The Federal Energy Regulatory Commission (FERC) is expected to unveil a new transmission ruling on Monday that could help speed up the currently arduous process of deploying long-distance power lines.
A framework for the plan released by FERC in 2022 served as a starting point for discussion on cost allocation in regional transmission planning. At the time, then-Chair Richard Glick said the proceeding intended to shift transmission planning to a “longer-term forward-looking approach.”
Among the proposed changes, transmission providers would be required to conduct regional transmission planning on a “sufficiently long-term, forward-looking” and identify needs based on federal, state, and local laws and regulations.
On cost allocation, the commission proposed requiring transmission providers to seek the agreement of relevant state entities within the transmission planning region regarding the cost allocation for transmission facilities selected as part of long-term regional transmission planning.
Larry Gasteiger, executive director of the transmission trade group WIRES, said he looks forward to FERC’s “once-in-a-generation action on its transmission planning, cost allocation, and competitive transmission rules with the hope that the new rules make it easier and faster to get transmission infrastructure built in the US to address a number of priorities.”
GO DEEPER: Episode 72 of the Factor This! podcast features Ari Peskoe, an expert on transmission policy and the director of the Electricity Law Initiative at Harvard. Subscribe wherever you get your podcasts.
Tory Lauterbach, a partner in the Energy & Climate practice at the law firm Foley Hoag, believes the most significant change to transmission planning would be the move to a minimum 20-year planning horizon with reassessments every three years. She also flagged the potential for developers to submit interregional projects in the regional planning process, as interregional projects are seldom developed due to a variety of permitting and cost allocation challenges.
“I expect that however FERC lands on the key components of its 2022 (proposed ruling), two issues will be especially contentious: (1) reestablishment of a limited federal right of first refusal (“ROFR”) for incumbent transmission utilities that agree to joint ownership of projects, and (2) the elimination of the availability of the construction work in progress (“CWIP”) incentive for projects selected in a regional planning process,” she told POWERGRID International. “One might expect these two issues and perhaps other issues to feature prominently in any requests for rehearing of the final rule, as well as in appeals of the ultimate rulings on such rehearing arguments.”
Lauterbach cautions that, even if FERC does offer a final ruling, it would only be the beginning for desperately needed transmission reform, despite the fact that it will likely represent “the most significant modification to FERC’s transmission planning and cost allocation policies in over a decade.”
For one, FERC is unable to substantially deviate from the initial plan, meaning calls for the adoption of a minimum interregional transfer capacity requirement are unlikely to be answered in this ruling. It may even require Congress to step in, she added. The ruling will also not address the “convoluted” permitting and siting issues that have long constrained transmission development in the U.S.
The urgency for FERC, and federal policymakers, to crack the transmission code cannot be understated: unprecedented load growth from data centers and artificial intelligence, coupled with surging growth of intermittent renewable energy resources, requires a massive buildout of new transmission capacity to keep pace.
According to Grid Strategies, U.S. peak demand growth could grow by more than 38 GW through 2028, driven by electrification, along with the development of data centers and industrial and manufacturing facilities.
The report, The Era of Flat Power Demand is Over, cited forecasts from grid planners, who have doubled their five-year load growth forecasts in just the past year. The nationwide demand forecast jumped from a rate of 2.6% to 4.7% growth over the next five years, according to FERC filings. And those forecasts are likely an underestimate, Grid Strategies said.
Perhaps unsurprisingly, Grid Strategies said the grid is not yet ready for such significant growth. The U.S. installed 1,700 miles of new high-voltage transmission miles per year on average in the first half of the 2010s but that dropped to only 645 miles per year, on average, in the decade’s second half. Low transfer capability between regions is a key risk for reliability if load growth outpaces the deployment of new generation in some regions, the report added.
Interregional grid connections could go a long way, too, by increasing reliability and supporting the buildout of new clean energy resources.
“In a lot of respects, the US is lagging behind other parts of the world,” Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School said on the Factor This! podcast from Renewable Energy World. “And again, why is that?” The answer, he said, is governance. “We really don’t have regional governance by the RTO. We have shared governance by both the RTO and the utilities.”
