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Allison Clements is a member of the Federal Energy Regulatory Commission.
As my time on the Federal Energy Regulatory Commission comes to a close, I am reflecting both on the accomplishment of this week’s Order No. 1920, of which I am very proud, and also on the broader context of transmission reform and what remains to be done. Order No. 1920, which establishes a new long-term planning process to better anticipate and address regional grid needs, is a strong step that can considerably enhance grid reliability while making electricity more affordable for consumers.
But at its heart, it is also just one important step on a longer staircase, forged through compromise. Considerable work remains to be done, both at the commission and in Congress, if we are to realize the modern electricity grid on which the continued vitality of the United States’ economy and security increasingly depends.
When I arrived at FERC in late 2020, I did not have the incremental approach of Order No. 1920 in mind. Rather, I envisioned that we would thoroughly and comprehensively reform the commission’s grid policies by replacing them with a holistic process that brought local, regional and interregional planning under one umbrella. In other words, a wholly transformative approach to rehaul a largely balkanized grid that, over time, will increasingly fail to ensure affordable reliability.
In working with my colleagues, however, I instead agreed to a step-wise bipartisan compromise plan. It began with a notice of proposed rulemaking that provided for robust long-term planning, while breaking off into other dockets critical issues like interregional planning, incentives and cost management reform. This approach had the significant downsides, at least from my perspective, of preserving planning silos and slowing down the more transformative set of reforms I envisioned, but it had the advantage of being a digestible approach that we could all work on together.
My colleague Commissioner Christie now contends that Order No. 1920 fundamentally diverges from that bipartisan compromise. As I see it, however, Order No. 1920 makes a few key improvements but keeps the same fundamental structure as the proposal. And, there is a lot of the NOPR left out of the final rule. For instance, several of the original twelve benefits that transmission providers should consider in evaluating system needs and solutions were left on the cutting room floor. The rule does not require the establishment of renewable energy zones by transmission planners, as the NOPR contemplated. In addition,it doesn’t address the heart of interregional transmission planning or mandate deployment of grid-enhancing technologies in any instances.
I nevertheless voted yes. At its heart, Order No. 1920 merely stands for the straightforward principles that transmission planners should plan ahead, use the best available information, consider the full suite of potential solutions including GETs, transparently evaluate infrastructure projects to assess whether they benefit consumers, and foster cooperation with states. To me, those principles are not partisan. They are common sense.
As Chairman Phillips and I emphasized in our joint statement, Order No. 1920 responds to the affordability and reliability imperative to facilitate new transmission infrastructure. We know that significant sums —roughly $20 billion to $40 billion annually, according to the Brattle Group —will be invested in transmission in any case. We cannot protect consumers without directing that spending towards cost-effective regional investments. Further, NERC, the nation’s independent reliability authority, agrees that the rule will help “pave the way for a much-needed investment in our transmission infrastructure, which will be essential for industry to be able to improve reliability, build resilience to extreme events, and add necessary generation resources to meet North America’s electricity needs into the future.”
Even still, Commissioner Christie strikingly mischaracterizes the rule and how far it goes, with two points in particular bearing emphasis:
- There is no mandated “selection” of transmission infrastructure: Commissioner Christie argues that Order No. 1920 fundamentally changes the NOPR by mandating outcomes rather than dictating process. While the final rule does improve upon the NOPR by mandating a minimum set of benefits be considered in the evaluation process, utilities remain free (much to my own displeasure, frankly) to decline to select a transmission facility “even where a particular transmission facility meets the transmission providers’ selection criteria.” A far cry from the green dream that Commissioner Christie has concocted, the rule doesn’t even guarantee that cost beneficial infrastructure is built.
- The NOPR’s cost allocation proposal did not include a state veto: Commissioner Christie also contends that the commission fundamentally altered the NOPR by requiring transmission providers put in place default cost allocation methods, which will apply in the event states cannot come to an agreement. But, contrary to his repeated insistence, the NOPR did not allow such a veto. Rather, in paragraph 303, it specifically provided that “it will ultimately be necessary for public utility transmission providers to have a cost allocation method on file with the commission.”
While I endeavored to achieve a bipartisan consensus for Order No. 1920, it proved impossible because I simply could not agree to a process that allows states an individual veto of beneficial regional transmission by unilaterally declining cost allocation and thereby free riding on other states’ grid contributions. Such a process would knee-cap collaborative discussions on new infrastructure and backtrack on Order No. 1000’s grid-planning principles.
Given the tenor of my colleague’s dissent, I am concerned that states and stakeholders will misinterpret key provisions of the rule and how it fits into the broader transmission challenge. Order No. 1920 provides the raw ingredients to transmission providers and states, but the grid of the future will not be built if these entities do not come together and start cooking. We have put forth a strong compromise that sets the table for workable, negotiated solutions. I urge my colleagues across the industry, especially state regulators and transmission providers, to roll up your sleeves and work together to get things built.
Dauntingly, Order No. 1920 is only the first step in this journey. Reliability and affordability demand that we not only tackle these issues, but move ahead to even thornier topics like how to facilitate interregional grid buildout and how to manage costs, especially in local and near-term transmission planning processes. For some of these next steps, particularly interregional planning and permitting reform, Congressional action could be critical in providing direction and momentum to the commission. I hope that Congress and the next commission will continue to build on this week’s important step forward.
