3 min read

May 20, 2024

Por Nicole Luckey, SVP, Regulatory Affairs; Patrick Whitty, SVP, Transmission Public Affairs; Andrew Wills, SVP, Federal Affairs

May 20, 2024

líneas eléctricas

New FERC rules a first step toward a more modern grid

Por Nicole Luckey, SVP, Regulatory Affairs; Patrick Whitty, SVP, Transmission Public Affairs; Andrew Wills, SVP, Federal Affairs

Last week, the Federal Energy Regulatory Commission (FERC) approved changes to the way major regions of the U.S. electric grid plan transmission lines. These new rules are an important first step toward a more modern, reliable grid, greater access to affordable and sustainable energy for consumers, and economic development for communities all over the country.
Strong leadership by FERC Chairman Willie Phillips and others at FERC was instrumental in the ultimate approval of the rule changes.
FERC's new rules in Order 1920 will accelerate and streamline the expansion of the U.S. power grid and facilitate more opportunities to connect new energy generation projects like those in Invenergy’s growing wind, solar, storage and gas peaker portfolio to the grid.
Among other measures, the rules help accomplish this by requiring grid operators to plan for transmission needs 20 years into the future, engage in long-term planning at regular intervals, and to be responsive to the nation’s expected load growth and energy goals set by states, utilities, and large corporate energy users. The rules also require grid operators to consider the potential impacts of extreme weather conditions on the grid. These changes will begin the process of adding greater transparency and fairness to the transmission planning process.
Additionally, the rule could support future competitive, greenfield rate-based transmission opportunities for the industry. FERC rightly declined to implement a federal right of first refusal in this order for competitive transmission projects, ensuring consumers continue to benefit from competition in transmission development, which supports greater cost efficiency and effective project delivery.
FERC’s reforms will deliver needed changes to support transmission expansion within regional footprints of major parts of the U.S. grid. But they don’t address expanding transmission between regions. Interregional transmission is a critically needed solution for ensuring energy access and availability as manufacturing and AI drive spikes in electric demand and increasingly frequent and severe extreme weather events threaten reliability.
Congress, regulators and grid operators should work together to address these significant grid policy gaps and build on the momentum of FERC’s recent ruling. FERC itself must also continue the unfinished work on its transmission agenda and address barriers to interregional and merchant transmission.
As planning processes evolve to meet these new standards, Regional Transmission Organizations (RTO) and Independent System Operators (ISO) should also work to maximize existing transmission and ensure their updated regional planning processes properly account for and leverage independently developed merchant lines in their regions, particularly those designated as national priority lines. Optimizing existing connections between regions (making the best use of the infrastructure we already have) will reduce costs for consumers and make the system more efficient. And leveraging lines funded and built by private industry means ratepayers only pay for transmission in the places it is needed most.
For example, Invenergy’s Grain Belt Express transmission line has been approved by four Midwestern states, is a covered project on the Federal Infrastructure Permitting Dashboard, addresses needs identified in the Department of Energy’s National Transmission Needs Study, and is sited in a preliminarily designated National Interest Electric Transmission Corridor. The project will provide much needed, geographically diverse energy and capacity in a portion of the Midwest grid that is woefully short. Yet, the Midwestern grid operator MISO has proceeded with two consecutive rounds of transmission planning to address the same issue on its system – planning that fails to appropriately factor in this nationally significant project. The result is over $2 billion dollars in duplicative transmission investment for MISO ratepayers, costs that the private sector is already bearing.
Failure by RTOs to act on these policy gaps are resulting in higher costs for ratepayers and a less efficient system, as well as foregone economic development opportunities for communities of all types.
Congress also has a role to play by passing legislation to give FERC authority and direction to implement some of the most important changes needed. For example, legislation could require that FERC implement minimum transfer capability and interregional planning requirements. Previous legislation like the BIG WIRES Act have served as a road map for these kinds of legislative directives, which would have a real impact on industry’s ability to get these lines built, lower costs, and improve reliability. Congress could also pass legislation that requires FERC to implement optimization standards for lines between regions to ensure lines that exist or will exist in the near future are used in the most efficient manner.
Still, if Congress fails to act, FERC has the authority to further reform regional planning by requiring privately funded lines be accounted for, and by imposing minimum transfer requirements, interregional planning requirements, or optimization standards on its own, and the agency should consider doing so in future orders.
Finally, it’s imperative that Congress approve the three remaining FERC nominees so that the agency isn’t left without a quorum or effective authority following the departure of Commissioner Allison Clements on June 30. The full bench of commissioners is critical to maintaining a resilient and reliable grid and robust energy supply. Successful confirmation votes on the FERC nominees present another opportunity for Senate Majority Leader Schumer to build on past significant energy infrastructure successes such as passage of the Infrastructure Investment and Jobs Act, a bipartisan bill that can make energy more affordable and reliable for all Americans.
FERC’s recent rulemaking is a promising step toward achieving a reliable and resilient energy future. It would be a mistake for policymakers to slow down progress now while there’s an opportunity to transform the U.S. energy sector for the better and open doors for major economic investments all across America.
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