National Transmission Policy Actions: Gold Medal for 2021, with Competition from 2022

Two distinct public policy goals affecting the nation’s high voltage transmission network captured the attention of the US Congress and the Biden administration in 2021: resilience against severe weather, and decarbonization. Broad support for these twin goals put 2021 atop the Olympic medal podium for national transmission policy through the passage of a set of significant transmission policies in a Bipartisan Infrastructure Law, and the beginnings of a potentially landmark nation-wide rulemaking by the Federal Energy Regulatory Commission (FERC). But the year 2021 could get knocked down to silver by 2022, as the current year is looking potentially even stronger. The Department of Energy (DOE) began 2022 with a Notice of Intent on how it might use its tools to help deploy transmission, and some significant actions from Congress, FERC, and DOE could be forthcoming this year. 2021 is watching with bated breath to see how the judges score 2022.

Federal Transmission Policy Actions Taken in 2021

Bipartisan Infrastructure Law/Infrastructure Investment and Jobs Act

The Infrastructure Investment and Jobs Act, passed by Congress on a bipartisan basis and signed by the President this past November, includes both policy changes and spending and revenue-raising items for the power sector. The Act allocates approximately $65 billion for general power sector support, $5 to $10 billion of which could be used to support new, large-scale transmission, and a few billion that could support power delivery through Grid-Enhancing Technologies (GETs).

The Act includes a Transmission Facilitation Program that:

• • • Authorizes $2.5 billion in permanent borrowing authority from the Treasury Department for a DOE program to support the construction of nonfederal electric transmission lines and other facilities by entering into capacity contracts and offering loans to developers. This provision can help resolve the chicken-and-egg problem whereby transmission development to an area with rich renewable resources suffers from uncertainty around who the renewable resource developers will be five or more years in the future. Government support can catalyze the proactive development of such transmission.

      The program is a revolving loan program, so when transmission customers eventually do reserve the transmission capacity, the government is paid back, and those funds can then be used for other projects. GETs are included as ranking criteria for the program. The provision also includes public-private partnerships where DOE can partner with private developers. 

• • • Strengthens federal backstop siting authority and requires the DOE to consider the integration of renewable energy resources and lower costs to consumers when designating National Interest Electric Transmission Corridors (NIETC). If DOE designates an NIETC, FERC may issue permits for construction or modification of certain interstate transmission facilities if a state denies or fails to process an application seeking approval for the siting of such transmission facilities. This is a change from how courts have interpreted the law in the past. Previously, state inaction was not deemed a trigger for federal action, based on a 2009 court interpretation of the backstop siting law originally passed in 2005. 

• • • Provides $10 billion for different types of resilience grants. This includes projects related to transmission, such as “the replacement of old overhead conductors and underground cables” and “the relocation of power lines or the reconductoring of power lines with low-sag, advanced conductors.” 

• • • Provides $3 billion in funding for the Smart Grid Investment Matching Grant Program, and adds the purchase and installation of advanced technologies that increase the “operational transfer capacity of a transmission network such as “dynamic line rating, flow control devices, advanced conductors, [and] network topology optimization.”

• • • Provides $10 billion for Bonneville Power Administration borrowing authority to use for many purposes, including transmission.

• • • Makes state energy conservation plans’ eligibility for federal assistance contingent on transmission and distribution planning activities that include “feasibility studies for transmission line routes and alternatives; preparation of necessary project design and permits; and outreach to affected stakeholders.”

FERC Advance Notice of Proposed Rulemaking

In July 2021, FERC announced an Advance Notice of Proposed Rulemaking (ANOPR) seeking comment on potential revisions to existing regulations to improve transmission planning, cost allocation, and interconnection processes. The ANOPR solicited input on a wide range of topics, including the need for long-term futures-based scenario transmission planning, the need for more interregional transmission, the types of transmission benefits that should be included when grid planners evaluate transmission solutions, how proactive planning and other measures can alleviate interconnection queue logjams, and the role for grid-enhancing technologies. FERC also set up a Joint Federal-State Task Force in partnership with the National Association of Regulatory Utilities Commissioners (NARUC) where these topics have been discussed.

The majority of commenters supported the need for more transmission generally, and revisions to regional transmission planning processes specifically, in order to more proactively plan transmission in anticipation of probable future generation and load—174 organizations to be exact. With resilience concerns as a backdrop, and consumer demand, state policies, and utility goals driving the demand for a much more diverse resource mix in the future, there is great potential for future-based planning requirements from FERC to lead to significant new transmission expansion and modernization.

FERC aims to issue a proposed rule and final rule in 2022 on this potentially landmark initiative.

More to Come in 2022

Transmission Tax Credit and Other Potential 2022 Legislation

Portions of the Build Back Better Act also have the potential to spur the construction of interregional transmission and bring significant economic benefits to consumers. Various parts of that bill are being considered separately by Congress as of March 2022. The following provisions specifically relate to transmission:

• • • A 30% Investment Tax Credit (ITC) for regionally significant transmission placed in service before the end of 2031. Transmission lines that qualify for the credit are new lines of 270 kV or more that have not already received cost allocation or recovery approval from a regional transmission organization (RTO). The ITC could potentially spur over $37 billion in new transmission development while saving consumers over $75 billion on their electric bills.

• • • $2 billion in loans and grants for transmission

• • • $800 million in economic development support for host communities and technical support for siting authorities
    • $100 million in studies on interregional transmission.

DOE’s Building a Better Grid Initiative

Kicking off potentially an even bigger year for transmission policy, in January DOE announced its Building a Better Grid Initiative, describing in some detail the various tools the agency intends to utilize to support the buildout of long-distance, high-voltage transmission facilities. Up to $5 billion of DOE’s existing Innovative Energy Loan Guarantee authority can be used for transmission. The agency also announced support for National Transmission Planning and Offshore Wind Transmission Analysis.

You Be the Judge

With the potential “Build Back Better” legislation, a FERC final rule on transmission planning and cost allocation, and DOE implementation and follow-through of its Building a Better Grid Initiative, 2022 could be found by the Olympic judges to score even higher than 2021. Followers of transmission, including the ESIG community, should pay close attention and engage at the state, regional, or federal level in this expanding set of activities.

Rob Gramlich
Founder & President
Grid Strategies