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Policy Integrity Comments Reflected in FERC’s Order 1920 on Transmission Planning and Cost Allocation

On May 13, 2024, FERC issued Order 1920, a landmark rule to improve regional transmission planning and cost allocation processes. The Order could ease the process of expanding electric transmission, helping integrate much more renewable energy to the U.S. grid. We submitted four rounds of comments in this proceeding: at the advanced notice of proposed rulemaking stage, then on the proposal, and then two sets of supplemental comments.  

For several key features of the final rule, FERC adopted our recommendations. Our comments opposed FERC’s proposal to omit a mandatory list of benefit metrics for assessing the value of transmission projects. We argued that requiring a mandatory set of metrics would facilitate the construction of interregional transmission because different regions would evaluate projects using similar methods. In the final rule, FERC adopted our suggestion to require a set of mandatory benefit metrics, citing our arguments about interregional planning. Similarly, our comments opposed FERC’s proposal to reinstate a limited right of first refusal to incentivize investment. Such a policy would cause anticompetitive behavior notwithstanding the guardrails in the proposal and thus lead to unnecessarily expensive projects. In the final rule, FERC declined to adopt the proposed right of first refusal. We also suggested that, instead of mandating only a minimum number of planning scenarios, the Commission should also require sensitivity analysis of critical drivers of transmission needs. In this vein, Order 1920 specifies that, for each planning scenario, the modeling must include a sensitivity analysis accounting for outages during extreme weather. Because many of the benefits of transmission are concentrated during these periods, this requirement will help illuminate the need for the transmission projects that provide benefits during these increasingly frequent high-impact events.

Order 1920 reflects our comments in several additional ways. One set of our supplemental comments addressed why the proposal would not violate the major questions doctrine. In the final rule, the Commission’s legal analysis on this point largely tracks our own, and our comments were its only source outside of case law. FERC also relied on our comments as evidence that long-term, scenario-based planning is a tool to mitigate uncertainty about future transmission needs in order to achieve just and reasonable rates, rather than a source of new uncertainty that will raise costs. And, in response to a request of ours for clarification, FERC specified that, under the final rule, planners must identify transmission needs that will occur during the next 20 years, not starting in year 20.