A divided Federal Energy Regulatory Commission on May 13 finalized a sweeping electric transmission rule that requires grid operators across the US to use a minimum 20-year planning horizon when developing regional plans for new power infrastructure.
The final rule, Order 1920, was approved during a special open meeting during which FERC Chairman Willie Phillips and Commissioner Allison Clements, the agency's two sitting Democrats, asserted the regulation represents a commonsense package of reforms that addresses the pressing need for more transmission capacity.
The US Energy Department's latest National Transmission Needs study estimated that US power grid capacity may need to increase 144% by 2040 assuming high levels of electricity demand and clean energy penetration.
"This rule recognizes the reality on the ground," Phillips told reporters. "That the factors affecting our grid, they are changing, so we have to take action now."
But Commissioner Mark Christie, currently the panel's only Republican member, argued the final rule goes far beyond a proposed version of the regulation that he supported in April 2022, calling the rule "a shell game designed to disguise its true agenda."
"It's a 1,300-page vehicle to socialize the trillion-dollar costs of the rule's sweeping policy agenda," Christie said during the meeting before voting against the measure.
Clements said billions of dollars will be spent annually on new transmission "regardless of whether it's done within the framework of this new rule." She noted that FERC recently approved nearly $1 billion in transmission investments in the PJM Interconnection LLC region to address the planned retirement of Talen Energy Corp.'s 1,273-MW coal-fired Brandon Shores plant in Maryland.
"The status quo, last-minute, and piecemeal approach is an expensive proposition," Clements said. "This rule protects consumers from that approach, and in the long run it will result in a far more affordable grid than the alternative."
New transmission planning inputs
Order 1920 (RM21-17) requires transmission planners to use a minimum 20-year planning horizon for regional transmission expansion plans that must be updated at least every five years. The order number is a tribute to FERC's predecessor agency, the Federal Power Commission, which was created by Congress in 1920.
Grid planners must account for factors such as state-level laws and regulations, utilities' integrated resource plans, trends in fuel costs, generator retirements, interconnection queue requests and withdrawals, and corporate clean energy commitments.
Planners must also use at least seven economic and reliability benefits when selecting long-term regional transmission facilities. Those benefits include reduced loss of load probabilities and mitigation of extreme weather events, as well as energy production cost savings and reduced congestion costs.
"Let me emphasize, these are all mandatory inputs," Christie said, noting FERC's earlier proposal would have required the consideration of such metrics but stopped short of mandating their use. "Mandating benefits will ultimately affect the allocation of costs to consumers across a multistate region."
After the meeting, Clements cited a study by the US National Renewable Energy Laboratory that found approximately 50% of the benefits associated with transmission facilities come during just 5% of a line's operating hours — typically during periods of peak demand. "That's a really important benefit to capture," she said.
The rule requires transmission providers to initiate six-month engagement periods with relevant state regulators on cost allocation before submitting compliance plans to FERC. Transmission providers can also adopt a state agreement approach where states elect to shoulder 100% of the costs associated with public policy-related projects such as offshore wind generation.
Right-sizing requirements, grid-enhancing technologies
In addition to encouraging the development of new power lines, Order 1920 requires transmission planners to identify "right-sizing" opportunities for replacement transmission facilities. Transmission owners will have a federal right of first refusal (ROFR) to build such replacement facilities.
As for new regionally planned lines, incumbents will have no federal ROFR to build them under Order 1920. FERC originally proposed to give them that right, conditioned on the transmission owners establishing joint ownership with an unaffiliated entity. But advocates for competitive transmission development heavily criticized the provision.
"We understand that all the tools necessary to build out the transmission grid need to be on the table," Phillips told reporters.
The rule also aims to squeeze more capacity out of the existing system by requiring planners to more fully consider grid-enhancing technologies such as dynamic line ratings and advanced power flow controllers. Dynamic line ratings allow existing power lines to operate at a higher capacity through the use of real-time data on factors such as wind speed and line sag, while advanced power flow controllers can push or pull power onto adjacent lines with spare capacity.
"Grid-enhancing technologies will be vital to achieving the seven economic and reliability benefits in the rule, especially production cost savings, reducing grid congestion and improving performance in extreme weather," Julia Selker, executive director of the WATT Coalition, an advocacy group for advanced transmission technologies, said in an email.
Order 1920 was broadly praised by the US clean energy industry. However, the American Clean Power Association cautioned that the rule "cannot be the finish line."
"If implemented effectively, this will lead to much-needed expansion in transmission capacity on the US grid," Carrie Zalewski, the group's vice president of markets and transmission, said in a statement. "At the same time, there are also areas in the rule to build upon, especially with regard to the integration of new resources and enabling more transmission between regions."
FERC is also considering a minimum interregional transmission standard, with results from a related study by the North American Electric Reliability Corp. due to the commission by December.
The full text of Order 1920 was not immediately available May 13. The final rule becomes effective 60 days after its publication in the Federal Register, with compliance filings due 10 months from its effective date.