Federal energy regulators on Monday approved two final rules aimed at updating transmission regulations for grid planners and settling disputes over who should pay for them — two key priorities for delivering on the Biden administration’s goal of reaching 100% carbon-free power generation by 2035.
Members of the three-person Federal Energy Regulatory Commission voted 2-1 to approve the new rules on regional transmission planning and cost allocation, marking the first time in more than a decade that the commission has updated those rules.
Under the new final rules, utilities will be required to conduct 20-year plans assessing regional electric transmission needs that model for long-term demand under multiple scenarios, including various energy mixes, extreme weather events, and the buildout of data centers that could ramp up demand in a short period.
The rule requires transmission operators to revisit these long-term assessments every five years to ensure they still accurately reflect the needs and demand expectations of specific regions, FERC officials said.
The rule also requires transmission owners to submit two different cost allocation plans for states and companies as they look to build out regional transmission lines.
“This rule cannot come fast enough,” FERC Chairman Willie Phillips told reporters Monday at the commission’s meeting, which was open to the public.
“We are at a transformational moment for the electric grid, with phenomenal load growth, from domestic manufacturing boom to an unprecedented construction of data centers fueling an AI revolution and ever-expanding electrification at the same time,” he said.
The rule comes as the Biden administration races to deliver on its carbon-free goals for the power sector. Despite the many incentives for commercial-scale renewable energy projects included in the 2022 Inflation Reduction Act, the government has struggled to bring these projects online due to a massive backlog in grid interconnection.
Clean energy projects currently awaiting connection to U.S. power grids total a combined 2,600 gigawatts, according to research from the Berkeley National Laboratory — a 30% jump from the previous year and twice the total installed capacity of existing power plants.
And much work remains to be done: To meet the 2035 goal of 100% carbon-free electricity generation, the United States must more than double its existing regional transmission capacity, and increase by five-fold its interregional transfer capacity, according to a recent Energy Department report.
Still, the rule is almost sure to spark objections from some Republicans and state regulators over its cost-allocation provision, which allows FERC to permit regional projects that have been previously rejected by states.
This view was advanced by the one dissenting FERC commissioner, Mark Christie, who described the new rule as “empty rhetoric” that simply allows for the “charade” of state involvement but one that ultimately takes away their ability to inform the process.
“The provisions for state consent for planning criteria, and most importantly to regional cost allocation, have effectively been eliminated,” he said.
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While details of transmission reform rules are “necessarily complex,” FERC Commissioner Allison Clements acknowledged on Monday, she said the principles behind the rule are simple: Require operators to plan further ahead, consider the best available data about future needs, and consider all economic reliability and reliability benefits of possible solutions alongside their costs.
“It is not the commission’s job to try and force the genie that is the energy transition back into the bottle,” she said. “It is our legal responsibility to protect consumers in light of whatever is going on in the world around us.”
