Unpacking FERC Order 1920: A Deep Dive into Transmission Planning and Cost Allocation

Posted by Caitlin Marquis on May 30, 2024 2:00:00 PM

In Webinar, FERC Talks “Relay Race” to Order 1920 1

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.

Last week, Advanced Energy United had the pleasure of hosting Karin Herzfeld, Senior Transmission Counsel for FERC Chairman Willie Phillips, alongside panelists Nic Gladd, Senior Counsel at Wilson Sonsini Goodrich & Rosati, and Cameron Yourkowski, Senior Manager of Policy and Markets at Pattern Energy, for a webinar that delved into the details of the FERC Order and its anticipated impact. 

Herzfeld set the stage for our discussion, providing her unique perspective as legal advisor to the Chair of the Commission, who for the past three years has spent countless hours pouring over the record – the longest ever considered by FERC. In her opening remarks, Herzfeld underlined FERC’s acknowledgment that, regardless of the Commission’s actions, investment in transmission is very likely to substantially increase over time, citing a recent study that found five-year load forecasts have nearly doubled around the country, and nationwide demand for electricity is projected to increase anywhere from 25 to 85 percent by 2050. Given “this very large investment that we know will happen,” Herzfeld explained, through the rulemaking, FERC aimed to send a message: “a robust, well-planned transmission system is foundational to ensuring an affordable and reliable supply of electricity.” 

Based on the record’s findings, FERC ruled that there were deficiencies in our current transmission planning processes, specifically, a failure to conduct sufficiently long-term assessments of needs and account for pressures on our grid. FERC found that the resulting piecemeal transmission expansion is only addressing near-term needs, ultimately resulting in customers paying more than necessary or foregoing real tangible benefits.  

In order to remedy these deficiencies, Herzfeld outlined that the rulemaking requires each transmission planner to do three main things: 1) identify the long-term needs, 2) evaluate the potential transmission solutions, and 3) if their project is selected, determine how to pay for those solutions. The order emphasizes the importance of long-term planning with a minimum 20-year time horizon, mandating planning occur at least once every five years using a plausible and diverse set of three scenarios that incorporate seven specific factors (including state-approved IRPs, trends in resource types, future fuel costs, resource retirements, and generator interconnection requests) that drive transmission and use best available data. The Commission required seven specific reliability and economic benefits to be measured to determine whether any identified transmission solutions will efficiently and cost effectively address those needs. More details on those benefits, and the Order overall, can be seen in our previous blog post about the ruling here. 

Herzfeld emphasized that, through Order 1920, FERC required transmission providers to give a meaningful opportunity for stakeholder input, including states, into those factors that are used to develop long-term scenarios. In this rule, Herzfeld highlights, FERC “created an unprecedented and new role for states in the transmission planning process that didn't formally exist before.”  

As someone intimately involved in its finalization, Herzfeld reflected on the leadup to the release of the Order, calling the rulemaking process a three-year “relay race” with “sprints sprinkled throughout” that required all hands on deck. However, Herzfeld also recognized that FERC’s work is far from over to truly create a transmission system that delivers affordable electricity and supports economic growth, and she cited further action on Dynamic Line Ratings (Docket AD22-5), interregional transfer capability (Docket AD23-3), and further interconnection reforms (Docket AD24-9) as areas of continued focus for the Commission. Advanced Energy United looks forward to continuing to work with FERC and engaging with stakeholders to continue advocating for a more robust, reliable, and affordable grid.  

Following Herzfeld’s opening remarks, Gladd and Yourkowski shared their respective perspectives on the catalysts for FERC’s rulemaking, the most important elements of the Order, gaps to compliance, and barriers to effective transmission planning and buildout that the Order leaves unresolved. Their expertise made for an invigorating conversation that underscored both the challenges and opportunities the Order presents. As raised in the discussion, although the rulemaking will likely face requests for rehearing and potential appeals, there is hope that regions will work together to create solid compliance filings that will be accepted, leading to actual transmission projects being developed.  

We are grateful for the participation of Herzfeld and our panelists in this webinar discussion. To access the recording, click here or the button below. 

Watch the Recording

Join Us for Part 2 of Our “Transforming Transmission” Webinar Series: Navigating State Dynamics of FERC's Transmission Order 

As the Order takes effect, states will see a transition from local, short-term projects to more comprehensive, regionally coordinated transmission investments, potentially optimizing grid reliability and facilitating clean energy integration. Understanding the Order's implications is crucial for states to make informed decisions about transmission planning and investment strategies, ensuring alignment with broader energy policy goals.  

A follow-up discussion to our previous webinar on the landmark FERC rulemaking, this June 20 webinar will explore the implications of the Order on states, addressing key impacts, potential pushback, and United's role in facilitating adaptation. Join this discussion to learn from our panel of experts about how FERC Order 1920 will impact current state and regional transmission planning processes. 


Topics: Wholesale Markets, Transmission



Advanced Energy Perspectives is Advanced Energy United's blog presenting news, analysis, and commentary on creating an advanced energy economy. Join the conversation!

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