FERC Transmission: The Highest-Yield Reforms
Most of America’s transmission grid was built in the 20th century to serve central power stations burning coal, oil, more recently, fossil gas, and nuclear stations. In a world where solar and wind energy are now less expensive than fossil-fuel generated energy — and much less expensive with the costs of pollution are considered — it is indisputable that this old transmission system requires a major overhaul. Order 1000, issued by the Federal Energy Regulatory Commission (FERC) in 2011, lowered some barriers to competition, but regional transmission organizations have by and large not aligned their transmission planning and funding with state policies and objectives. A broader, more interregional approach to transmission is also needed to make the grid more flexible and reliable. And the rapid development of offshore wind requires better transmission planning in order to avoid capacity constraints and unnecessary costs.
In this brief, the authors consider FERC’s current efforts to reform interconnection and transmission planning and ask the question: What is the best focus for reform of federal regulation of this complex and disparate set of transmission grids across the United States? The brief answers this question in five parts:
- What FERC did think about: interconnection;
- What FERC should be thinking about: competition;
- What else FERC should be thinking about: integrating offshore wind transmission efficiently and reliably;
- What FERC can do to drive effective implementation: oversight; and
- What FERC knows: To be effective, standards need to be mandatory for RTOs and transmission organizations.