WASHINGTON (May 13, 2024) — The United States Federal Energy Regulatory Commission (FERC) has released its long-awaited rule on transmission planning and cost allocation for the U.S. electricity grid. 

The rule has significant implications for the U.S.’s ability to meet rapidly growing energy demand, quickly and efficiently add more carbon-free energy to the power generation mix, and ensure the grid is resilient and reliable in the face of extreme weather. The U.S. has been underinvesting in the grid and with significant growth in demand expected in coming years, it is critical to accelerate the build out of new lines.

FERC’s final transmission planning rule follows the U.S. Department of Energy (DOE)’s recent announcement of initial selection of potential National Interest Electric Transmission Corridors (NIETC), which are geographic areas where capacity constraints or grid congestion exist or are expected. A NIETC designation enables DOE and FERC to help advance transmission projects within the corridors using federal financing resources and siting tools, and these two announcements will work in tandem to help modernize the U.S. grid. 

Below is a statement from Lori Bird, Director of WRI’s US Energy Program:

“This rule significantly improves the U.S.’s ability to plan its grid investments to meet the country’s growing electricity demand while achieving our climate goals. It will also make the grid much more reliable and resilient amidst increasing extreme weather events. 

“It lays out a roadmap for long-term regional transmission planning that will help grid planners and transmission providers keep pace with evolving needs by considering the changing resource mix, demand growth and new technologies. These improved processes will enable planners to more comprehensively evaluate grid investments. 

“Importantly, the rule also addresses the critical issue of how to pay for new lines by instituting better processes for allocating costs among those who benefit from them. The new rule enables transmission providers to consider a broader set of economic and reliability benefits when determining whether transmission lines are cost-effective and efficient. The inability to effectively assess benefits and determine who should pay for new power lines has long been a sticking point that has impeded new projects, and this rule helps address many of these challenges.

“While much still needs to be done to modernize our power system, FERC has taken a critical step forward by making it easier to plan and pay for a more reliable grid.”