Advanced Energy Perspectives

For the past 20 years, states across the country have been working to re-orient our electric utilities around 21st-century goals, including greenhouse gas reductions, distributed resource integration, peak load management, resilience from emerging weather threats, energy burden alleviation, and more. These efforts have led to a plethora of new policies, programs, and processes that span from demand response and time varying rates to non-wires alternatives, performance incentive mechanisms to distribution system planning and hosting capacity analysis. Many of these reforms seek to mitigate the inherent bias in the electric utility world towards capital expenditures and large utility-owned resources, to varying degrees of success.

When FERC issued Order 2023 requiring an overhaul to interconnection processes, clean energy advocates lauded it as a crucial first step in addressing overdue reforms. Inefficient interconnection processes for integrating new clean energy resources onto the grid present arguably the biggest current bottleneck in the energy transition, threatening both grid reliability, affordability, and states’ abilities to meet their climate and energy policy requirements. While a lot of work to fully rectify interconnection in New England will remain even after Order 2023 reforms are implemented, compliance with this Order marks a crucial milestone towards a more efficient, equitable, and expedient interconnection process. 

The recently finalized Federal Energy Regulatory Commission (FERC) transmission planning and cost allocation rule—known as Order 1920—represents a pivotal moment in the regulatory landscape of energy infrastructure in the United States, which we expect will launch the nation towards a more holistic planning approach for our country’s transmission grid.

America has not been building the kind of transmission lines it needs to reliably and cost-effectively power our grid, and a major part of the problem has been our short-term, just-in-time planning process. On May 13, the Federal Energy Regulatory Commission (FERC) released Order No. 1920, meant to modernize the transmission planning process by viewing the system through a wider lens to plan for and construct the transmission system we need for the future.

What is a fixed charge? Similar to fixed costs you see on your cell phone or internet bill, a fixed charge, also referred to as a “basic service charge,” is a monthly fee that utility customers are required to pay no matter how much energy they actually use. Typically, utility bills are based on actual electricity and gas usage, perhaps with a modest fixed charge, but recently utilities have been proposing very large fixed charges on top of their already-approved charges and per-usage rates.