The US federal government’s evolving role in overseeing transmission development took another leap forward after the Federal Energy Regulatory Commission (FERC) issued Orders 1920 and 1977, two new rules that mark FERC’s first transmission planning overhaul in more than a decade. The rules, which address regional transmission planning and transmission siting for certain projects, respectively, are intended to improve the transmission grid’s ability to meet the nation’s growing demand for electricity. Here, we provide an overview of the landmark orders and key areas to watch.
At more than 1,300 pages, and the subject of the largest procedural record in FERC history, Order 1920 is dense with major reforms for transmission planning. These reforms focus on four key areas: establishing a long-term transmission planning horizon, developing planning scenarios, selecting transmission solutions, and cost allocation. The overarching goal of the order is to identify regional proposals that will efficiently and cost-effectively address transmission needs further into the future than transmission providers have generally planned.
At a high level, Order 1920 requires transmission providers to perform the following actions:
The final rule also requires each transmission planning region to consider additional transmission enhancements and enhanced technologies such as dynamic line ratings, conductors, and line switching.
Practical Considerations
The rule takes effect on August 12, 2024 (i.e., 60 days after publication in the Federal Register). Transmission providers will need to submit two sets of compliance filings in 2025. Compliance filings to address most of the final rule’s requirements are due by June 12, 2025, while filings to comply with the rule’s interregional transmission coordination requirements are due by August 12, 2025.
Implementation of the rule will be overseen by a different roster of FERC commissioners. Commissioner Allison Clements, who supported the order, left FERC on June 30 when her term expired, leaving Commissioner Mark Christie, who dissented from the order, and Chairman Willie Phillips, on the commission until June 30, 2025 and June 30, 2026, respectively. The US Senate recently approved three new commissioners: David Rosner for a term expiring June 30, 2027, Lindsay See for a term expiring June 30, 2028, and Judy Chang for a term expiring June 30, 2029.
While not nearly as long as Order 1920, Order 1977—addressing FERC’s limited siting authority for electric transmission lines—also received a lot of attention and commentary from stakeholders, particularly from state utility commissions, which have largely governed transmission siting.
The order has several provisions tied to stakeholder engagement and outreach. In general, the order does the following:
Practical Considerations
The rule enters into force on July 29, 2024. However, the DOE is still in the process of identifying NIETCs. While the DOE has taken initial steps to identify potential NIETCs, the process is not expected to be completed in the near future, meaning FERC and thus planners must wait for the process to be finalized. In the meantime, applicants would do well to ensure compliance with the specific application requirements related to outreach and engagement.
Moving forward, the implementation of these new rules raises several questions. Among them is the accuracy of forecasts and implications of cost recovery over a 20-year planning horizon as called for in Order 1920. The order’s requirements regarding benefits considerations could also carry the potential for conflict between FERC benefits and the requirements of state-regulated integrated resource planning.
Meanwhile, Order 1977 raises questions about federal and state balance. For instance, how would using backstop authority affect a utility’s relationship with landowners and state regulators, particularly if federal eminent domain is used? Another question is whether the availability of federal backstop siting could make transmission development in these regions more difficult.
The release of Orders 1920 and 1977 is a major milestone. However, as with any regulation, the final outcomes remain uncertain. Implementation and compliance filings are forthcoming, and potential challenges should be anticipated.
Order 1920 in particular has raised questions about FERC’s authority to regulate regional transmission planning and cost allocation, particularly after the US Supreme Court’s recent decisions in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce.
In those two cases, the Court overturned the so-called Chevron doctrine, a long-standing judicial rule that required courts to defer to an agency’s reasonable interpretation of the statute it administers. Following those decisions, FERC Chairman Philips issued a statement insisting that Order 1920 is an appropriate exercise of FERC’s statutory authority. However, it remains to be seen how the Loper Bright and Relentless decisions will impact the fate of Order 1920 as well as FERC’s other administrative adjudications, rulemakings, and interpretations of its statutory authority.
Further, it is important to remember that FERC siting authority for transmission lines is just one of several steps in successfully building a project. Developers must engage with multiple stakeholders in various jurisdictions, raising the potential for delays. Supply chain issues can also affect project timelines. The coming weeks, months, and years will determine how FERC’s orders ultimately influence transmission projects.