FERC Rule Designed to Address Power Needs Explained

FERC Rule Designed to Address Power Needs Explained

The Federal Energy Regulatory Commission (FERC) recently introduced a new rule designed to ensure the transmission grid can meet the nation’s growing demand for reliable electricity.

Order No. 1920 outlines how to plan and pay for the transmission facilities that regions of the country will need to keep the lights on and power the American economy through the 21st Century, according to a press release on the FERC’s website. The rule requires transmission operators to conduct and periodically update long-term transmission planning over a 20-year time horizon to anticipate future needs. Additionally, it provides for cost-effective expansion of transmission that is being replaced, when needed, known as “right-sizing” transmission facilities, and expressly provides for the states’ pivotal tole throughout the process of planning, selecting, and determining how to pay for transmission lines.

Power transmission towers illuminated by a sunset.
The Federal Energy Regulatory Commission (FERC) recently introduced a new rule designed to ensure the transmission grid can meet the nation’s growing demand for reliable electricity.

“Our country is facing an unprecedented surge in demand for affordable electricity while confronting extreme weather threats to the reliability of our grid and trying to stay one step ahead of the massive technological changes we are seeing in our society,” said FERC Chairman Willie Phillips. “Our nation needs a new foundation to get badly needed new transmission planned, paid for and build. With this new rule, that starts today.”

The rule represents the first time in more than a decade that FERC has addressed regional transmission policy – and the first time it has ever directly addressed the need for long-term transmission planning.

“We need to seize this moment,” Phillips said. “Over the last dozen years, FERC has worked on five after-action reports on lessons learned from extreme weather events that caused outages that cost hundreds of lives and millions of dollars. We must get beyond these after-action reports and start planning to maintain a reliable grid that powers our entire way of life. The grid cannot wait. Our communities cannot wait. Our nation cannot wait.”

The FERC approved the rule by a 2-1 vote, with Phillips and Commissioner Allison Clements voting ‘yes.’ Commissioner Mark Christie, the lone ‘no’ vote, told the New York Times that the rule would allow states that want more renewable energy to unfairly pass on the costs of the necessary grid upgrades to their neighbors.

“This rule utterly fails to protect consumers,” he said. “[It] was intended to facilitate a massive transfer of wealth from consumers to for-profit, special interests, particularly wind and solar developers.”

Phillips and Clements issued a joint concurrence statement directly addressing Christie’s concerns.

“When it comes to the critical question of “who pays,” we are providing transmission planners with the maximum flexibility we can legally allow in order to facilitate negotiated, regionally appropriate solutions,” the statement reads. “And, as part of a multi-pronged approach to protecting customers, we are requiring transmission planners to reevaluate any previously selected Long-Term Regional Transmission Facility when the actual or projected costs of that facility significantly exceed the cost estimates used during selection. Finally, we are providing states with unprecedented, expanded opportunities to work with transmission providers to shape the cost allocation approaches of their regions, while meeting the beneficiary pays requirement that is the foundation of cost causation under the FPA’s just and reasonable standard.”

The rule could take years to have an effect, and in the meantime the commission could face legal challenges from state’s that share Christie’s concerns.

Two GPRS Project Managers performing utility locating services on a job site.
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Frequently Asked Questions

What is the current state of America's energy infrastructure?

America's energy infrastructure consists of a vast network of power plants, transmission lines, pipelines, and distribution systems. This infrastructure supports the generation, transmission, and distribution of electricity, natural gas, and petroleum products. Many parts of the infrastructure are aging and require significant upgrades or replacements. There has been a growing shift towards renewable energy sources such as wind, solar, and hydroelectric power, which necessitates the integration of new technologies and the modernization of the grid.

What are the primary challenges facing America's energy infrastructure today?

The primary challenges include:

  • Aging Infrastructure: Much of the energy infrastructure was built decades ago and is now outdated, leading to inefficiencies and increased vulnerability to failures.
  • Grid Modernization: The existing grid needs to be upgraded to handle the variable nature of renewable energy sources and to improve resilience against cyber-attacks and extreme weather events.
  • Energy Transition: There is a need to balance the transition from fossil fuels to renewable energy sources while ensuring energy reliability and affordability.
  • Regulatory and Policy Hurdles: Navigating the complex regulatory environment and securing the necessary funding and investments for infrastructure projects can be challenging.

What steps are being taken to address these challenges?

Efforts to address these challenges include:

  • Investment in Modernization: Federal and state governments, along with private companies, are investing in the modernization of the grid, including the development of smart grids and energy storage solutions.
  • Policy Initiatives: Policies are being implemented to support renewable energy development, such as tax incentives for renewable energy projects and regulations promoting energy efficiency.
  • Infrastructure Legislation: Recent infrastructure bills have allocated significant funds to upgrade and expand the energy infrastructure, including support for clean energy technologies and resilience improvements.
  • Research and Development: Ongoing research and development efforts are focused on advancing technologies that can enhance the efficiency, reliability, and sustainability of the energy infrastructure.