Overhead Transmission

A Look Back and Ahead on the Current 'State of Play' of Transmission Policy

Feb. 25, 2022

The year 2021 was the year transmission policy stepped into the spotlight. Federal Energy Regulatory Commission Commissioner Allison Clements, didn’t mince words in her keynoteat an October meeting organized by WIRES, the trade association dedicated to promoting investment in transmission, “we are at a once in a generation moment” to “go big” and “pivot the ship” on transmission reform.

Throughout 2021, policymakers, legislators, and regulators broadly recognized the need for a significant expansion of the nation’s transmission infrastructure driven by clean energy goals, an increasingly electrified economy, and the need for a more resilient electric grid. Indeed, estimates of the country’s transmission needs are eye-popping. Studies have shown that the United States will have to build out the grid by 60 percent by 2030, and may need to possibly triple it by 2050. To put that in a dollars and cents perspective, a recent report sponsored by WIRES estimated that $230 to $690 billion in investment in the nation’s transmission system will be needed by 2050 just to meet anticipated electrification needs alone. Accomplishing all of this will require a herculean effort.

In response to projections like these, in November 2021 Congress passed and the President signed into law the infrastructure Investment and Jobs Act (IIJA). The IIJA includes provisions such as a limited level of funding support for the development of high-voltage transmission capacity and modifications to strengthen the Department of Energy (DOE) and the FERC backstop siting authority. On the regulatory front, FERC initiated the transmission Advance Notice of Proposed Rulemaking (ANOPR) proceeding to consider whether there should be changes to the transmission planning, cost allocation, and generator interconnection processes to better meet the future needs of the grid. FERC is now sorting through hundreds of comments in response to the ANOPR and considering next steps.

While 2021 was a significant year for transmission policy, 2022 has the potential to be even more impactful. On the legislative front, Congress continues to consider additional legislation that would build upon the initial progress in the IIJA and include more investment to improve and expand long distance, high voltage transmission as part of the Build Back Better Act. While these legislative efforts send a strong signal of support for large scale regional and interregional transmission, they constitute only a small portion of the total transmission investment needed in the coming decades.

Instead, the real action in 2022 is likely to be on the regulatory, rather than the legislative, front. Already this year DOE announced its Building a Better Grid Initiative to implement the IIJA in conjunction with previously enacted authorities and funding. The goal of the DOE Initiative is to identify critical national transmission needs and support the buildout of long-distance, high-voltage transmission facilities to meet the critical national transmission needs through collaborative transmission planning, innovative financing mechanisms, coordinated permitting, and transmission related research and development.

In the meantime, look to FERC to follow up on its transmission ANOPR with a proposed rule (or rules) sooner rather than later. Indications are that the Commission wants to get a final rule (or rules) out by the end of the year – a highly ambitious timetable. The stakes are high. The issues FERC has teed up in the ANOPR are complex, and FERC has not tried to tackle major transmission policy reform in a meaningful way in more than a decade. Moreover, it seems all but certain that there will be disagreements among the Commissioners as to what direction FERC should take on transmission policy. A sharply divided transmission rule would likely invite judicial challenges and provide little policy certainty to the transmission owners and developers who will ultimately have to build the transmission infrastructure the country needs.

Separate and apart from the ANOPR, FERC has other avenues for spurring development of transmission infrastructure. Given the long lead time for getting transmission built and the large amount of capital investment required for transmission projects, adequate and durable transmission policies that consistently and emphatically send strong signals to promote needed transmission investment are crucial. Unfortunately, FERC’s track record on some of these critical matters has not been good. Proceedings related to transmission incentives and rate of return policy have been pending at FERC for many years, and there is a discouraging, and fairly longstanding, lack of consistency and agreement among the Commissioners on what direction to take. The simple fact is that when it comes to promoting investment in transmission, no policy is of greater import than the methods used to set rates of return on those investments. And to the extent additional incentives are needed to spur particular transmission development and construction activity, FERC must use its incentives authority to make it happen. Consistent, adequate rate of return and incentives policies will be indispensable to advancing the ball on transmission development.

It is now obvious the country will need the equivalent of a moonshot effort on transmission investment in order to meet the nation’s critical clean energy, electrification, and resilience needs within the coming decades. While some initial, and potentially helpful, steps were taken by Congress and regulators last year, as matters currently stand, we are not even close to building the electric transmission infrastructure needed to achieve these goals. Look to the steps taken in 2022 to see whether legislators and regulators are serious about meeting those needs or not.

Larry Gasteiger is executive director of WIRES.

About the Author

Larry Gasteiger

Gasteiger is a graduate of the University of Pennsylvania and the Dickinson School of Law. He currently serves on the Board of Directors of Americans for a Clean Energy Grid (ACEG).

Before joining FERC in 1997, Gasteiger was an attorney in the General Counsel’s Office at the Commodity Futures Trading Commission, and from 1989 to 1991 he served as a law clerk for the Honorable Edwin M. Kosik in the United States District Court for the Middle District of Pennsylvania.

Gasteiger brings to WIRES deep federal regulatory experience, having spent nearly two decades at the Federal Energy Regulatory Commission (FERC). During his tenure from 1997-2016, he held a variety of senior leadership roles that culminated in his position as Chief of Staff for Chairman Norman Bay. Additionally, Gasteiger was the Acting Director of the Office of Enforcement after having served as the Deputy Director from 2009 to 2014. Before he joined FERC’s Office of Enforcement, Gasteiger was the Director of the Division of Tariffs and Market Development - East in the Office of Energy Market Regulation. Prior to that, he held several other positions at the Commission, including Deputy Associate General Counsel, Legal Advisor to Chairman Joseph T. Kelliher, and attorney in the FERC’s Solicitor’s Office.

Prior to WIRES, Gasteiger was Chief of Federal Regulatory Policy at Public Service Enterprise Group Incorporated (PSEG) serving from 2016 to 2019. At PSEG, he focused on transmission and wholesale market policy issues and was a regular speaker and panelist at energy industry meetings and conferences.

Larry Gasteiger, Executive Director of WIRES, oversees the international trade association’s initiatives to advance investment in high voltage transmission. Gasteiger works closely with members to set and pursue the group’s regulatory policy agenda, and takes a leadership role in promoting the importance of a robust and resilient grid.