Jason Marshall is Deputy Secretary and Special Counsel for Federal and Regional Energy Affairs at the Massachusetts Executive Office of Energy and Environmental Affairs.
The rule lived up to the hype. After much anticipation, the Federal Energy Regulatory Commission issued its latest major order on transmission planning last month. The new reforms set out in Order 1920 — focusing on longer-term planning and cost allocation — will dominate discussion at industry gatherings this summer. It’s deserved. Taken together, the changes launch a new paradigm for transmission planning across the nation that looks decades into the future, accounts for a rapidly changing resource mix and load profile, and affirms the multi-value benefits of transmission infrastructure.
Among other features of FERC’s final rule, Order 1920 fills a gap in current transmission planning processes: the failure to require consideration of “alternative transmission technologies” or ATTs. To address this gap, Order 1920 directs grid planners to consider certain ATTs when evaluating solutions to identified transmission needs. ATTs encompass a suite of equipment and software that provide an alternative to the current approach to expanding the grid or rebuilding existing infrastructure. They have the promise to be generational innovations in transmission technology.
Order 1920 provides a list of ATTs that must be considered. This includes advanced conductors, which are upgraded cables made from materials that enhance the amount of power flowing through transmission lines. It also includes several so-called “grid-enhancing technologies,” commonly known as GETs: dynamic line ratings and power flow control. These applications — a mix of hardware and software solutions — provide greater visibility into real-time system conditions and tools to manage available capacity. Rounding out the list are “transmission switching” technologies, another mechanism to control power flow and manage system congestion.
While FERC’s directives on ATTs may receive less attention than other reforms in the rule, they provide a critical opportunity to seize. Optimizing our system — getting the most out of existing facilities and maximizing the capacity and flexibility of new infrastructure — is key to enhancing grid reliability and prioritizing affordability.
ATTs provide value to the grid and consumers
Reliability and affordability top the list of the “value propositions” that advanced grid technologies provide, according to a recent Liftoff Report from the U.S. Department of Energy on Innovative Grid Deployment. Among other contributions, the report cites the ability of these technologies to provide increased situational awareness and flexibility to help system operators address unexpected events and restore service.
ATTs also have the potential to drive substantial cost savings to consumers at a time when transmission investment across the country could double or grow at a greater pace. In New England alone, to meet the high end of projected system demand in 2050, our grid operator has estimated the potential need for over $20 billion in new transmission investment. Costs may well exceed that estimate given that the study examined only thermal violations of the system. There may also be additional key drivers of electric demand beyond the heating and transportation sectors considered in the study, such as the dramatic surge in load that some utilities are beginning to experience as data centers connect to the grid.
There appears to be unanimous agreement at FERC about this value added. Chairman Willie Phillips and Commissioners Allison Clements and Mark Christie have each made clear in separate statements that GETs can unlock ratepayers savings.
These technologies can be deployed more quickly than traditional transmission assets and have a more immediate impact on our grid. While not yet widely implemented, two different grid operators reportedly utilized GETs as a tool to address system challenges from Winter Storm Elliott. One utility also installed dynamic line rating equipment in PJM and found that it saved tens of millions of dollars in congestion costs.
More broadly, Gov. Maura Healey is taking concrete steps to foster a climatetech ecosystem in Massachusetts, recognizing that innovative technologies, including ATTs, are key to confronting climate change, enhancing grid reliability and affordability, creating jobs and generating economic growth. In just economic benefits alone, a University of Massachusetts analysis projected that Gov. Healey’s proposed $1.3 billion in state investments over the next ten years on climatetech will generate $16.4 billion in economic activity, while creating over 6,500 new jobs.
Prioritizing ATTs in transmission system planning
To be sure, there is not yet enough real-world experience with ATTs to understand fully how they will contribute to electric power system operations. Moreover, despite the promise of ATTs — and evidence of benefits in their deployment to date — they will not displace the need for substantial transmission infrastructure investments in the coming decades. We will need towers and cables to meet rising system demand and integrate new resources. But we miss an opportunity to unlock what could become foundational elements of a future reliable, affordable and clean grid if our regulatory structure does not keep pace with the maturity of these technologies.
As Order 1920 makes clear, transmission planning procedures must make the consideration of ATTs a routine part of the process for evaluating solutions to identified system needs. This is a key improvement. It sets a floor for compliance with Order 1920. However, compliance filings can go one step further. Given the potential near-term impact and substantial benefits that ATTs can provide, transmission planners — with encouragement from states and stakeholders — can leverage FERC’s directive on ATTs to ensure that they receive priority order in the evaluation of potential solutions.
Here’s one approach for getting this done. In law, there is a principle know as a “rebuttable presumption.” Basically, a given fact is accepted as true until it is disproved. For example, borrowing from my time on a local zoning board, Massachusetts courts apply a rebuttable presumption that an abutter to a property that receives zoning relief is “aggrieved” by the decision and therefore has legal status to challenge it in court. The burden is on the defendant, or the court, to demonstrate that the abutter has not been harmed. FERC applies rebuttable presumptions in adjudicating some of the cases that come before the agency, such as requests for transmission incentives. In all of these examples, the presumed fact is not dispositive of the ultimate outcome, but there must be a sound reason to depart from the factual starting point.
In transmission planning, ATTs should be the starting point for addressing system needs. Tariff procedures would establish a rebuttable presumption that ATTs would result in a more efficient or cost-effective transmission solution. Transmission providers would be required to evaluate how these technologies can address identified system violations before more expensive and longer-lead time options are considered. As a rebuttable presumption, and consistent with Order 1920, transmission providers would not be required to select ATTs as part of the solution, and they would have flexibility to propose a different approach. But the burden should be on the transmission provider to demonstrate that ATTs are not a more efficient or cost-effective way to help meet the need. Colorado took action last year to adopt a similar approach, reportedly requiring utilities to consider GETs before proposing new transmission lines.
Aligning rate recovery structures with ATT deployment
Transmission providers should additionally consider filing complementary rule changes to incentivize the acceleration of ATTs in this early stage of adoption. DOE’s Liftoff Report discusses how compensation models for traditional regulated utilities can disincentivize the deployment of ATTs because profits are tied to capital expenditures — for example, major poles and wires projects — and not system optimization. In weighing options to address a system need, these cost recovery structures bias traditional investments in infrastructure over ATTs that would earn lower profits or, depending on the technology, no profits at all if the solution is viewed as an operational expenditure that qualifies only for recovery of cost incurred.
Getting incentives right is key to integrating ATTs as a routine practice in transmission system planning. Utilities that are first movers in proposing updated regulatory models for cost recovery of ATTs are best positioned to influence the shape and scope of incentives. Utilities should seek to work with states and stakeholders in developing new models for FERC to consider through the lens of Order 1920’s proactive and comprehensive approach to system planning. We should explore cost recovery mechanisms that are as innovative as the advanced technologies we are trying to incentivize.
Order 1920 takes a critical step toward ensuring the meaningful consideration of ATTs as a routine part of the transmission planning process. This action is timely. As we expand our electric power grid at an unprecedented scale, we need to pursue every opportunity to optimize the grid and lower consumer costs. ATTs can be a powerful tool in charting this path to a modernized power grid. The next step requires building on Order 1920 to ensure that ATTs are prioritized as a first order practice in evaluating solutions to transmission system needs.
