A sharply divided Federal Energy Regulatory Commission adopted a sweeping electric transmission reform Monday (May 13), featuring a blistering dissent from Commissioner Mark Christie, the only Republican member, and a pointed defense of the order from Commissioner Allison Clement.
The commission adopted a new approach to regional electric transmission planning and construction in the face of federal failure to expand and protect the grid going back decades. The architects of that failure include both the commission and, more importantly, Congress.
Order 1920 provides a complex mechanism for how the nation will plan and pay for new interstate transmission. The order, based on the year Congress established the Federal Power Commission (which became FERC in 1977), dates back over 30 years to FERC orders 888, 890, and 1000, all of which have proven to be inadequate to overcome historic hurdles to site high-voltage transmission lines that cross state boundaries.
In a news release, FERC observed, “Today’s rule, Order No. 1920, marks the first time in more than a decade that FERC has addressed regional transmission policy – and the first time the Commission has ever squarely addressed the need for long-term transmission planning.”
The rulemaking process leading to Order 1920, with a 2021 advanced notice of proposed rulemaking (NOPR in FERC-ese), and a 2022 NOPR, morphed into the most massive rulemaking procedure in the agency’s history. According to the commission’s general counsel office, the NOPR led to 26,985 pages of initial comments and over 3,000 pages of reply comments. The final rule is a stunning 1,300 pages (with a 77-page written dissent from Christie).
As described by FERC, “The rule requires transmission operators to conduct and periodically update long-term transmission planning over a 20-year time horizon to anticipate future needs. It also provides for cost-effective expansion of transmission that is being replaced, when needed, known as ‘right-sizing’ transmission facilities. And it expressly provides for the states’ pivotal role throughout the process of planning, selecting, and determining how to pay for transmission lines.”
FERC chairman Willie Phillips, who voted with Clement to pass the order, said, “We need to seize this moment. Over the last dozen years, FERC has worked on five after-action reports on lessons learned from extreme weather events that caused outages that cost hundreds of lives and millions of dollars. We must get beyond these after-action reports and start planning to maintain a reliable grid that powers our entire way of life. The grid cannot wait. Our communities cannot wait. Our nation cannot wait.”
Christie, who served as a Virginia utility regulator for 17 years before joining FERC in 2021 slammed the final rule as essentially bulldozing state regulators in favor of “green” power interests. He had supported the proposed rule. “The NOPR,” he said, “was a compromise. This final rule is not a compromise.” He described the final rule as “a shell game.”
In his written comments, Christie summarized his objections: “The final rule is a pretext for enacting a sweeping policy agenda never passed by Congress, denies the states the authority promised by the NOPR, and fails the commission’s consumer protection duty under the Federal Power Act.”
Christie charged that “the final rule replaces the NOPR’s principle of requiring state agreement to selection criteria, benefits, and cost allocation with a charade of suggesting to transmission providers that they ‘consult with and seek support’ from the states—while paradoxically ‘clarifying’ that transmission providers do not actually need to obtain state consent—and the final rule uses other empty phrases such as allowing states to ‘inform’ or ‘provide input on’ the evaluation process and cost allocation. But the final rule’s real attitude towards the states and state regulators is embodied in this airily regal but perhaps unintentionally straightforward pronouncement: ‘[W]e do not agree that the views of state regulators regarding the appropriate cost allocation approach are dispositive.’”
Christie said the basis of the final rule is to assure the dominance of “green” power –wind and solar – regardless of what state energy regulators and planners might come up with. He said, “The final rule seeks to shift the costs of transmission projects whose purpose is to implement state or local public policies promoting wind and solar generation (commonly referred to as ‘public policy projects’ or ‘policy-driven projects’) and big corporation ‘green energy’ preferences by putting those projects into the same regulatory bucket—both for planning and cost-allocation purposes—with fundamentally different types of projects, those designed either to solve identified reliability problems (an engineering purpose, not a political or corporate purpose) or to provide quantifiable congestion cost savings (economic projects).”
Christie also hit the final rule for failing to enact the NOPR’s repeal of “construction work in progress” for financing transmission, which requires consumers to pay for projects (and a return on the investments) before they are finished. He wrote, “Today’s final rule also walks back the widely supported proposal to remove the CWIP transmission incentive. As I have discussed above, it is apparent that the pretextual goal of this final rule is to get transmission built to serve political and corporate goals, no matter the cost and no matter who actually benefits from it.”
In her comments, Clement pushed back against Christie’s critique, noting that “all transmission needs are inherently influenced by state policies of all stripes. They always have been. Be it a zoning law, an economic development incentive, or state renewables standard. The dissent’s public policy focus on misses the forest for the trees. Policies are only one of a much broader set of factors, including fundamental economic and reliability inputs, that drive the extent of transmission investment required.”
Clement added that “the dissent’s recommended approach—that each state gets an individual veto on infrastructure development—is a recipe for inaction. We cannot fund essential interstate transmission infrastructure by asking states to get together and pass around the hat. The urgency is too acute, and the consequences of failure are too costly.”
She also rejected the charge that the order will harm consumers. “That couldn’t be further from the truth,” she wrote. “The truth is that enormous sums will be spent on transmission investment regardless of whether it is done within the framework of this new rule. The Brattle Group estimates that number at roughly $20-40 billion annually. Just months ago, this Commission approved nearly $1 billion dollars in last-minute transmission spending to address the retirement of a single generating facility. It is hard to imagine the region could not have found a more cost-effective solution had it began planning for that retirement, along with other anticipated shifts, further ahead of time.”
What’s next? It’s a near certainty that the massive order will end up at the U.S. Court of Appeals for the D.C. Circuit, and perhaps in the U.S. Supreme Court. In his oral comments, Christie said the order is “a violation of the ‘major questions doctrine,’ one of the worst any administrative agency has tried to do in terms of the dollars involved,” a reference to the doctrine the Supreme Court concocted in 2022’s West Virginia v. EPA clean air case.
In his written dissent, Christie cited the predecessor legal doctrine: “The final rule does not deserve a shred of deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. in any form.”
–Kennedy Maize
Utility regulators troubled by FERC Order 1920
The nation’s electric utility regulators have expressed concerns about the Federal Energy Regulatory Commission’s new order on regional transmission planning and cost allocation.
In a statement yesterday (May 14), the National Association of Regulatory Utility Commissioners said, “NARUC is still digesting FERC Order 1920 and evaluating our options, but we are generally disappointed by the significantly diminished state role envisioned by the FERC order with respect to transmission planning and cost allocation. In light of our recent joint task force with FERC on electric transmission and the newly proposed collaboration, we hope there will be future opportunities to ensure that state voices are heard.”
The comments attributed to NARUC Executive Director Greg White echoes FERC Commissioner Mark Christies’ critique of the order. Before named to FERC, Christie was a 17-year member of the Virginia State Corporation Commission, the Old Dominion’s utility regulator.
–Kennedy Maize