For months, critics have been going after a federal rule issued earlier this year billed as expanding transmission planning and boosting access to renewable energy. Republicans allege that the rule is meant to is bypass Congress to deliver the Democratic Party’s clean energy agenda.
The rule was issued by the Federal Energy Regulatory Commission, an independent agency formed in 1977 with the intent to regulate interstate transmission and wholesale prices for natural gas, oil, and electricity across the country. As part of its responsibilities for regulation, the FERC regularly issues orders regarding transmission planning, interconnection procedures, cost allocation and more.
Motivation behind the controversial order
After years of development, one of these orders, titled “Electric Regional Transmission Planning and Cost Allocation,” came in May. Better known as Order No. 1920, it was issued following a 2-1 partisan vote, with FERC officials saying the measure was key to ensuring a reliable electrical grid in the future.
Primarily, this rule is meant to help project where the grid and expected load growth will be headed in the coming years, in an attempt to also help meet any growing demand. It was issued following congressional Democrats’ failure to pass legislation to facilitate the construction of clean energy projects — leading some legislators to suggest the commission is doing the party’s bidding.
The Democratic Party has long sought out legislative pathways to boost transmission and construction for renewable and green energy projects, such as solar and wind farms. In December 2023, Reps. Sean Casten (D-IL) and Mike Levin (D-CA) introduced the Clean Electricity and Transmission Acceleration Act to reform permitting for clean energy transmission. Five months prior, Sen. Chuck Schumer (D-NY) sent a letter to the FERC asking the commission to pass a transmission and cost allocation rule.
As the Biden administration has prioritized adding renewable projects to the grid, Schumer said he had been “pushing … repeatedly” for the FERC to pass the rule. The Senate majority leader noted that following the passage of the 2022 Inflation Reduction Act, Republicans blocked legislation to facilitate faster permitting for clean energy projects.
“So, I had to find another way, and I was very eager, and almost desperate, to find another way because we so needed to bring this clean energy to people’s homes and reduce their costs,” Schumer said, adding that the rule contained nearly every one of his requests.
Details of the order
The far-reaching effort to boost grid development requires utility providers to come up with several long-term scenarios identifying transmission needs and facilities required to meet them over a period of at least 20 years. The rule then requires providers to assess these scenarios every five years.
As part of this, the rule calls on transmission providers, such as PJM Interconnection and Pacific Gas and Electric, to file ex-ante cost allocation formulas based on a number of predetermined benefits to determine whether regional proposals can cost-effectively and efficiently meet long-term transmission needs.
While the rule also requires providers to hold cost allocation agreement processes between states within that provider’s region, Republican critics have said this may result in their states footing the bill for projects they did not agree to in other states.
Additionally, the rule also requires transmission providers to increase transparency about local transmission planning information and identify ways to use in-kind replacement with right-sizing for existing transmission facilities. This would help ensure that existing infrastructure is using systems that appropriately meet the needs of the consumers, such as increasing the capacity of transmission lines.
The rule is expected to boost large-scale renewable projects that are unable to connect to the overall grid due to lacking transmission capacity.
Criticism within the commission and the courts
Commissioner Mark Christie, who was nominated by President-elect Donald Trump, was the sole dissent to the rule, claiming it prioritized green policy rather than consumers.
“The final rule inflicts staggering costs on consumers by promoting the construction of trillions of dollars of transmission projects, not to serve consumers … but to serve a major policy agenda never passed by Congress, to serve the profit-making interests of developers of politically preferred generation, primarily wind and solar, and to serve corporate ‘green energy’ preferential purchasing policies,” Christie wrote in May.
Christie also criticized the cost allocation portion of the rule, claiming that it put projects promoting wind and solar power under the same regulatory classification as projects that prioritize reliability through engineering without any political or corporate agenda.
As such, he has insisted that it cannot be efficient or cost-effective to require ratepayers in states that do not consent to policy-driven projects, such as Republican districts and green energy projects, to help pay for them.
Several Republican lawmakers have also lambasted the rule, further insisting it would raise costs for families who do not benefit from new power, as regional transmission organizations and many utility providers stretch across state lines.
This summer, utility regulators, advocacy groups, and trade groups filed at least 11 lawsuits against the FERC over the rule. The lawsuits were filed in nearly every federal appeals court in the country and consolidated in August to be heard in the U.S. Court of Appeals for the 4th Circuit in Richmond, Virginia, per E&E News.
Some experts have speculated that the biggest threat to the rule may be the Supreme Court’s overturning of the Chevron U.S.A. Inc. v. Natural Resources Defense Council doctrine in July. The decision now gives judges the ability to rely on their own interpretation of the law instead of deferring to agencies when statutes are vague or ambiguous, paving the way for regulations to be overturned more easily.
At the time of the Supreme Court decision, Christie said the move took away “the most legal lifeline” Order No. 1920 needed. “The final rule’s chances of surviving court challenges just shrank to slim to none,” the commissioner said.
Defense of the order
While some have suggested that this focus on interstate transmission planning may infringe on states’ autonomy, many in the industry agree that the status quo for transmission is not enough to support a reliable grid.
Neil Chatterjee, a Trump appointee who served on the FERC from 2017 to 2021, said the rule would allow ratepayers in Republican-led states to benefit from alleviating transmission congestion overall. While it may take some time, the former commissioner said, the order offers a pathway for “red supply” to meet and even beat “blue demand.”
“I think that many of the opportunities for job creation and economic growth in clean energy lie in red states and rural congressional districts,” Chatterjee said. “And I think that when we get to the place where we’re seeing energy created and jobs created in these conservative states and congressional districts, they’re going to want those transmission lines to get the power to the market where the demand is.”
FERC Chairman Willie Phillips has also disputed the idea that customers who do not benefit from new renewable transmission lines will have to pay for them. During a July hearing with the House Subcommittee on Energy, Climate, and Grid Security, the chairman insisted transmission planning would only require customers to pay for power if they benefited from the new infrastructure.
Additionally, the Democratic chairman has rejected criticism that the Chevron ruling will hinder the commission’s ability to enact the rule, saying the FERC has the authority to regulate regional transmission planning and cost allocation.
Future of the order
After announcing the rule, the FERC opened a public comment period and is taking those into consideration, a representative for the commission told the Washington Examiner in October. This is known as the rehearing period, meaning the rule is not yet in effect.
Utility providers have until June 2025 to comply with the rule, though with Phillips’s term set to expire in June 2026, a new Trump presidency could pave the way for a Republican-led commission. While this could result in a rehearing of the rule, experts have said any major changes would be difficult to pursue.
“It wouldn’t be easy,” Chatterjee told the Washington Examiner. “It would take time, but it’s certainly possible.”
Chatterjee explained that the order could fail to be implemented either by opting to pursue alternative rulemaking that includes the core components of Order No. 1920 or by declining to defend the rule in court.
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As part of its rehearing period, the FERC is expected to review all public comments and concerns regarding Order No. 1920 before coming out with another, possibly adjusted, order. A representative for the commission was unable to provide the Washington Examiner with a timeline of when the rehearing period may be completed.
During the American Council on Renewable Energy’s Grid Forum earlier in October, newly appointed commissioner David Rosner indicated that he is hopeful that the commission will be able to come to a 5-0 vote on the rule following the rehearing.