April 21, 2022
E-1: Transmission NOPR
Thanks to Chairman Glick, and to all of you. With today’s issuance of a NOPR in E-1, I think we are taking a really important first step to address the nation’s pressing need for forward-looking transmission infrastructure investment.
The nation’s electricity grid is the backbone for an increasingly digitalized and electrified U.S. economy. Its affordability, reliability, resilience and security are essential to every individual and family’s ability to thrive and to access economic opportunity. The high voltage transmission system is also essential, more broadly, for the United States’ continuing ability to provide economic leadership on the world stage. The planning for and investment in this critical infrastructure must be prioritized in a manner commensurate with its importance.
Seventy percent of our grid is over twenty-five years old and some of it much older, making it more vulnerable to disruption and attack. Insufficient transmission infrastructure is also costly. Currently, Americans pay billions of dollars annually extra due to transmission congestion. Extreme weather and disasters are testing a system not planned for the emerging conditions, causing life-threatening blackouts and unanticipated and dangerous price spikes. There are now 1,400 GW of new supply and storage resources stuck in queues around the country, unable to provide largely lower cost electricity, with many hundreds more gigawatts predicted in coming years
Even if we discounted these statistics significantly, there remains an order of magnitude of critical “no or low regrets” transmission investment that must be made if we are serious about protecting customers. I believe the Notice of Proposed Rulemaking we are issuing today has the ingredients to address what we have come to understand through the record and experience as key barriers to this investment.
Three aspects are especially important:
Long-Term Scenario Planning
First, the rule proposes that regions engage in robust, 20-year forward scenario planning to inform long-lead time investment while still maximizing regional flexibility. By relying on the best available data and realistic assessments of the factors that shape supply and demand, the scenario-based approach brings tried and true risk management strategies, already applied in some transmission planning regions, to inform this investment nationwide. While there is inherent uncertainty surrounding the ultimate costs and benefits of any infrastructure, the charge that scenario planning is on its face unreliable is not borne out by experience. The smart planning called for in this proposal will allow grid planners to satisfy system needs and navigate the twin risks of building too much or too little. Given customers’ experience of rising costs due to piecemeal planning, it is important that states, grid operators, and all stakeholders have a clear-eyed vision of a range of possible futures that allow for delivering value for customers.
State Perspectives and Input
Second, the proposal embraces the reality that we cannot successfully develop the nation’s electricity system unless we act in direct partnership with states. The proposal aims to facilitate states’ influence and buy-in to regional planning and cost allocation in a manner that respects their jurisdiction and their individual priorities. Because siting of any infrastructure is difficult and should minimize impacts, states’ early participation in the process may help to improve outcomes.
To be clear, should the states choose to accept the role proposed in this NOPR, they will become decision partners in guiding transmission investment. They will have influence over and accompanying accountability for weighing in on transmission planning decisions as to best serve customers.
Cost-Effective Transmission Development
Third, the proposal contains various efforts to ensure customers are benefiting and that costs are managed effectively. The Commission’s responsibility is not only to ensure supply is able to satisfy future demand, but also to protect customers along the way. The NOPR recommends improving transparency in local planning and improving coordination between local and regional processes. It proposes to require consideration of Grid Enhancing Technologies in lieu of and as part of new wires-based solutions to identify long-term system needs. It encourages joint ownership models that have proven track records of managing costs. Moreover, concurrent with the issuance of today’s NOPR, as the Chairman mentioned, the Commission is issuing notice of a technical conference that will further consider cost management in transmission planning processes.
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Having described what the proposal is, it’s worth briefly touching on what it is not. It is not a plan to foist the costs of one state’s policies onto another. It is also not a policy action to advance renewable energy interests. To so frame today’s proposed long-term transmission planning reforms or to portray transmission planning as a zero sum game misses the point. Rather, the proposal contains a sensible suite of reforms to shore up costs protections and reliability of the U.S. electricity system based on clear market signals about generation development and demand, the risks of extreme weather, and the increasing threat of cyber- and physical attacks.
Finally, it’s worth noting that transmission owning utilities already invest tens of billions of dollars annually in transmission. Today’s State of the Markets Report conservatively estimates that across the U.S., over $15 billion dollars’ worth of U.S. transmission projects entered into service last year, and notes that these cost continue to rise. So, the correct question is not whether long-term planning will cost customers money. The correct question is whether planning wisely for the future will ensure that customers get the most bang for their buck from a cost and reliability perspective.
As where the Chairman started, reaching agreement on this proposal was not easy. I can say with some confidence that this is probably not the NOPR any of the Commissioners voting for it would have issued if writing on our own. But I am proud that it is a bipartisan effort, and I’d like to thank my colleagues for proactively engaging on this issue.
We cannot thank the Staff team enough. Under the steady guidance of Liz Salerno, they have worked for a year, and burned the midnight oil for months, to deliver a proposal that we can all be proud of. I’d like to thank advisors from other offices who played a role, including Kelsey and Karin. I would also like to thank my own team, Vivian Chum, Byron Corum, and Miles Farmer. I’d like to recognize Miles for his commitment to getting this done as well as his thought leadership on the issue.