Tracking Transmission Reform

In June 2022, the Federal Energy Regulatory Commission (FERC) issued (1) a proposed rule to address interconnection procedures; and (2) two proposals to address grid reliability against extreme weather.

In a notice of proposed rulemaking titled Improvements to Generator Interconnection Procedures and Agreements, FERC proposes reforms to address the delays and costs that new generation and storage projects can face in attempting to connect to the grid. Aspects of the proposal include: (1) changes to the study process and new readiness requirements for customers; (2) deadlines for processing interconnection studies with associated penalties for failing to meet deadlines; (3) the incorporation of technological advancements; and (4) updated modeling and performance requirements.

In a notice of proposed rulemaking titled Transmission System Planning Performance Requirements for Extreme Weather, FERC proposes to direct the North American Electric Reliability Corporation (NERC) to develop modifications to reliability standards around transmission planning for extreme heat and cold weather. And in a notice of proposed rulemaking titled One-Time Reports on Extreme Weather Vulnerability Assessments, FERC proposes to direct transmission providers to submit a report on their approach to extreme weather vulnerability and risk mitigation. This is an information gathering activity and would not require new assessments.

In April 2022, FERC issued a notice of proposed rulemaking, Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection. This proposal addresses several pieces of the inquiry FERC launched in its earlier advanced notice in this proceeding.

The proposal includes:

• Forward-looking regional transmission planning on a 20-year planning horizon (at minimum) and including accounting for extreme weather events.
• More robust consideration of dynamic line ratings and advanced power flow control devices.
• A significant role for states in cost allocation for transmission facilities.
• Prohibition of the construction-work-in-progress incentive for facilities selected through long-term regional transmission planning.
• A federal right of first refusal for facilities selected in a regional transmission plan, as long as the incumbent transmission developer established joint ownership with unaffiliated, nonincumbent developers.
• Enhanced transparency requirements for transmission providers.

Our colleagues at the Institute for Policy Integrity at NYU Law provide a summary of the April 2022 proposal.

In July 2021, FERC issued an advanced notice of proposed rulemaking called Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection. FERC’s efforts in this area are likely to be key to facilitating the cost-effective and efficient buildout of the transmission system needed to enable a cleaner, affordable energy future.

Customer demand, state and federal policies, and cost competitiveness have driven the country’s power generation mix towards cleaner technologies. We are shifting from large resources sited near population centers to renewables, which are often located far from population centers, based on sun or wind patterns. Current transmission policies have led to backlogs in adding new renewable generation to the grid. Serious reform is needed to access these resources in a cost-effective and efficient way. As FERC Chair Richard Glick and Commissioner Allison Clements said in a statement: “With the clean energy transition gaining steam, we can either continue with the status quo, trying to meet the transmission needs of the future by building out the grid in a myopic, piecemeal fashion, or we can start holistically and proactively planning for those future transmission needs.”

In its advanced notice of proposed rulemaking, FERC asked for comment on potential reforms in broad areas, including how costs of new transmission and upgrades should be allocated, whether the planning process should take into account likely future generation, and what kind of oversight there should be. FERC’s news release and staff presentation that accompanied issuance of the advanced notice provide additional information. This is the beginning of a longer process that will have further opportunities for stakeholder and public engagement.