Importance of FERC Order 1920
Increase focus on planning and development of large regional transmission projects.
Key step toward meeting significant future capacity needs and enabling the development of renewable generation.
Long-term Planning Filings
- Each transmission operator must produce a regional transmission plan of at least 20 years
- Planning must be conducted every five years
Planning requires three scenarios, incorporating:
- Federal, state, and local laws and regulations affecting resource mix and demand
- Trends in fuel costs
- Resource retirements
- Generator interconnection requests and withdrawals
- Utility and corporate commitments
Considerations to Be Included in New Long-term Plans
Benefits Evaluation: Seven benefits must be applied to any regional proposal:
- Avoided or deferred reliability transmission facilities and aging infrastructure replacement
- Reduced loss-of-load probability or reduced reserve planning margin
- Production cost savings
- Reduced transmission energy losses
- Reduced congestion due to transmission outages
- Mitigation of extreme weather events
- Capacity cost benefits from reduced peak energy losses
Cost Allocation
- Customers only pay for projects from which they benefit
- States and interconnection customers have the opportunity to fund all, or a portion, of the cost of long-term regional transmission facilities
Right-Sizing: To qualify as “right-sized” transmission, projects must meet these criteria:
- Meets the need of replacing an existing transmission line
- Results in a non-incidental capacity increase compared to in-kind replacement
- Located in the same general route and/or uses existing rights-of-way as the existing transmission line
State Involvement
- State role is expanded throughout the process of planning, selecting, and determining how to pay for transmission facilities
Grid-enhancing Technology (GET)
- Encourages the consideration of grid-enhancing technology
Contextualizing FERC Order 1920 with Other Recent FERC Orders
FERC Order 1977
- FERC is the backstop transmission siting authority for DOE-designated National Interest Electric Transmission Corridors (NIETCs)
- Limit required stakeholder engagement to affected landowners, environmental justice communities, tribal communities, local communities
- Meant to help when coordination between states is an obstacle for project completion
FERC Order 2023
- Add uniformity to interconnection queues by moving toward “first ready, first served” cluster study approach
- Must demonstrate commercial readiness to move forward in the queue
Compliments
- For interstate transmission, both FERC 1920 and FERC 1977 emphasize stakeholder engagement and limit a single state’s ability to block interregional transmission
- Trust in a faster interconnection queue established in FERC 2023 should help with more knowledgeable planning under FERC 1920
ScottMadden Perspective: It is not yet clear the degree to which these orders will move the needle in building the transmission that is needed, and it is likely to vary by region.
What Remains Unaddressed
- Further siting and permitting reform
- Interregional planning
- Incentives for GETs
- Transmission ITC
Co-Author: ScottMadden Associate Patrick McPadden contributed to this article.