Policy Backgrounders

FERC Rules to Streamline Transmission Expansion

June 14, 2024

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The Federal Energy Regulatory Commission (FERC) recently approved two final rules to promote expansion of interstate power transmission capacity and increase clean energy production in the face of rising electricity demand and concerns over the reliability of the grid.

• Order 1977 provides FERC the authority to make permitting and siting decisions for interstate transmission projects if a state fails to act on an application within one year; the rule was unanimously approved and aligns with proposed bipartisan Congressional efforts to streamline reviews and approvals, particularly for multi-state projects.
• The more contentious Order 1920 will require transmission providers to submit long-term planning and cost-allocation, assessing regional transmission needs and opportunities over a 20- year horizon, with a mandatory six-month engagement period with state agencies and required filing of a default cost-sharing plan covering all stakeholders.
• Critics argue these rules unfairly preempt state authority and prioritize renewable energy at higher costs to consumers, while supporters emphasize the urgent need for grid expansion and modernization to meet future electricity demands, including from AI and data centers.
• The rules come after a year-long effort in Congress to streamline the expansion of transmission and grid capacity; however, many of those efforts have stalled despite bipartisan support, with diminishing prospects for additional legislative action this year.