Strong FERC Transmission Planning Reforms Will Speed the Transition to Clean Energy

Aging and inadequate transmission infrastructure is thwarting the clean energy transition. At a minimum, we must double current transmission capacity by the end of this decade to meet current and future load demands and reliability needs and connect the thousands of proposed clean energy projects that have been waiting years to access the grid. Now the agency with authority to improve the pace and scale of building transmission infrastructure – The Federal Energy Regulatory Agency (FERC) – is expected to enact much-needed regulatory reforms.

This problem is no accident. The nation’s transmission owners have long refused to build long-distance transmission lines that would connect clean energy across the region because the competition from cheap clean power would jeopardize the profits of their local fossil fuel affiliate power plants. That’s left us with a backlog of proposed solar, wind, and battery storage projects waiting to connect to the grid, and dire studies from the Department of Energy warning that “today’s grid cannot adequately support 21st century challenges —including the integration of new clean energy sources and growing transportation and building electrification — while remaining resilient in the face of extreme weather exacerbated by climate change.”

There are currently three systemic barriers to getting transmission built:

• Transmission providers have every economic incentive to thwart the expansion of transmission since they often own or are affiliated with existing fossil fuel plants that stand to lose money or retire when cheaper clean energy gets access to the grid, which is primarily via regional transmission lines. FERC’s current transmission rule gives these providers extensive discretion through an essentially unchecked ability to build local transmission projects that primarily benefit existing fossil fuel plants, but requires them to compete to build the regional and interregional transmission needed to facilitate the energy transition. As a result, in some regions, like PJM, spending on local projects has tripled since FERC’s Order 1000 transmission planning rule required them to compete to build regional transmission projects.
• A lack of effective long-term transmission planning and regulatory oversight, especially of local transmission projects. Current federal rules operate largely as voluntary guidelines that do not require planning regions to actually prepare for the future grid needs, assess the benefits of regional transmission, or meet state clean energy requirements or federal regulations such as the Inflation Reduction Act.
• Political struggles among states with different views on energy policy, especially in multi-state regional transmission organizations where debates on how to fund projects presents a barrier to transmission build-out.

Earthjustice and its partners have been on the forefront of pushing for justice-centered transmission planning and siting reforms that would break down these barriers and accelerate the clean energy transition.  Central to this work has been our extensive advocacy before FERC. After filing our initial proposal for reforms,  FERC issued a Notice of Proposed Rulemaking for Long-Term Regional Transmission Planning (NOPR) that would, if finalized, improve existing requirements.  While the NOPR received initial bipartisan support,  differences between the Commissioners around key proposals remained. After considerable pressure from Congress and numerous stakeholders in the proceeding, FERC scheduled a vote on the final rule on May 13, 2024.

If finalized as proposed, the final rule would enhance specific planning and information sharing requirements designed to help break the barriers to building new transmission including:

• Mandatory Long-Term Planning Requirements. The core shift in FERC’s proposed rule would require all transmission operators to conduct triennial planning exercises that evaluate the best available data on expected trends in energy supply and demand to prepare for present and reasonably foreseeable future needs over the next 20 years. At a minimum, planners would be required to plan for a transmission system that would account for applicable state and federal energy policies, among other things. This process is already used by at least one grid operator, the Midcontinent Independent System Operator (MISO), which is currently building 18 regional transmission projects, most of which will be in service by 2029.
• Mandatory Benefits Assessment. Planners would then need to assess the benefits of projects over a period of at least 20 years. The Commission suggested 12 types of benefits it believes would likely apply based on best practices already used by some grid operators to assess all economic, reliability, and other benefits, such as cost savings that come from reduced congestion, greater competition, avoided resource adequacy costs, and improved reliability.
• Local Planning Reforms. Transmission planners would be required to increase transparency of criteria, models, and assumptions used in local planning process and improve public participation and larger projects would have to go through the regional planning process.
• Cost Allocation. Transmission planners would be required to work with states to establish how transmission projects identified in the final plan will be paid for, including the option for one or more states to voluntarily assume the costs of transmission.

Earthjustice and our partners believe that FERC should strengthen these reforms, as we stated in our comments. Among other things, FERC should require that planning regions incorporate equity and environmental justice considerations early in the planning process. To ensure that the most efficient transmission solutions are selected, FERC should mandate that planning regions specify their approach for integrating all types of grid-enhancing technologies. FERC should not grant the planning region discretion to choose which combination of transmission benefits they will assess, since transmission owners tend to focus on the projects that will produce the most profit for themselves. Similarly, FERC should not authorize planning regions to limit corporate clean energy goals incorporated in scenario-based plans. FERC must also set clear guidelines for cost allocation to avoid deadlocks over political differences among states, disagreements that often thwarted building necessary interstate transmission.

Clean energy means cheaper electricity and a more reliable grid

Solar, wind, and battery storage are increasingly cheaper than burning fossil fuels, we just need the wires to deliver clean energy into every American home.

Building out transmission and distributed clean energy will result in a more reliable, resilient, affordable, and equitable grid. In addition to the ongoing harms for the communities bearing the unjust burdens of our fossil fuel-based energy system, over the last decade, increasing plant and pipeline failures have led to outages and blackouts during major storm events. These  system failures were compounded by the inability of grid operators to rely on alternative resources like wind power (which does well in winter) or the transmission capacity to draw electricity from other regions—with catastrophic and deadly consequences. In fact, Europe’s electricity grids powered primarily by solar and wind resources and extensive regional and interregional transmission lines have proven to be far more reliable and resilient than the fossil-fuel powered grid of the U.S.

What’s next?

Issuing the rule is the first step of a long march to implementation and Earthjustice is already preparing for expected challenges  in federal courts and in the regional compliance processes. Each region will be required to comply with the rule within eight to ten months after the rule is published in the Federal Register.

This is the latest in a series of much-needed federal reforms that will spur new transmission and connect clean energy projects to the grid. FERC revised the interconnection process for new energy projects last year and will issue the so-called “backstop authority” rule on its authority to site interstate transmission projects. The DOE just issued a new rule that will cut the average time to issue federal permits for transmission projects in half and also issued a list of 10 priority potential electric transmission corridors for funding and development. The potential corridors (known as National Interest Electric Transmission Corridors) will aid the clean energy transition across the country.

FERC will likely focus on reforming interregional planning next, including setting the interregional transfer requirements to establish minimum requirements for how much power a system can reliably transfer, reforming incentives for Grid Enhancing Technologies, and holding a technical conference on interconnection and transmission planning for privately-owned (merchant) transmission lines.

Taken together, these federal reforms should modernize and expand our grid in ways necessary to support the transition to a 100% clean economy. FERC must continue to accelerate transmission infrastructure in an equitable way, with policies that support the rapid-buildout of a clean, reliable, and affordable energy system across the country.