By Robert Sherick, Vice President of Market Strategy, GridUnity.

I have mentioned that I very much wanted to complete law school. I did my first year at the local school quite a while ago and for various reasons did not get back to it. That ship has sailed, so I have to satisfy that interest with periodic dives into the Energy Law Journal. I was particularly happy to see “The Law and Economics of Transmission Planning and Cost Allocations” in the winter edition. 

FERC Order 1920 and the Next Phase of Grid Policy

FERC Order 1920 represents the Commission’s latest effort to strengthen long-term regional transmission planning and cost allocation, building on decades of regulatory evolution. Folks familiar with this history know this has a great deal to do with fair and non-discriminatory access for independent power producers to the grid. FERC, over the last 30 years, has fostered this goal through the creation and development of regional transmission organizations with their planning, operations, and market functions. FERC Orders 888, 2000, 890, and 1000 sought greater coordination, transparency, and competitive opportunities in transmission planning and development while tackling the key component of cost allocation.

A Dissent Worth Dissecting

Christie’s dissent focuses on excessive cost shifting from 1) generators to customers and 2) from states with renewable policies to states with traditional and local resources. Not to simplify the second issue too much, but one way to view the controversy is that the intermittency inherent in renewable generation benefits from a robust regional transmission grid to manage the intermittency across a larger area. What the authors characterize as Christie’s siloed approach would be countered by the Commissioner Christie saying, “multi-value” regional transmission building is just overbuilding to support public policy that is not universally adopted by individual states.

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What Are Multi-Value Regional Transmission Projects?

Multi-Value projects are large-scale transmission lines that purport to deliver several system-wide benefits at once. These include:

• Enabling energy resource integration
• Enhancing reliability
• Reducing congestion and improving economic efficiency
• Supporting public policy goals such as state-level clean energy mandates

• Reinforcing resilience in disaster-prone or high-demand areas
• Providing cost-effective solutions to consumers
  
  

Because these projects serve multiple functions and beneficiaries, their costs are shared across broad regions through cost allocation mechanisms. This has drawn criticism from stakeholders in areas that perceive fewer direct benefits but still share in the costs. Large regional projects have always been challenging to build due to their land impacts across multiple regulatory jurisdictions. Constraining cost-allocation methodologies will likely further limit regional projects in favor of “local” transmission.  

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Regional vs. Local: Planning Tradeoffs

As new appointees join the Commission and the regulatory landscape continues to evolve, this debate is far from settled. What seems clear is that while most stakeholders agree that more transmission infrastructure is needed, regional projects will continue to face challenges over local and intra-state projects.

This may not provide an optimized transmission grid, but it does enable individual state differences and potentially produces fewer problematic cost allocation/cross-subsidies between states. 

Ambitious Plans, Uncertain Outcomes

The scale of today’s transmission ambitions is undeniable:

• MISO’s 2025 Transmission Expansion Plan: $11 billion
• PJM-approved investments (2025): $6 billion
• SPP’s 2024 plan: $7.5 billion
• California’s recent plans: $15 billion combined
  
  

Whether these plans are enough or too much, whether they are optimized for least cost/best fit, and whether they are built at all are to be determined. The focus on the issue has created a great deal of transparency and analysis that are positive to creating a plan that works.

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Robert Sherick leads GridUnity's strategic efforts to support utilities, RTOs, and regulators in modernizing interconnection and planning processes for the evolving energy landscape.

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