U.S. Federal Energy Regulatory Commission Directs Transmission Planning Reforms

The Federal Energy Regulatory Commission (“FERC”) issued Order No. 1920 last week, directing reforms intended to improve the nation’s transmission planning processes by requiring planning on a longer-term and more comprehensive basis to, among other things, better support the nation’s changing resource mix, reliability needs and demand. Order No. 1920 is an important step toward more forward-looking transmission planning, but it leaves for further action some potentially significant issues, such as methods for allocating associated costs. The order will become effective 60 days after publication in the Federal Register and compliance filings addressing most requirements will be due 10 months thereafter.

Background 

Since FERC’s last major transmission planning reforms in Order No. 1000, many regional transmission planning and cost allocation processes have focused on relatively near-term and discrete issues and solutions but have not adequately addressed longer-term transmission needs. Recognizing these challenges and the need for more forward-looking and comprehensive transmission planning and cost allocation processes, FERC issued Order No. 1920 on May 13, 2024, which is intended to improve and reform transmission planning processes to identify and plan for long-term transmission needs to, among other things, better accommodate the nation’s changing resource mix, reliability needs and demand.

FERC Order No. 1920

Order No. 1920 outlines a long-term regional transmission planning process, under which a three-year planning cycle should be conducted at least every five years. The process should identify transmission needs over a longer time horizon of 20 years, using multiple scenarios that incorporate a range of specific factors, such as laws that may impact resource mix including tax credits and other incentives, fuel trends and generator interconnection. 

FERC also required a more holistic process for evaluating and selecting projects to meet the identified long-term transmission needs. It specified seven economic and reliability benefits that should be measured over at least a 20-year time horizon in assessing projects to meet the identified long-term transmission needs. And it required that the evaluation process and criteria applied to ultimately select projects meeting the identified long-term transmission needs should, among other things, appropriately account for costs and measured benefits. The process should also consider whether advanced transmission technologies, such as dynamic line ratings and advanced conductors, may be more efficient or cost-effective than alternatives that do not incorporate these technologies.

In addition, Order No. 1920 directs initial steps toward improving coordination with other related processes. For instance, in addition to considering generator interconnection as a potential driver of long-term transmission needs in planning scenarios, Order No. 1920 requires that generator interconnection upgrades meeting certain minimum thresholds (i.e., at least 200 kV and an estimated cost of at least $30 million) that are identified multiple times through that process but not ultimately built to be at least considered for selection in the regional planning processes. FERC directed a process for improved coordination with and transparency of local transmission planning processes. And it took some limited steps as to interregional transmission planning by requiring procedures for information sharing and for proposing, identifying, and evaluating interregional transmission projects that may be more effective at addressing long-term transmission needs.

Next Steps

Order No. 1920 is an important step toward driving more forward-looking, long-term transmission planning, but some potentially significant issues are left for further action. For instance, while Order No. 1920 requires certain cost allocation principles and a process for engaging with states, methods for allocating these costs remain to be proposed in individual compliance filings. It also defers more comprehensive reforms to interregional transmission planning processes for potential consideration in other proceedings. Order No. 1920 will become effective 60 days after publication in the Federal Register and compliance filings as to most requirements will be due 10 months (12 months as to the interregional transmission coordination requirements) thereafter. The first long-term regional transmission planning cycle thereunder should commence within one year following the compliance filing deadline.