Cost-Efficient and Resilient Grid Planning Needs Supportive Regulators

by SREA Transmission Director Andy Kowalczyk

There’s a growing focus on electric transmission at the federal level. The Department of Energy’s (DOE) Grid Resilience and Innovation Partnerships program has allocated about $5.6 billion in funding across the country to strengthen the grid. Additionally, they’ve identified National Interest Electric Transmission Corridors (NIETCs) to accelerate the development of transmission lines that provide economic and reliability benefits nationwide. On Capitol Hill, permitting reform, including transmission, has gained attention with a bipartisan bill from Senators Manchin and Barasso. However, this high-level interest in transmission overlooks a fundamental truth: federal support alone won’t result in necessary transmission projects. At least not without the backing of state decision-makers.

Although the DOE’s current funding for transmission is significant compared to previous allocations, it falls short of addressing the projected changes in the power industry over the coming decades. In the Midcontinent Independent System Operator (MISO) region, which covers 15 Midwestern and Southern states, necessary transmission upgrades to address long-term issues over the next 20 years are estimated to cost around $40 billion. While this level of spending is essential for maintaining reliability, resilience and access to low cost cleaner resources to consumers over the life of the investments, these plans only cover the northern half of MISO’s footprint. 

This is due to the fact that MISO is legally constrained by the lack of support from key decision-makers, like public service commissions. The Transmission Owners Agreement, a legally binding document, states at page 228 that “The MISO Plan shall have as one of its goals the satisfaction of all regulatory requirements. That is, MISO shall not require that projects be undertaken where it is expected that the necessary regulatory approvals for construction and cost recovery will not be obtained.” In other words, without state regulatory support, MISO won’t plan in those states.

Southern state regulators within MISO’s footprint have consistently opposed long-term regional reliability planning, despite well-documented benefits to consumers. In 2019, regulators from the Louisiana Public Service Commission, the City Council of New Orleans, and the Mississippi Public Service Commission issued a statement dissenting from the majority of MISO state regulators who supported long-term planning. While the City Council of New Orleans has since reversed its stance, other Southern states remain opposed. Both the Mississippi and Louisiana Commissions’ consultants, under the leadership of the commissions that employ them, have challenged the benefits of MISO membership in recent years, despite well documented benefits that come from being part of a regional system that can share resources.

FERC Chair Willie Phillips

More Federal Support, More Southern Opposition
On May 13, 2024, the Federal Energy Regulatory Commission (FERC) issued Order 1920, a landmark ruling on long-term reliability transmission planning that largely validates MISO’s existing practices. While many supported the ruling, the Mississippi and Louisiana Public Service Commissions strongly opposed it. They challenged FERC’s jurisdiction over transmission planning under the Federal Power Act and questioned the need for long-term reliability planning.

After Order 1920 was issued, consultants from Louisiana and Mississippi commissions appealed to FERC for a rehearing of Order 1920 and later sought a review of the decision by the 5th Circuit Court of Appeals. The case will be reviewed in the 4th Circuit, but it’s likely that both commissions will continue to challenge the order. This raises important questions about how state commissions make decisions to challenge federal rules like Order 1920 and the level of public input involved in these decisions.

In Louisiana, it’s unclear whether the state’s elected commissioners were even informed when consultants and staff decided to file a joint appeal of Order 1920 with the Mississippi Public Service Commission. Commissioner Davante Lewis, for example, was not notified, as evidenced by his social media posts and a joint Op-Ed supporting Order 1920 published in Utility Dive on July 23.

Other Southeastern states have followed suit. The Georgia Public Service Commission passed a resolution opposing Order 1920 in June, followed by an appeal for rehearing to FERC, echoing FERC Commissioner Christie’s dissent, which argued that states lack sufficient input in transmission planning decisions. For Georgia, no public service commissioner has ever attended a SERTP meeting. In MISO south, regulators have largely declined the opportunity to engage in MISO’s stakeholder process, even as MISO and a host of its stakeholders have consistently appealed to them to engage for several years now. Now, Order 1920 specifically requires Transmission Providers like MISO and SERTP utilities to engage directly with states, and to account for their policies in planning. 

These positions have effectively stalled planning at the boundary between MISO North and South for more than a decade. But state decision-makers still hold the largest balance of power to approve or reject transmission projects in their states. The new Order 1920 does not change this balance of power. It does empower regulators with evidence to make decisions about beneficial investments in grid infrastructure that increase reliability, resilience and affordability. In the current environment, opposition to long-term planning prevents transmission plans from even being developed, much less brought to a vote in state proceedings.  

State Public Utility Regulators (from left to right) Sarah Martz (IA), Randal Christmann (ND), Justin Tate (AR), Patrick O'Connell (NM), John Tuma (MN), Commissioner Mark Christie (FERC), Andrew French (KS), and Kristie Fiegen (SD) 

The Path Forward
In a post-Order 1920 world, the State Engagement Period requires regulator engagement over at least six months to discuss or propose a group cost allocation for long-term reliability projects. However, wise state regulators would begin that work now. Furthermore, there’s no rule preventing state regulators in a transmission planning region from meeting to discuss transmission planning or any other multi-state issue.

The Organization of MISO States (OMS), Organization of PJM States Inc. (OPSI), and the Southwest Power Pool Regional States Committee (RSC) regularly discuss issues affecting multiple states, from transmission planning and cost allocation to resource adequacy and power market issues. These forums are crucial because state regulators must make vital in-state decisions. Given the interconnected nature of power grids across the country, greater coordination between states is necessary to ensure consumers receive affordable and reliable power. Additionally, increased accountability occurs when regulators are kept informed about initiatives involving transmission planners and system operators.

Notably, no current regulator has attended a  Southeast Regional Transmission Planning (SERTP) meeting. This needs to change, not just to comply with FERC rules, but because of the many reasons why regulators need to coordinate across state lines. Unprecedented load growth, shifts in power generation resources, and challenges to maintaining reliability demand the attention of state regulators on a regional basis. Success depends on the ability of stakeholders, regulators, and the power industry to work together—and showing up is essential.