Andrew French is the chair of the Kansas Corporation Commission, Joseph Sullivan is the vice chair of the Minnesota Public Utilities Commission, Ann Rendahl is a commissioner at the Washington Utilities and Transportation Commission, Gabriel Aguilera is a commissioner at the New Mexico Public Regulation Commission and Davante Lewis is a commissioner at the Louisiana Public Service Commission.
Thousands of miles of transmission lines transport energy all across the country. From amber waves of grain to purple mountain majesties, the energy grid makes up the backbone of American economic prosperity and comfort.
But while we have been enjoying the security and convenience provided by energy reliability and resilience, much of the existing grid system has reached or surpassed its intended life span with a majority of the grid’s transmission assets dating back to the 1950s. New demands have only heightened the strain on the system. Major power outages from weather-related events have increased more than 65% since 2000. Plus, U.S. electricity demand growth is expected to more than double over the next five years.
The current framework often focuses on planning transmission by utility footprint, or only within one state. Even worse, upgrades to the grid are often planned in an expensive and piecemeal fashion, addressing individual issues as they arise. As state regulators, we have a strong working knowledge of the systems within our states and have pledged to work in the best interests of our states’ customers.
In some cases, that means planning transmission across states and throughout a transmission planning region in order to ensure that the grid is as reliable and cost-effective as possible. Compared to other ways of addressing needed growth, the right investments in well-planned transmission will be the most affordable option for customers. It would also create 3.3 million jobs and connect thousands of gigawatts of new energy generation to the grid needed to meet increased demand and promote economic development.
To facilitate better planning, the Federal Energy Regulatory Commission recently voted to approve Order No. 1920 — a landmark rule that requires transmission to be planned on a regional basis through a long-term, forward-looking assessment of changing circumstances. The rule also requires selection of projects pursuant to a comprehensive, specific set of economic and reliability transmission benefits.
While previous planning procedures took a more reactive approach to transmission deployment, FERC’s new rule builds on a more proactive and intentional approach. When transmission is planned in a forward-looking and comprehensive way, the projects that get selected and developed can be more efficient, both in terms of cost and the capacity to move power.
If we want to have a grid ready to withstand the challenges of the coming decades — and enable future economic prosperity — we need to start planning now.
The Federal Power Act gives FERC authority over “the transmission of electric energy in interstate commerce.” Just as outlined in its operating mandate from Congress, FERC’s rule is fuel neutral and provides a framework to produce more just and reasonable rates for the benefit of all ratepayers.
Additionally, Order No. 1920 does not take away any existing authority of states. In fact, this rule formalizes and requires engagement with states in a way that has not been done before. This new role for state utility regulators — like us — puts states in the driver’s seat for deciding key issues and encourages active participation in the regional planning process.
Furthermore, this rule from FERC will not force some states to pay for the public policy choices of other states, such as clean energy initiatives. The reality is that customers will only pay grid costs that are justified by concrete benefits to those same customers, such as more reliable power or access to lower cost energy resources. Plus, FERC must approve all cost allocation proposals, which can also be reviewed by the courts, to ensure that the costs to customers are roughly commensurate with the benefits they receive — aligning with long standing precedent. We represent states with diverse energy goals, but we are all satisfied FERC’s new planning rule will produce beneficial and fair outcomes for our residents and businesses.
As state utility commissioners, we know that these changes to how regions plan transmission will provide customers across the U.S. reliable, cost-effective electricity, while also making the grid more resilient, secure and able to handle the challenges that the future will hold. America’s livelihood depends on it.
