Federal regulators on Thursday adopted a new regulation under which transmission project developers could obtain faster approval for proposed transmission projects and more easily spread the costs of building new facilities among utilities that would benefit.
The Federal Energy Regulatory Commission’s decision on transmission cost allocation caps years of debate over how the U.S. can promote development of new, costly transmission lines and substations that are needed to strengthen the grid and ship new wind, solar and other renewable energy to end-users.
The new regulation “will profoundly affect the development of our nation’s transmission system in coming decades,” said FERC Chairman Jon Wellinghoff.
Wellinghoff said that while about one-quarter of new transmission facilities likely to be built over the next two decades will serve wind and solar farms, half of that new transmission capacity will be needed to maintain grid reliability.
Reliability allows electricity grids to operate efficiently despite weather or other unusual events that might otherwise cause blackouts or other disruptions.
Transmission and renewable-energy developers hailed the decision as a necessary policy change to support new development.
“The rule removes one of the obstacles to developing the grid that the U.S. needs for the 21st Century — narrow cost allocation that does not recognize the way the grid operates and impedes cost recovery for grid investment,” J. Jolly Hayden, president of transmission industry group Wires, said in a statement.
The rule requires the nation’s transmission operators to participate in regional transmission planning groups that will decide what projects the region will need to ensure grid reliability. Each regional group will then use a regional cost allocation method that meets FERC requirements, to decide how to spread the costs of the projects among utilities that will benefit from them, according to a summary of the regulation issued by FERC.
“As I have frequently observed, I believe that our nation has historically underinvested in electric transmission, particularly in high-voltage interstate transmission,” FERC Commissioner Cheryl Lafleur said in a statement. “An important precursor to building transmission is determining what will be built, who will build it, and who will pay for it — the subjects we address today in the final rule.”
The new rule itself hadn’t yet been made available.
The industry group Solar Energy Industries Association said the regulation ” will facilitate the development of utility-scale solar power in the Southwest, where some of the best solar resources are found, but are restricted by lack of adequate access to the nation’s rapidly aging transmission infrastructure.”