutes of the committee’s Sept. 21 meeting show the bill was supported by the state’s three biggest transmission operators: ITC, ATC and Xcel Energy (NASDAQ:XEL). ITC CEO Linda Apsey and ITC Michigan President Simon Whitelocke testified on behalf of the bill.

Whitelocke told RTO Insider the bill was supported by “over a dozen entities across Michigan,” including General Motors; Johnson Controls; the Michigan Forest Products Council; IBEW locals 876, 17 and 223; Utility Line Contractors; and the Michigan Chamber of Commerce, in addition to ATC and Xcel.

“SB 103 will ensure that utilities with a proven track record in the state are allowed to construct any future high-voltage transmission projects,” Whitelocke said in a statement. “Adopting a TIPA provision preserves Michigan’s right to decide who builds, owns and operates these systems and where they should be built. This provides benefits in terms of efficiency, planning, development, operation and maintenance of the grid, while protecting landowner interests and meeting the needs of energy consumers.”

ITC Holdings’ ITC Transmission and Michigan Electric Transmission Co. serve most of Michigan’s Lower Peninsula through a network of about 8,700 circuit miles. The companies have made $5.5 billion in capital investments in the state since 2003. | ITC Holdings

ITC Transmission and Michigan Electric Transmission Co. serve most of the state’s Lower Peninsula with a network of about 8,700 circuit miles. The companies have made $5.5 billion in capital investments in the state since 2003. ITC is a unit of Fortis (NYSE:FTS).

ATC, which provides transmission in the Upper Peninsula, and Xcel, which has about 110 miles of transmission line in the state serving about 9,000 electric customers, did not respond to requests for comment.

The Michigan Chemistry Council and the conservative Mackinac Center for Public Policy testified against the bill.

The Chemistry Council acknowledges “there remain barriers to transmission planning and development and particularly with the implementation of FERC Order 1000,” Executive Director John Dulmes told RTO Insider. “But our members have long advocated for greater energy competition, and we don’t believe the answer is a state ROFR law that eliminates the benefits of competitive transmission development. We are hopeful that the FERC ANOPR will yield constructive reforms for the benefit of ratepayers across Michigan and the nation.”

The council said it supports House Bills 4806 and 4807, which it said would allow any MISO-qualified transmission developer to exercise eminent domain for competitive transmission projects. “We believe it only makes sense to open up this authority for all qualified developers, as was done in 2004 when the new independent transmission companies (like ITC and ATC) were spun off of the incumbent utilities,” the council said in its written testimony.

Transmission lines built and operated under the legislation would remain subject to the state Public Service Commission’s rules on cost accountability. If the PSC successfully files a complaint against a line or a line owner with FERC, the bill stipulates the company will need reimburse the state commission for up to $25,000 in legal costs.

PSC spokesman Matt Helms said the commission is neutral on the bill.

At one of the first Senate committee meetings on the bill, Mike Byrne, COO of the commission, said the state would need additional generation and therefore transmission as the economy becomes more electrified. He also said more transmission would provide resilience in the grid during extreme weather events such as the massive rainstorms that caused outages in the state in August.

Several other Midwestern states, including Iowa and Minnesota, have similar legislation, Sen. Schmidt said. However, Iowa’s law is the subject of a legal challenge filed in November 2020 by LS Power Midcontinent and Southwest Transmission, based in St. Louis. LS Power is challenging the law on procedural grounds, saying the ROFR provisions were improperly included in an omnibus budget bill. ITC’s Iowa-based Midwest unit and Des Moines-based Mid-American Energy have filed to intervene to protect their ROFR rights.

In 2020, the 8th U.S. Circuit Court of Appeals upheld Minnesota’s ROFR law, affirming a lower court’s 2018 decision. (See Courts Uphold Minn. ROFR, MISO Cost Allocation.)

CMS Energy, Michigan’s largest utility, is neutral on the bill, spokeswoman Katie Carey said. DTE Energy did not respond to a request for comment. The two utilities sold their transmission assets to ITC and no longer own transmission in the state.

According to the Michigan Campaign Finance Database, Schmidt has received $6,500 in campaign contributions from ITC Holdings PAC, and Hertel received $2,500 since 2018, the year of their last elections. Both senators are term-limited and cannot seek re-election next year.