ROFR is Not Dead at All

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Back from the Dead

ROFR was dead, to begin with. There is no doubt whatsoever about that. The register of its burial was signed by the Assembly Speaker, the Senate Majority Leader, the lobbyists, and Wisconsin’s energy transmission cartel. You will therefore permit me to repeat, emphatically, that ROFR was as dead as a doornail.

So why did its face just appear on our front porch?

Supporters of Right of First Refusal (ROFR) claim to be singing a new Christmas carol by introducing a compromise bill which is really the same old song and dance: The generous gift of unconstitutional protectionism to the cartel and its allies and a lump of coal to Wisconsin’s citizens.

ROFR allows Wisconsin’s three incumbent electrical transmission companies to refuse to allow companies from outside the state to bid on new transmission projects—a multi-billion-dollar industry as the demand for electricity rises exponentially over the next few years. This has the practical effect of creating a government-enforced cartel of three ostensibly independent companies which collude to restrict competition and artificially set prices.

The measure died amid widespread public outcry in 2024, but Senate Majority Leader Devin LeMahieu resurrected it earlier this year only to see it perish again in a wave of even greater backlash.

The third time is apparently the charm, as ROFR supporters are now circulating what they call a compromise proposal: The Wisconsin Energy Reform Act (WERA). They claim this new legislation will guarantee competitive bidding on new electrical transmission projects, keep construction and maintenance costs down, and ultimately save Wisconsin ratepayers $1 billion over the next 40 years.

It most certainly will not—primarily because it is not a compromise at all. It still allows Wisconsin’s cartel to eliminate out-of-state competition by granting the three incumbent companies the exclusive right to own and operate transmission lines and facilities in the state. Out-of-state companies would be therefore forced to bid only on construction and maintenance projects for the cartel. They wouldn’t be its competitors; they would be its subcontractors.

The likelihood of any company actually being willing to do this is precisely zero, which establishes the same protectionism as the two failed bills without explicitly saying so. De facto ROFR, however, is just as insidious and just as unconstitutional as de jure ROFR.

And ROFR is most assuredly unconstitutional, as its discrimination against out-of-state transmission companies directly impacts interstate commerce and clearly violates the Constitution’s Dormant Commerce Clause. Article I, Section 8 grants Congress the exclusive authority to “regulate commerce … among the several states.” Within this delegation of power is the implicit prohibition on states regulating interstate commerce themselves, especially by enacting legislation that discriminates against other states.

That is precisely what ROFR and WERA do. Supporters of both arrived at their $1 billion savings figure by calculating the costs that their legislation would allow the Wisconsin cartel to push off onto other states. This, combined with a ban on any other state entering Wisconsin’s transmission market, plainly violates the Dormant Commerce Clause.

Almost as bad, the claimed billion-dollar savings may well pale in comparison to the increased cost of projects that are not open to competition.

The MacIver Institute found that “competitively bid projects in [Wisconsin’s electrical grid] region resulted in overall costs 37% less than the highest bids placed, and 52% less than…estimates” while “similar multi-value projects not subject to the competitive process resulted in costs that were 18% higher than [the] original estimates.”

WERA’s drafters claim that the law will force the cartel to pay all cost overruns out of its own pocket, but this is dubious. The law excludes “prudent costs” incurred by “circumstances beyond the developer’s control” as defined and approved by Wisconsin’s Public Service Commission (PSC). An expansive definition by a tolerant—or heavily lobbied PSC—would allow the cartel to pass off any and all cost overruns to the state.

WERA isn’t just wrong financially and constitutionally; it is also wrong philosophically. As President Trump imposed massive tariffs on pretty much every nation on earth, conservatives came out of the woodwork to vocalize their support for free markets and open, fair trade across national boundaries.

Yet some of those same conservatives simultaneously seek to put a giant trade barrier around Wisconsin. Forget about tariffs, they want to ban all electrical transmission imports—not to win a trade war with China or force friendlier nations to lower their own barriers to free trade but to protect the interests of the home-state cartel.

ROFR is about as dead as Jacob Marley, and just like him, it is dragging the heavy chains of unscrupulous business practices along behind it. True free-market capitalists, true constitutional conservatives recognize this for what it is.

And the Republicans pushing it are going to have a dickens of a time convincing us otherwise.