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I think it is important to recognize that this siting rule appreciates the primary role that states play in siting transmission infrastructure. To be honest, I am hesitant to vote to approve the provision providing that in relevant cases, FERC’s pre-filing process will not commence until one year after the State applications have been filed. The long timeline required to develop transmission infrastructure is a significant obstacle to ensuring reliable and affordable electricity. I am worried that this aspect of the rule may contribute to lengthening that development timeline for certain projects.
That said, our decision reflects this Commission’s commitment in both this siting rule and in the regional planning rule, to work closely with states. We heard concerns from states, both in the record and at the Joint State-Federal Transmission Task Force meeting, and this final rule modifies the proposal in response to those concerns.
Beyond the issue of simultaneous processing, the rule breaks new ground in setting forth processes to ensure that applicants treat landowners fairly and appropriately engage with tribes and environmental justice communities.
While some have suggested that these provisions are fodder for litigation, I strongly disagree. We have seen in other contexts that early and effective landowner and community engagement improves project outcomes and avoids unnecessary controversy. I am particularly supportive of these provisions.
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There is no infrastructure more essential to our nation’s health, safety, and economic vitality than our electric grid. It is indispensable to modern life and is becoming more so by the day. Our transmission system planning model is no longer fit for purpose, and its shortcomings are increasingly putting communities and our economy at risk. Today’s rule sets grid regions on a path to remedy that urgent problem.
I often tick off the challenges facing the country’s electric grid. It is aging and outdated, it was not designed to withstand the extreme weather now bearing down on it, and it is ill-equipped for the evolving cyber and national security threat facing it. Meanwhile, just as older generation is retiring and load growth is on the upswing, new generation is stuck in miles-long interconnection queues because transmission system planning has failed to prepare the grid for the future. Based on the record before us, it is clear that the Commission cannot fulfill its statutory obligation to safeguard grid reliability without reforming transmission planning and cost allocation.
Today’s rule is as common-sense as it is historic. Here are the principles the rule advances: plan far enough ahead, consider the best available information about future needs, consider all potential solutions, including the cheap ones like GETs, consider all the economic and reliability benefits of solutions alongside their costs, and finally, foster cooperation with states on allocating costs.
While the details of implementing reform are necessarily complex, these principles are simple. Whether planning a family vacation or the nation’s electricity system, it is tried and true that planning early, taking a clear-eyed view of the options, and making smart investment decisions will result in more affordable and reliable outcomes.
And we must remember: The costs of inaction—of failing to plan our nation’s transmission system for the future—are incalculable. Planning with a longer-term view will avoid piece-meal, inefficient outcomes that ultimately harm consumers. Customers’ bills will skyrocket if states “go at it alone” in ensuring grid reliability.
As the backbone of the U.S. economy, a strong grid is critical to economic development. Increasingly, new manufacturing facilities that bring jobs and other benefits are putting available grid capacity at the top of their priority list when choosing where to locate.
And perhaps most important in terms of the costs of inaction, a reliable, resilient grid is an imperative for the health and safety of all Americans, especially in over-burdened and under-served communities. We cannot stick our heads in the sand and ignore the urgent need for new regional transmission in this country.
After I am done speaking, my colleague is going to offer you a starkly different perspective of what this final rule does and does not do, and why you should be opposed to it.
First, the dissent argues that the Commission should embark on a fraught voyage to parse out certain public policies as inappropriate for influencing transmission needs. But all transmission needs are inherently influenced by state policies of all stripes. They always have been. Be it a zoning law, an economic development incentive, or state renewables standard. The dissent’s public policy focus on misses the forest for the trees. Policies are only one of a much broader set of factors, including fundamental economic and reliability inputs, that drive the extent of transmission investment required.
Second, the dissent’s recommended approach—that each state gets an individual veto on infrastructure development—is a recipe for inaction. We cannot fund essential interstate transmission infrastructure by asking states to get together and pass around the hat. The urgency is too acute, and the consequences of failure are too costly.
Third, the dissent suggests that the costs of infrastructure built pursuant to this rule will harm customers. That couldn’t be further from the truth. The truth is that enormous sums will be spent on transmission investment regardless of whether it is done within the framework of this new rule. The Brattle Group estimates that number at roughly $20-40 billion annually. Just months ago, this Commission approved nearly $1 billion dollars in last-minute transmission spending to address the retirement of a single generating facility. It is hard to imagine the region could not have found a more cost-effective solution had it began planning for that retirement, along with other anticipated shifts, further ahead of time.
Whether the next straw that breaks the camel’s back is an economically driven retirement or a large manufacturing facility coming online, the status quo last-minute, and piecemeal approach is an expensive proposition. This rule protects consumers from that approach, and in the long run it will result in a far more affordable grid than the alternative.
Finally, even if the dissent’s approach could work, it is illegal. This Commission and the Supreme Court have been clear that the Federal Power Act’s beneficiary pays principle requires customers that benefit from transmission to pay for those benefits. Arguably, the only way to maintain allegiance to this legal requirement under the dissent’s approach would be to cut off customers if delivering their power came from transmission lines they didn’t pay for. Surely, we do not want a future in which an RTO stops flowing power to states during a winter storm because those states previously opted out of paying for a project simply out of fear it might further another state’s public policy.
I’ll be honest. In reading the stridently worded dissent that I believe misrepresents the final rule and strains in its legal rationale, I can only surmise that thou doth protest too much about the rule’s alleged political agenda. Not everything is about politics. This rule is a reliability and affordability imperative. It is not the Commission’s job to try and force the genie that is the energy transition back into the bottle. It is our legal responsibility to protect consumers in light of whatever is going on in the world around us.
As a practical matter, if I don’t have you convinced, it is worth noting that this planning framework will endure. Legally, the rule is a straight-down-the-middle-of-the-fairway shot. Resources directed at litigation would be better spent finding a path forward within the new parameters. As we’ve heard, the last time this Commission took on major transmission planning reform was 2011 and I do not see a comparable level of reform happening again anytime soon.
So, it’s now up to you. States in particular, you have a choice to make. You can get drawn into a lose-lose debate over who, precisely, caused the need for each specific system upgrade as the grid’s inadequacy festers, or you can take advantage of the unprecedented seat at the table this rule provides. Working together is your best shot at ensuring that your citizens and those of your neighbors are equipped to compete and flourish into the future.
The rule is a massive step towards addressing the costs of inaction and maintaining US leadership amidst an increasingly complex slate of global challenges and opportunities. I am pleased and proud to be part of issuing it today.