Price relief through competition: ending Minnesota’s transmission monopoly

Minnesota has long prided itself on forward-thinking policies and careful stewardship of resources. Yet for over a decade, a little-known law has been quietly increasing your electric bill while stifling innovation in our energy infrastructure.

In 2012, Minnesota passed a “Right of First Refusal” law for electric transmission lines. While the Vikings stadium deal dominated legislative attention, 216B.246 passed unanimously in both chambers. This law gives incumbent utility companies the exclusive right to build new high-voltage transmission lines that connect to their existing infrastructure.

The consequences have been profound and costly for Minnesota ratepayers.

Before this law, Minnesota enjoyed electricity rates significantly lower than the national average — about 18% below in 2001 and still 13% lower in 2011.

Then came the ROFR law in 2012, and this advantage began eroding rapidly. By 2013, rates were only 6.5% below the national average. The downward trend continued until 2020, when rates were virtually identical to the national average — a mere 0.2% lower. While there have been slight improvements recently, Minnesota is nowhere near its former competitive advantage.

This isn’t just about losing an economic edge — it’s a failure to meet the state’s own legal requirements. Minnesota law explicitly mandates that electricity rates should be 5% below the national average. Current rates fail this standard, putting Minnesota in violation of its own energy policy goals.

The ROFR law effectively creates a monopoly, allowing incumbent utilities to build transmission projects without facing competition from potentially more efficient, innovative or cost-effective providers.

Research consistently shows that competitive bidding on transmission projects reduces costs by 20-30%. In the MISO region (which includes Minnesota), competitively bid projects have yielded overall cost savings of 37% for ratepayers. These aren’t small numbers considering the multi-billion-dollar scale of transmission infrastructure. For the average Minnesota family, this could mean significant relief on monthly electric bills.

The stated purpose of the ROFR law is often described as protecting consumers and incumbent utilities from “out-of-state competition.” Instead, it has shielded utilities from any competition, removing incentives to innovate, control costs, or improve efficiency. Under the current law, even if an incumbent utility decides not to build a needed transmission line, alternatives can only be considered after the incumbent formally declines — creating further delays and complications.

The timing for action is critical. Without competitive bidding, massive infrastructure investments will be built at monopoly prices, potentially driving electricity rates even further above the statutory requirement.

Currently, bills SF434 and HF2553 aim to repeal Minnesota’s ROFR law. This repeal represents a crucial opportunity to restore competition, reverse the trend of diminishing rate advantages, and deliver much-needed price relief to Minnesota consumers.

Critics may argue that changing the law will create uncertainty. But courts in other states have already shown the path forward. In Iowa, the Supreme Court characterized their ROFR as “crony capitalism” in 2023. Similarly, Texas courts ruled that ROFRs are “unconstitutional because they violate the dormant Commerce Clause.”

Despite these judicial setbacks, the utility industry continues to push for ROFR laws nationwide. Oklahoma has seen ROFR bills proposed every year for the past four years. Wisconsin is battling to prevent similar legislation. And in Iowa, despite court rulings, new bills have been proposed with the same misleading justifications used when Minnesota’s law was enacted.

The evidence is clear: Monopoly by statute doesn’t work. Competition drives innovation, efficiency, and ultimately, the price relief that Minnesota consumers need.

For a state that values innovation, fair competition, and consumer interests, Minnesota’s ROFR law is an anomaly that must be addressed. Since its enactment, Minnesotans have watched their electricity rate advantage disappear.

It’s time for Minnesota to repeal this costly monopoly protection and restore the competitive advantage it once enjoyed. The state’s energy future — and the relief on your electric bill — depends on it.