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The Federal Energy Regulatory Commission (FERC) has taken steps to affirm its landmark long-term transmission planning rule, Order No. 1920, with modifications that are meant to improve state regulators’ ability to participate in the long-term regional transmission planning process.
FERC’s new order, Order No. 1920-A, responds to requests for rehearing and clarification of Order No. 1920, approved in May 2024, by giving state regulators more opportunities to be involved in the new process of how to plan and pay for transmission facilities in regions throughout the country.
“This order builds upon an already strong Order No. 1920 and will further enhance the ability of state regulators to provide their important perspectives on the much-needed new transmission facilities our nation needs to ensure our grid can serve the significant growth in demand for electricity,” FERC Chairman Willie Phillips said. “I applaud my colleagues for helping us achieve this bipartisan, unanimous compromise, which will benefit all Americans.”
Order No. 1920-A largely leaves the original rule intact, FERC said. It requires transmission providers to conduct long-term planning for regional transmission facilities over a 20-year time horizon to anticipate future needs and to determine how to pay for those transmission facilities. It is also intended to provide for cost-effective expansion of transmission that is being replaced, when needed, also known as “right-sizing” transmission facilities. The order also clarifies that FERC will extend the engagement period for cost allocation discussions for up to six additional months at the request of state regulators.
The original Order No. 1920, which was unveiled in May, reformed the Commission’s regional transmission planning and cost allocation processes to require transmission providers to conduct long-term regional transmission planning. In some instances, the draft rehearing order agrees with certain arguments raised on rehearing and clarification, and thus the new order clarifies the meaning of Order No. 1920 or modifies the discussion and sets aside parts of Order No. 1920.
Order No. 1920-A requires transmission providers to incorporate state input about how future scenarios used in long-term regional transmission planning will be developed, since the scenarios will reflect how the states plan to meet their laws, policies, and regulations. The new order also requires transmission providers to include in the transmittal or as an attachment to their compliance filings any ex ante cost allocation method or state agreement process agreed to by the relevant state entities, even if the transmission provider chooses not to propose the method or process in compliance with Order No. 1920.
Additionally, transmission providers must include in their compliance filings any information related to relevant state entities’ agreed-upon cost allocation method or state agreement process that relevant state entities request that transmission providers include on compliance. Order No. 1920-A is also meant to makes clear that FERC will consider the entire record – including the relevant state entities’ agreed-upon cost allocation method or process and a transmission provider’s proposal, if they differ. FERC may adopt any cost allocation method or process proposed by the Relevant State Entities and submitted on compliance, as long as it complies with Order No. 1920 and the cost causation principle.
The new order further clarifies that, if relevant state entities request additional time to complete cost allocation discussions, FERC will extend the engagement period for up to an additional six months to ensure that relevant state entities have enough time to engage in discussions. If this extension to the engagement period occurs, Order No. 1920-A also provides that FERC will extend the relevant Order No. 1920 compliance deadlines.
Order No. 1920-A also requires transmission providers to consult with relevant state entities before amending their long-term regional transmission cost allocation method, state agreement process, or the processes that is on file with FERC, or later, if relevant state entities request the transmission provider to amend the method or process consistent with their chosen method. In what FERC says is meant to increase transparency, Order No. 1920-A requires that transmission providers post on a public website the results of their consultations with relevant state entities before filing an amendment, and explain why they have chosen not to propose any amendments preferred by relevant state entities.
Order No. 1920-A clarifies that, while transmission providers must develop three long-term scenarios that meet all of the requirements adopted in Order No. 1920, they may develop additional scenarios to provide relevant state entities with information that they can use to inform the development of long-term regional cost allocation methods or state agreement processes. Thus, transmission providers have the flexibility to depart from Order No. 1920’s requirements related to the development of the required long-term scenarios while developing these additional, optional scenarios. Order No. 1920-A also requires that if relevant state entities request additional scenarios to inform their consideration of cost allocation methods, transmission providers must develop a “reasonable number” of those scenarios.
The original Order No. 1920 included seven categories of factors to be considered in long-term regional transmission planning. Factor Category Seven took into account utility and corporate commitments and federal, Tribal, state, and local policy goals that affect long-term transmission needs. Some requests for rehearing suggested that this specific factor could “unnecessarily” account for the needs of particular transmission users. The new order sets aside the requirement to incorporate commitments from actor Category Seven into each required long-term scenario. Additionally, the new order specifies that although transmission providers are not required to use the set of seven required benefits to help inform their identification of long-term transmission needs, the identification of those needs should still rely on economic and reliability drivers.
To avoid “unnecessary delays” in delivering reforms and to give transmission planners enough time to implement their long-term planning, the new order gives transmission providers more time to submit their initial compliance filings. The original order required that the long-term regional transmission planning cycle would begin no later than one year after initial Order No. 1920 compliance filings are due. Now, transmission providers are required to propose a date within two years of their initial compliance filings, on which they will begin their first long-term regional transmission planning cycle.
The full Order No. 1920-A is available here.
