New FERC Has Golden Opportunity to Pass Interregional Transmission Planning Rule
Our electric system was designed to experience service interruptions once per decade. That time is long gone. In the past three years, the U.S. South has sustained two debilitating winter storms, forcing utilities to cut power when their customers needed it the most. In 2023 alone, the U.S. was hit with more than 28 separate billion-dollar weather and climate disasters.
Our aging system of poles and wires was not made for this moment. To meet it, we urgently need to create a more reliable and resilient electricity grid that can weather increasing climate impacts and the shortcomings of fossil fuels.
COMMENTARY
With three newly sworn-in commissioners, now is the time for the Federal Energy Regulatory Commission (FERC) to set its sights on a durable, nationwide transmission grid. Having recently expanded the requirements for regional transmission planning, FERC must take the next logical step to stitch those regions together. A rule requiring utilities to plan grid expansion on an interregional scale is needed to fortify the bulk electric system against a rapidly changing climate and equally fast-growing energy demand.
More specifically, an interregional transmission rulemaking would for the first time require regional transmission operators to plan interconnections between their grids in an open and transparent matter. Ideally, it would require proactive planning that creates connections needed to reliably accommodate future conditions. And to ensure monopoly utilities do not block these needed interregional connections to benefit their own power plants, it would require a minimum level of transfer capability between regions.
The fruits of smart transmission planning have broad public backing. Americans want utilities to deliver more affordable, reliable, and cleaner forms of energy to power their homes and businesses. According to a 2023 Data Progress poll, voters’ top priorities include their utility ensuring reliable service (21%), upgrading aging grid infrastructure (17%), and transitioning to renewable energy (15%).
Now is the perfect time to make these hopes a reality. FERC recently has undergone a significant overhaul, with three new commissioners recently sworn in. The new commissioners can hit the ground running and pick up where their predecessors left off.
As an attorney with the Southern Environmental Law Center, I now represent clean energy advocates before FERC, but I previously worked at the Commission at a time of similar turnover. There, I helped advise a re-shaped Commission as it pivoted from one landmark rulemaking on electric storage resources to a similarly ambitious rule on distributed energy resources. This new FERC can similarly learn from the lessons of its recent past and go one step further.
Fortunately, it has the right person at the helm to do so. Chairman Willie Phillips grew up in an environmental justice community in Alabama and holds a unique understanding of the challenges the South faces to provide equitable access to clean and reliable energy. Indeed, communities in his home state currently pay some of the highest monthly electricity bills in the country.
After his appointment in 2023, Chairman Phillips outlined his three principal priorities: reliability, electric transmission, and environmental justice. True to his word, FERC has taken action to address these priorities in the past year. In May, FERC released its final rule on regional transmission planning and cost allocation, Order No. 1920, which mandates that utilities plan regional transmission on 20-year, forward-looking basis. The same day, FERC issued Order No. 1977, which allows the Commission to permit certain interstate electric transmission lines if a state has not done so. And last summer, Order No. 2023 took effect, which reformed the process for new power plants to connect to the grid. Finally, FERC held a roundtable on environmental justice last year and is expected to soon follow that up with new guidance on environmental justice considerations. An interregional planning rule would continue and build on this recent progress.
Understandably, some have questioned whether these orders will stand after the Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo. The Court’s decision to overturn the longstanding Chevron doctrine in late June will limit the deference courts give federal agencies when interpreting ambiguous statutory language. As a result, FERC’s authority to require broad reforms to transmission policies is certain to be challenged. However, the Federal Power Act grants FERC broad authority to modify transmission practices where it finds that current practices are unjust, unreasonable, or unduly discriminatory.
Recent developments have given it plenty of reason to make this finding. Utilities, especially in the South, have a patchwork transmission system with limited connections to their neighbors. This has left them unable to provide customers with reliable service in the face of increasing extreme weather disruptions and power demand. Winter Storm Elliott, which resulted in blackouts across Tennessee and the Carolinas, provides the most immediate example of this deficiency. While gas plants throughout the region failed, causing power outages to millions of customers, bordering regions had too much wind power to use. The lack of grid connections between the regions prevented utilities in the South from taking advantage.
If this abundant source of clean energy had been made available to the Southeast through stronger interregional transmission ties, the region could have averted these outages. A 2022 GE Energy Consulting study conducting a heat wave and a polar vortex simulation found that “[i]n the face of frequent and extreme weather events, interregional transmission expansion can allow access to generation that otherwise would not have been accessible and minimizes the likelihood (or in the worst case, the impact) of shedding load (i.e., blackouts).”
FERC must seize this opportunity by establishing an interregional planning rule. The rule should mirror Order No. 1920’s approach by requiring utilities to (1) conduct forward-looking interregional transmission planning, (2) evaluate a broad range of economic and reliability benefits, and (3) involve interested stakeholders. Finally, the rule should establish a minimum amount of interregional transfer capability that all utilities must meet to ensure they do not put shareholder profits above reliable service to their customers.
The new FERC can make real and lasting change to our current transmission system, which will improve the lives of all Americans by making energy more affordable and less vulnerable to service interruptions.
—Nick Guidi, Southern Environmental Law Center Attorney, represents SELC partners in electric power matters before the Federal Energy Regulatory Commission, and coordinates strategy for wholesale market reform in the Southeast. He shapes national transmission and generator interconnection policy and participates in regional transmission planning processes. In the PJM Interconnection stakeholder processes, which affect power users in 13 states including Virginia, North Carolina, and Tennessee, Nick represents clean energy interests.