There was a lot of media attention after a federal judge ruled in August that Google had violated antitrust laws and become a monopolist. The company could be forced to sell one of its most popular tools.
The federal government recently suggested Google is being forced to sell its Chrome web browser to deal with its alleged search engine monopoly. The state argues that the company’s dominance is due to contracts that “make it difficult for competitors to compete.”
But while the search giant’s problems take center stage, little attention is paid to the monopolies in our own backyard that actually impact consumers. In many states, electric companies enjoy a de facto monopoly over the industry, which means less competition and higher prices for ordinary people. In fact, several states such as Iowa and Wisconsin have attempted to pass laws that would enshrine these companies as monopolies indefinitely.
These are so-called ROFR (Right of First Refusal) laws, which give incumbent utilities the exclusive right to build, own and operate modern transmission lines that connect to their existing infrastructure.
These laws bypass the bidding process and allow incumbent utilities to win projects without having to compete with other developers. Those who support ROFR laws might suggest ensuring the grid remains reliable. But in reality they only serve to stifle competition and innovation while creating monopolies. The result is that everyday consumers have no choice in determining where they get their energy from.
Let’s take a hypothetical example. Imagine your state has a ROFR law that requires a modern $500 million transmission line to connect a farm to an urban area. Under this law, the incumbent utility that already supplies electricity would automatically gain the right to build the project without having to compete with other companies.
This means that other organizations that could have completed the project for less money are excluded from the process. The incumbent estimates the project would cost $600 million and is allowed to complete construction. Guess who pays for the higher costs? That’s right, you as a consumer have to pay for this through higher monthly installments.
This only sounds like fun if you happen to be the incumbent energy provider, right?
Earlier this year, Wisconsin’s state assembly approved a ROFR law.
Groups supporting the bill include several utilities, labor unions and local economic development organizations. One of the utilities supporting the bill is American Transmission Co. (ATC), which owns and operates much of Wisconsin’s transmission line system.
Opponents of the bill include consumer advocacy groups such as AARP and the Citizens Utility Board of Wisconsin, as well as Clean Wisconsin and conservative groups such as Americans for Prosperity and the Wisconsin Institute for Law and Liberty.
After the bill passed the Assembly on Thursday, Americans for Prosperity-Wisconsin state director Megan Novak issued a critical statement to lawmakers, saying the Assembly was “on the side of the utilities, not on the side hardworking ratepayers like you and me.” She called it “crony capitalism,” a term that describes companies that benefit from a close relationship with the government.
So far the bill hasn’t gone anywhere else, but in the modern year it’s likely state lawmakers will take up the issue again.
ROFR laws contradict free market principles and would only further burden everyday Americans still suffering from the country’s economic woes. When there is no real competition, immense companies can essentially charge whatever they want for their services, knowing that they don’t have to worry about other companies outbidding their prices and quality of service. Journalist Ezra Wyrick describes the problems well:
While Democrats and Republicans in Congress whine incessantly about fictitious tech monopolies, there is a bipartisan effort in some states to create another sidekick for actual monopoly interests – utilities.
The right of first refusal must be rejected. pic.twitter.com/GQdB1Dczjb
— Ezra Wyrick (@Ezra4Liberty) December 6, 2024
Of course, the state government could simply impose price caps on these companies to keep costs down, right? Maybe, but that does little to solve the problem. Competition forces companies to figure out how to provide a high quality service at a lower cost. This will promote innovations that could not only lead to financial relief for consumers, but also to better service.
Unfortunately, there are far too many state legislators who are more than willing to betray taxpayers to join forces with their cronies in corporate America. Hopefully more consumers will be aware of what is happening and trust their state representatives to repeal this type of legislation.
