On May 13, the Federal Energy Regulatory Commission (FERC or Commission) issued Order No. 1920, the Commission’s long-awaited final rule regarding regional electric transmission planning and cost allocation for future transmission projects on the nation’s interstate electric grid.  Order No. 1920 revises key aspects of the Commission’s current regional transmission planning and cost allocation policies, largely adopted in 2011 in Order No. 1000, in an effort to help accelerate the buildout of transmission infrastructure needed to serve the country’s changing resource mix and growing energy demand projections. 

The major reforms adopted by FERC in Order No. 1920 center around four key areas: (A) planning horizon; (B) developing planning scenarios; (C) selection of transmission solutions and (D) cost allocation, each discussed in more detail below. At a high level, the rule requires transmission providers to engage in long-term regional transmission planning at least 20 years in advance, use at least seven enumerated benefits for the evaluation and selection of long-term regional transmission facilities, and hold a six-month engagement period for relevant state entities before filing a cost allocation method for a chosen project with FERC. Yet, while the Commission’s overarching goal of Order No. 1920 appears to be the selection of efficient long-term regional transmission solutions by transmission providers, the rule makes no mention of National Interest Electric Transmission Corridors (National Interest Corridors), geographic areas designated by the Department of Energy (DOE) where transmission congestion or constraints have an adverse effect on consumers, and where, in certain circumstances, FERC has siting authority for transmission facilities under the Federal Power Act (FPA).     

  1. Planning Horizon

Order No. 1920 requires transmission providers in each transmission planning region of the country to participate in a regional transmission planning process that includes “Long-Term Regional Transmission Planning,” or planning with a 20-year minimum horizon.  The rule also requires transmission providers to reassess their respective planning scenarios every five years. In addition, transmission providers must calculate the benefits and allocate the costs of long-term regional transmission facilities over, at a minimum, 20 years, starting from the estimated in-service date of the transmission facilities.

  • Development of Scenarios

To identify long-term transmission needs and solutions, Order No. 1920 requires transmission providers to use at least three “Long-Term Scenarios” that incorporate various assumptions using best available data inputs over a sufficiently long-term horizon. The Commission’s intent in requiring the use of at least three Long-Term Scenarios is to ensure that transmission providers account for the increasing uncertainty in the accuracy of assumptions over longer (i.e., over 10 years) transmission planning horizons and mitigate the risks of under-building or over-building Long-Term Regional Transmission Facilities. The rule requires transmission providers in each region to reassess and revise each Long-Term Scenario at least once every five years.

  • Selection of Solutions

Order No. 1920 requires transmission providers to measure a set of seven required benefits for potential long-term regional transmission facilities: (1) avoiding or deferring reliability transmission infrastructure replacement; (2) reducing loss of load probability or planning reserve margin; (3) increasing production cost savings; (4) reducing transmission energy losses; (5) reducing congestion due to transmission outages; (6) mitigating of extreme weather events and unexpected system conditions; and (7) increasing capacity cost benefits by reducing peak energy losses. The Commission found that, without consideration of each of these seven benefits, transmission providers may not identify, evaluate, and select more efficient or cost-effective regional transmission solutions.

The rule also requires transmission providers to evaluate opportunities to meet long-term transmission needs by “right-sizing” existing transmission facilities to increase capacity, and establishes a federal right of first refusal for incumbent transmission owners with respect to such right-sized facilities.  Transmission providers must also consider grid-enhancing technologies, such as dynamic line ratings and advanced power control devices, as solutions to meet long-term transmission needs.

  • Cost Allocation

Order No. 1920 requires transmission providers to file one or more ex ante cost allocation methods to allocate the costs of facilities (or a portfolio of facilities) selected as solutions to long-term transmission needs. The allocation of costs under such method must be roughly commensurate with the benefits of the facilities. The final rule further permits, but does not require, transmission providers to adopt a process that would provide up to six months after project selection for relevant state entities to agree upon a cost allocation method (Engagement Period).

  1. National Interest Corridors

On May 8, in accordance with Section 216 of the FPA, the DOE’s Grid Deployment Office issued a preliminary list of ten potential National Interest Corridors, covering transmission-critical corridors from New England to the Pacific Northwest.  The public comment window on the preliminary list closes on June 24, and DOE will begin drafting the final list and completing any necessary environmental review in the fall.  A National Interest Corridor designation makes projects within the relevant geographical area eligible for financing under DOE’s Transmission Facility Financing Program. Further, Section 216 of the FPA permits FERC to issue permits for the siting of such projects where the relevant state siting authorities (a) do not have authority to site the facility or consider its regional benefits, (b) have not acted on a siting application for over one year, (c) have conditioned its approval such that it will not significantly reduce congestion or is economically infeasible, or (d) have denied an application.

On the same day that FERC issued Order No. 1920, it also issued Order No. 1977, which updates the Commission’s regulations regarding applications for permits to construct transmission facilities pursuant to Section 216 of the FPA.  The notice of proposed rulemaking (NOPR) for Order No. 1977 noted that the Commission had not received any Section 216 applications since adopting Order No. 1000 in 2011, due to the lack of any National Interest Corridor designation by DOE.   However, if DOE moves forward with finalizing any such designation this fall, a developer of projects located in newly designated National Interest Corridors may contemplate filing a Section 216 application with FERC as early as 2025, to the extent that one of the four scenarios given rise to the Commission’s FPA 216 authority above exists.    

Despite the potentially imminent National Interest Corridor designations by DOE, and the issuance of Order No. 1977 by FERC, Order No. 1920 does not require transmission providers to consider National Interest Corridors in their respective regional transmission planning processes.  It is possible that, in their respective compliance filings, transmission providers will propose project selection criteria that include consideration of whether a project is located in a National Interest Corridor.  However, given the absence of National Interest Corridors from the text of Order No. 1920, it is unclear whether the Commission would accept such compliance filings, or exactly what weight a transmission provider may give to consideration of whether a project is located in a National Interest Corridor.

  1. Siting New Regional Transmission

Because the siting of new transmission facilities is generally within the authority of the relevant state’s public service or regulatory commission, commenters on the NOPR that preceded Order No. 1920 argued that such bodies could withhold the required approvals, to the extent that they disagreed with the selection of the project or cost allocation method by the relevant transmission providers.  The optional Engagement Period to consult with relevant state entities appears to be the Commission’s primary solution for addressing this concern, as the rule states that  “facilitating [states’] engagement in cost allocation may minimize delays and additional costs that can be associated with associated transmission siting proceedings.”  Yet, Order No. 1920 does not require transmission providers to obtain any consent from any state entity in order to select a project or cost allocation method, and only requires transmission providers to make a good faith effort to consult with the relevant state entities on the development of their respective project selection criteria. 

Given the lack of mention of National Interest Corridors in Order No. 1920, combined with the siting authority that states otherwise exclusively maintain, there is significant uncertainty regarding whether the siting and construction of new regional transmission facilities will take place at a pace sufficient to accomplish the Commission’s goals.  It is easy to imagine scenarios in which state commissions only permit construction of new facilities if they agree with the allocation of costs proposed to FERC by the transmission provider, and FERC would have no authority to address resulting application denials if the projects are outside of a National Interest Corridor. Thus, to the extent that FERC maintains its posture with respect to relevant state entities in its order on rehearing of Order No. 1920, it possible that additional Congressional action on the siting of regional transmission facilities may be needed.

The Clean Electricity and Transmission Acceleration (CETA) Act, introduced by Reps. Sean Casten (IL-06) and Mike Levin (CA-49) on December 13, 2023, is one example of potential amendments to the FPA that would address efforts by states to block certain projects by withholding siting approval.  The CETA would give FERC exclusive siting authority over transmission facilities that cross two or more states and exceed 1,000 megawatts of capacity.  It is uncertain whether progress will be made towards passage of the bill; however, it is likely that members of Congress will maintain a close eye on ways to complement FERC’s efforts to ensure the buildout of adequate transmission infrastructure in Order No. 1920 by streamlining the siting process where possible.  

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Photo of Jayni Hein Jayni Hein

Jayni F. Hein co-chairs the firm’s Carbon Management and Climate Mitigation industry group.

Jayni joins the firm after serving as Senior Director for Clean Energy, Infrastructure & the National Environmental Policy Act (NEPA) at the White House Council on Environmental Quality (CEQ).

During…

Jayni F. Hein co-chairs the firm’s Carbon Management and Climate Mitigation industry group.

Jayni joins the firm after serving as Senior Director for Clean Energy, Infrastructure & the National Environmental Policy Act (NEPA) at the White House Council on Environmental Quality (CEQ).

During her tenure at CEQ, she oversaw the Biden Administration’s ambitious environmental and clean energy agenda, leading work on low carbon projects and climate disclosure, and advancing the successful implementation of the Infrastructure Investment and Jobs Act (2021) and Inflation Reduction Act (2022).

Jayni has extensive experience advising clients on NEPA, Clean Air Act, and Endangered Species Act issues, as well as energy development on public lands. As the former senior political appointee spearheading work to revise NEPA regulations and issue guidance on climate change and greenhouse gas emissions, Jayni offers clients first-hand experience with infrastructure projects that require federal and state permits and authorization. She helps clients identify new funding opportunities and successfully advance clean energy and other infrastructure projects, including onshore and offshore wind, solar, hydrogen, transmission, semiconductor, and carbon, capture, sequestration, and utilization (CCUS) projects.

In addition, leveraging her government experience, Jayni advises companies and investors on ESG compliance and strategy in light of increased scrutiny of corporate climate and net-zero commitments. She advises clients on the legal and policy issues relating to ESG and climate-related regulatory requirements, investor demands, global reporting frameworks, and strategic business opportunities.

Clients benefit from her ability to creatively troubleshoot issues, establish relationships across government, and engage policymakers, industry, non-profit organizations, and other key stakeholders in constructive conversations around climate change, environmental justice, and corporate decarbonization goals.

Prior to CEQ, Jayni led energy and climate work at think tanks at NYU Law and Berkeley Law.

Jonathan Wright

Jonathan Wright is a member of the firm’s Energy Industry Group, and counsels industry clients on a diverse range of transactional and regulatory matters. Mr. Wright counsels developers, investors and lenders in the development and financing of energy infrastructure assets, as well as…

Jonathan Wright is a member of the firm’s Energy Industry Group, and counsels industry clients on a diverse range of transactional and regulatory matters. Mr. Wright counsels developers, investors and lenders in the development and financing of energy infrastructure assets, as well as mergers and acquisitions, with a particular focus on renewable generation and battery storage facilities.

Mr. Wright also counsels clients on electric and natural gas matters before the Federal Energy Regulatory Commission, where he previously served as an Attorney-Advisor in the Office of the General Counsel. He specializes in matters involving electric generation interconnection, wholesale electric market design and participation, mergers and acquisitions involving jurisdictional assets, and natural gas pipeline rate proposals.