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'The time has come' for FERC to act on interregional transmission, report argues

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'The time has come' for FERC to act on interregional transmission, report argues

A major new report released Jan. 27 is calling on the Federal Energy Regulatory Commission to launch a new rulemaking effort aimed at boosting interregional electric transmission buildout to the levels needed to avoid the worst effects of climate change.

Produced by Americans for a Clean Energy Grid, or ACEG, the 105-page report is the result of more than a year's work, ACEG Executive Director Rob Gramlich said. He co-authored the policy blueprint with Jay Caspary, a planning expert who has worked on transmission projects for the Southwest Power Pool.

Gramlich said the comprehensive report is intended to invigorate discussion at FERC around how to ensure enough long-distance high-voltage transmission capacity is built to accommodate a surging number of variable renewable energy resources.

With an aging transmission system already in need of significant repairs, ACEG estimated the U.S. will eventually need to double or even triple its electric transmission delivery capacity to decarbonize the nation's economy by midcentury.

The Jan. 27 report noted that FERC already has a rule, Order 1000, that requires regional transmission organizations and independent system operators to coordinate on planning new interregional projects. While Order 1000 was issued in 2011, no interregional transmission lines have been built pursuant to that rule to date.

Meanwhile, RTOs and ISOs, which are largely dominated by transmission-owning incumbent utilities, have approved an increasing number of local reliability projects with limited regional benefits.

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"The time has come for FERC to build on its previous orders and strengthen transmission planning through a new nationwide transmission planning and cost allocation rule," the report said.

Recommendations

While the report addressed cost allocation, a particularly thorny issue for major transmission projects, it focused more on the planning process itself, Gramlich said.

"If the plans are right and they include all of the right things in the future, then we think there's a lot of transmission that would pass the test and make the grade to move forward," Gramlich said in an interview.

Specifically, the report said regional planning authorities should be required to solicit input from states so that interregional projects are designed with an eye toward state siting considerations. Gramlich noted that FERC allows for those types of considerations but does not require it.

"Electrification estimates are important. Utility resource goals both retirements and additions are important," Gramlich added. "The main thing we're advocating here is to take all this information into account. It's largely knowable information; none of it is exact, but it's all important."

While Order 1000 already requires regional planning authorities, the report suggested considering the potential need for new transmission planning entities. The report further recommended including societal benefits of carbon-cutting transmission projects, noting that the New York ISO already applies a social cost of carbon sensitivity to its benefit-cost analyses for public policy projects.

"I don't think any investor in the real world assumes a zero carbon price," Gramlich said. "It's like load growth, which you have to take a stab at, you have to estimate it, and you make a best assessment of what it is."

Nothing off the table

Gramlich, a former economic adviser at FERC, said a rulemaking resembling his policy proposal would likely take about a year to develop and finalize. "It would be a big undertaking, no question about it."

But Gramlich said he is confident that FERC will act on interregional transmission planning under the leadership of Chairman Richard Glick, a Democrat who was elevated to the role after President Joe Biden took office. Biden's $2 trillion infrastructure plan includes a target of completely decarbonizing the U.S. power sector by 2035, a goal that cannot be attained without building significantly more transmission.

Gramlich said that for now, ACEG plans to let the report speak for itself but he did not rule out a future petition for rulemaking under Section 206 of the Federal Power Act.

"We're not taking anything off the table either," he said.