This webinar is part of our new transmission series, where we provide climate policy actors with the knowledge and tools they need to bring transmission advocacy into their work. For more information on how transmission policy can provide reliable and affordable energy that meets the United States’ decarbonization goals, see the recap article from our first webinar in the series.
In the face of rising energy demand, looming deadlines for clean energy targets, and soaring energy prices, the United States is in need of a major overhaul in transmission capacity. While much of transmission is governed at the federal level, states play a crucial role in the planning, deployment, and management of transmission infrastructure across the country.
We invited a panel of experts to explore the role of states in transmission reform and the policy levers state actors can pull, from engagement at the federal and regional levels to state legislation and regulation, and everything in between. Our panel included Anjali Patel, Vice President for Clean Energy at David Gardiner and Associates and Consultant for Americans for a Clean Energy Grid, and Miles Farmer, Clean Energy Policy Consultant at his independent energy policy, strategy, and law practice.
In this recap article, we’ll provide highlights from our experts’ presentations, including why transmission modernization and expansion is needed, the role of states in crafting policies to advance transmission, and state engagement with regional transmission planning under FERC Order 1920 and 1920A.
Anjali Patel, David Gardiner and Associates
Anjali Patel is the Vice President for Clean Energy with David Gardiner and Associates (DGA). She leads DGA’s work to help Americans for a Clean Energy Grid expand long-distance transmission to support reliable, resilient, and more affordable energy. Anjali also focuses on providing companies, organizations, and governments with strategic guidance on policies that are needed to support decarbonizing the energy, transportation, and building sectors.
The Basics: Why Transmission is Needed
Transmission is often referred to as “the great enabler” — it’s the backbone of the electric grid, moving energy from large generation sources to where it’s needed. Transmission is necessary in addition to advocating for smaller, distributed energy sources like rooftop solar, for a few big reasons:
- Economies of scale: larger power sources generally produce cheaper electricity than smaller generators, and transmission lines connect those large sources with the places where energy is used
- Resource sharing: a well-connected grid allows for different areas to share power, which is essential during extreme weather events or when electricity demand exceeds supply
- Access to clean energy: areas with greater resource potential, such as ideal sites for solar or wind farms, are not necessarily near highly-populated areas, and transmission lines connect these areas to deliver energy where it’s needed
- Resource agnostic: transmission lines facilitate the movement of energy from all generation sources, from coal plants to wind farms
While electricity is an essential service, the grid we have today is not robust enough to meet our short- or long-term energy needs. Most transmission infrastructure currently in use was built in the 1950s and 1960s, with a 50-year lifespan, so we need to add new generation to replace what’s retiring, and we need transmission infrastructure to move that power.
We don’t need to simply replace existing infrastructure, but we also need to add more, due to unprecedented national load growth. While energy demand has been relatively stable in past decades, some regions are projected to double or triple their energy demand due to many factors, including increased energy use from data centers and onshore manufacturing.
In addition, the increased frequency and intensity of extreme weather events requires an electric grid that is larger than any one weather pattern, and one that is connected to areas with surplus electricity, to ensure energy flows where it’s needed in times of disaster.
The Role of States in Transmission
Transmission is a tricky policy topic, built on a sense of cooperative federalism through the Federal Power Act. The federal government has jurisdictional authority over many aspects of the transmission and sale of electric energy, while states play a central role in the siting and permitting of transmission lines, distributing the costs and benefits of transmission infrastructure, and promoting comprehensive, collaborative, and well-coordinated transmission planning.
State Policies to Advance Transmission
There are six big buckets of focus for how states can overcome the barriers to transmission modernization and expansion.
The first is in planning, as states can help to prioritize proactive transmission planning — not only reactive to past issues, as is traditionally done. States must participate in ongoing regional and interregional planning processes, and at the state level, advocates can promote the development of actionable, long-term transmission plans to better inform that regional and interregional planning, such as through integrated resources plans (IRPs), statewide transmission studies, and the identification of energy resource zones. States can also encourage greater coordination between agencies within the state and across neighboring and other electrically interconnected states.
Examples:
- Washington: In 2023, the state updated their state IRP requirements to include a 20-year forecast of regional generation and transmission capacity and an exploration of utilities’ expected needs related to new, expanded, and upgraded transmission facilities.
- Colorado: In 2023, the state directed its electric transmission authority to study expanded statewide transmission capacity.
- North and South Carolina: These states established the Carolina Transmission Planning Collaborative, developing a coordinated transmission plan for areas across both states served by shared utilities.
Siting and permitting is another extremely important area for states to engage in transmission development, as it is often squarely within the state’s purview. States should ensure they’re de-duplicating permitting processes across federal, state, interstate, and local authorities, and coordinating regional planning and state permitting processes through streamlined bodies or procedures. In terms of siting, states are encouraged to engage impacted communities early on and seek to reduce land impacts by utilizing existing rights of way and co-locating transmission infrastructure — for example, laying a transmission line down next to a highway or railroad tracks, rather than building out a line in the middle of otherwise undisturbed land.
Examples
- Nevada: The state requires its public utilities commission to accept and incorporate findings of the federal environmental review process so that the state doesn’t duplicate through its own review.
- New York: The state has consolidated its transmission siting authority into a one-stop shop, and while they provide opportunities for local governments of proposed siting areas to provide input, the state preempts local authority so that developers do not need to seek approval from each local government.
- Wisconsin: The state has an explicit prioritization of corridors that can be used for siting new transmission, with new green space being last on the list.
- Wisconsin: The state provides compensation to the localities that host transmission projects, funded by an annual impact fee paid by the transmission owners.
Transmission is not cheap, and states can engage on costs and financing to minimize costs borne by ratepayers. States should proactively engage in regional and interregional cost allocation discussions to ensure costs are shared equitably. They can also provide or leverage public funding and private financing opportunities.
Examples
- New Mexico: The Renewable Energy Transmission Authority can provide financing for transmission projects it deems necessary to meet the state’s goals.
- North Dakota: The North Dakota Transmission Authority can provide bond financing for transmission projects to foster in-state energy.
Better supporting the effectiveness of state agencies is critical for rapid transmission development. Enhancing staffing and technical resources available to state agencies, as well as coordinating transmission-related education and engagement between state agencies and other parties, are both ways advocates can work to better support agencies, reducing bureaucratic delays. States should also consider consolidating transmission support and decision-making under one agency or team.
Examples
- Delaware: A state legislator has convened a voluntary standing working group of state agencies and other interested parties to discuss what’s happening with respect to energy issues, streaming input.
- Nevada: The state has a regional transmission coordination task force that brings together stakeholders to advise policymakers on necessary changes to transmission facilities in order to achieve state goals on clean energy and economic development.
- Colorado, New Mexico, North Dakota: These states each created brand-new transmission authorities, each with slightly different functions, that generally provide opportunities for financing and planning assistance, coordinate siting, review project needs, etc.
While building out new transmission infrastructure is essential, transmission modernization is just as necessary to ensure we’re utilizing the full capacity of existing transmission lines. The traditional conductors used on transmission lines were invented in the early 1900s, and we’ve since developed advanced transmission technologies (ATTs) and grid-enhancing technologies (GETs) to get the most out of our transmission infrastructure. States can promote direct studies of ATTs and GETs in state-level planning and permitting processes, ensuring that there are performance criteria to make sure the technology really does enhance grid capacity.
For more information, explore ACEG’s September 2024 report, State Policies To Advance Transmission Modernization And Expansion, which reviews roadblocks to the development of transmission infrastructure and its key players, further detail on the above transmission policies, and state examples with statutory language.
Miles Farmer, Clean Energy Policy Consultant
Miles is an independent consultant and attorney focused on energy policy, strategy, and law. Miles previously worked as a legal advisor to Commissioner Allison Clements of the Federal Energy Regulatory Commission, where he led her office’s engagement in negotiating Order No. 1920.
The Role of States in Regional Transmission Planning, under FERC Order 1920 and 1920A
States play a key role in transmission, not only through pulling the previously-mentioned state-specific levers, but also through engaging as active players in regional transmission planning. This power was recently boosted by the Federal Energy Regulatory Commission (FERC) — the independent agency that regulates the interstate transmission and sale of electric power in the U.S. — through Order 1920 and 1920A, which finalize requirements for how transmission providers conduct long-term regional planning.
This recent order aimed to improve regional electric transmission planning and cost allocation, centered around a forward-looking scenario-based planning process. This planning must evaluate a minimum set of benefits over a 20-year horizon, with criteria that seek to “maximize benefits accounting for costs over time without over-building.”
These orders are unique among FERC rules in that they give states a special role in providing input on how costs will be allocated. The ruling also requires that this planning allows for enhanced transparency in local transmission planning processes, and it includes a “right-sizing” provision that allows for transmission providers to identify opportunities to enhance or increase the size of a facility that needs replacement, if it would make regional operations more efficient. They also mandate evaluation of grid-enhancing technologies (GETs) in this long-term regional planning.
The Timeline: Compliance with 1920 and 1920A
Regions must comply with this order and establish their regional long-term planning process by June 2025, although there could be a six-month extension for states engaging on cost allocation. However, once regions put forward these rules for their planning process, the preparation of the plan itself will occur over a few years. The planning cycles should move through and select any projects within three years, and then repeat the process at least once every five years.
Long-Term Scenarios for States
Once the regions complete this planning, they will put together scenarios based on various factors affecting their transmission needs, and they must provide meaningful opportunities for states and other stakeholders to provide input in these scenarios. Transmission providers should consult with states and rely on relevant states when determining how to account for state-related factors in this long-term scenario planning. In the evaluation and selection process, transmission providers are required to consult with relevant state entities, including around the selection criteria.
Transmission providers are also required to offer relevant state entities an opportunity to voluntarily fund the cost or portion of the cost of facilities that may otherwise not meet the cost-benefit criteria of the selection process. In terms of cost allocation, providers must develop an “ex ante” method, which is a formula for allocating costs that is determined by providers and states at the time of compliance, to be used as the default method. However, there’s an additional state agreement process that can override this default and be a part of the filing, if the states agree to do so, even if at odds with the desires of the transmission provider. And again, transmission providers must provide an engagement period with states to provide input on the development of the processes for both ex ante and the state agreement process.
Q&A
Q: What are some examples of successful state agreement processes?
Miles Farmer: First off, a state agreement process, as it exists under Order No. 1920, has never been done before, because there’s specific requirements set forth under Order No. 1920, and we’ll see how it goes. However, Order No. 1920 sits in parallel to these other processes that are out there. I think one process that has gotten a fair amount of attention is called the State Agreement Approach in PJM.
The State Agreement Approach is a separate process outside of Order No. 1000 in the PJM tariff that states can activate, where if they agree on the funding of a project, they can get it done, and that has been used by New Jersey. New Jersey did it in order to issue a solicitation for certain transmission infrastructure related to its offshore wind goals that New Jersey funded, but that can continue to sit in parallel with Order No. 1920, or states could agree to do something similar.
I will also flag that though not directly a formal process like this, I think states generally being in alignment around a transmission portfolio has been at the heart of some of the most successful transmission planning exercises we’ve seen. MISO, for example, has issued a series of portfolio transmission plans for MISO North until just prior to when Order No. 1000 was adopted. There have been more recent portfolios put out, and those portfolios have had the support from states across the region, but they haven’t come together for this sort of formalized process around cost sharing yet. Those have just been kind of done under an ex ante cost share process.
Anjali Patel: To add to that, one of the things that jump started the MISO process was that the MISO governors spoke up and said, “We agree transmission is important, and we agree that we should work together to build this.” That went a long way to helping support the development of collaborative lines. MISO has now done two tranches, lots of projects that are going to build out the backbone of the transmission system in that area. It really did take some political willpower to support that, and that is part of what is needed, I think, in other regions. As Miles was saying earlier, the more vocal states can be about the importance of transmission and that they support it, the better off we all will be.
