FERC adopts sweeping transmission planning regulations with the aim of speeding projects
Energize Weekly, May 22, 2024
The Federal Energy Regulatory Commission (FERC) adopted a sweeping new regulation, on May 13, aimed at spurring the planning and construction of new transmission lines to meet the growing needs of the nation’s overworked electric grid.
The new rule requires long-term planning for grid improvements, a broader allocation of transmission project costs and in some cases, commission intervention to speed along projects.
There was, however, immediate pushback from state energy officials and investor-owned utilities who see some of their prerogatives being curtailed by the new rules.
“Our country is facing an unprecedented surge in demand for affordable electricity while confronting extreme weather threats to the reliability of our grid and trying to stay one step ahead of the massive technological changes,” FERC Chairman Willie Phillips said in a statement.
“Our nation needs a new foundation to get badly needed new transmission planned, paid for and built. With this new rule, that starts today,” Phillips said.
The regulation is seen as bolstering the buildout of renewable energy generation and storage. There are about 2,600 gigawatts of projects waiting to hook up to the grid, according to the Lawrence Berkeley National Laboratory.
At the same time, the demand for electricity is growing. For the last decade, grid planners were forecasting a 0.5 percent annual growth rate for load, according to the think tank Grid Strategies, but the forecast for the next five years has already jumped to 4.7 percent from 2.6 percent.
“FERC has acknowledged the multiple benefits that transmission provides and has set out a process to ensure that all beneficiaries help to fund projects,” Carrie Zalewski, a vice president at the American Clean Power, a renewable energy trade group, said in a statement.
“If implemented effectively, this will lead to much-needed expansion in transmission,” Zalewski said.
The rule requires transmission planners to develop 20-year plans and consider the economic and reliability benefits for new power lines, including changes in the generation mix, risks of extreme weather, and renewable energy mandates.
In presenting the rule to the commission for a vote, the FERC staff said that a lack of long-term planning has led to “piecemeal transmission expansion.”
“This dynamic results in, among other things, transmission customers paying more than is necessary or appropriate,” according to the FERC staff presentation.
The rule would place some limits on the role of states in planning and paying for grid improvements. For example, some states, such as New Jersey, have policies to promote renewable energy, while others, like West Virginia, remain coal oriented.
Under the new regulations, no state could opt out of paying for new transmission, even if it serves wind and solar generation.
“This rule is a pretext to enact a sweeping policy agenda that Congress never passed,” FERC Commissioner Mark Christie said. “It is intended to facilitate a massive transfer of wealth from consumers to for-profit special interests, particularly generation developers – primarily wind and solar – transmission developers, [and] influential powerful corporations.”
Christie, a Republican voted against adopting the regulation. Phillips and Commissioner Allison Clements, both Democrats, voted for the new rules.
The rule also gives FERC the power to issue permits for transmission lines in so-called National Interest Electric Transmission Corridors when state regulators lack authority, have denied an application or have failed to act on one for more than a year.
The U.S. Department of Energy has proposed national corridors – where congestion is raising power prices – covering more than 3,500 miles across half a dozen regions. These include New England, New York, the mid-Atlantic, Southwest, Northern Plains and Northwest.
“We are generally disappointed by the significantly diminished state role envisioned by the FERC order with respect to transmission planning and cost allocation,” Greg R. White, executive director of the National Association of Regulatory Utility Commissioners, said in a statement.
The new regulation also does not give investor-owned utilities (IOUs) and public power authorities the ability to build projects without going out to bid by independent transmission companies – the so-called right of first refusal. The right had been in the initial proposal.
The effect of the new regulation could lead to “longer compliance processes and, ultimately, could slow the development of much-needed transmission projects,” Philip Moeller, a vice president at the Edison Electric Institute, an IOU trade group.
The rule will take effect 60 days after being published in the Federal Register. Transmission operators will then have 10 months to file plans to meet most of its requirements.
