FERC Order 1000: The Most Exciting Energy Regulation You’ve Never Heard Of

by Adam James and Whitney Allen

What does ultra-rich timeshare mogul David Siegel have in common with transmission lines?

Both have had trouble with planning.

While we’ll admit that revamping the transmission planning process for the electrical system won’t grab as many headlines as building a 90,000 square foot, 13 bedroom, 23 bathroom home, we do guarantee that it will have a much bigger impact on the majority of Americans.

We know that last week’s announcement from FERC that it will begin enforcement of Order 1000 isn’t a natural-born attention-getter, but read on: because if you care about clean energy this is actually really important.

Turbocharging Renewable Development

So what is Order 1000? Last year, the Federal Energy Regulatory Commission issued a Final Rule to reform the “electric transmission planning and cost allocation requirements for public utility transmission providers.”  This ruling is set to, as Bloomberg put it, “turbocharge the biggest transformation of the U.S. electricity market in decades, with far-reaching consequences for the economy, consumers, utilities and investors.” Let’s dig into the fundamental transformation which is being turbocharged here, and why we should care.

Well first, as a starting point: new transmission lines are a catalyst for clean energy development.

Historically, the gap between where energy is available and where it is needed has been pretty easy to overcome, because fossil-fuel burning plants can be placed almost anywhere and then scaled according to the needs of local cities and communities. Transmission is crucial to link the grid together, but isn’t as crucial for developing carbon intensive resources.

However, as we move into an age where the environmental consequences of fossil fuel reliance are untenable, society must move towards alternative energies if we want to maintain a liveable planet. The trouble is that the areas optimal for developing renewable resources sometimes do not match with population centers, and that a much wider dispersal of renewables is needed to ensure reliability. So transmission lines are necessary to meet the energy where it’s at, carry it to where it is needed, and link it into the larger grid.

Changing the Thinking of Planning

The stumbling block has been over who is going to pay for the lines. States that have a heavy reliance on incumbent, centralized fossil fuels are not going to pay for transmission lines to bring renewables across state boundaries, because they have no economic incentive to do so. This insular state-centric approach to energy management disproportionately hurts renewable energies since they are more widely dispersed.

So the importance of Order 1000 is that it changes the planning and valuation process for transmission lines. To use FERC’s language:

“Local and regional transmission planning processes must consider transmission needs driven by public policy requirements established by state or federal laws or regulations.  Each public utility transmission provider must establish procedures to identify transmission needs driven by public policy requirements and evaluate proposed solutions to those transmission needs.”

Whereas the planning process used to only have to consider reliability and efficiency, it now also must consider state and federal laws.

Enter Renewable Portfolio Standards, which are state laws that mandate a certain percentage of electricity must come from renewable energy sources. Every region has at least one state RPS to consider, and some have several. This means that their transmission planning process must now consider (and value) lines that get enough renewables online to meet state targets. In short, regions will have to work together to get more renewables online — and fast.

Piecing Together the Clean Energy Puzzle

By building off Order 890, which required transmission providers to organize into different regions, Order 1000 represents another huge step in the right direction. The enforcement of this rule will ensure that our electrical grid moves forward in a way that is conducive to building a clean economy from the ground up, spurring economic development and creating jobs along the way. By increasing the amount of renewables in the electrical grid, systems operators will get more experience with balancing renewable resources — and by increasing the distribution of renewables across the country, we can decrease their variability.

What are the implications? Look no further than the National Renewable Energy Laboratory’s report on integrating 80 percent renewable electricity. New, smart transmission plays a big role in getting us there: meeting a target of 80 percent renewables would require 110-190 million miles of new transmission and 47-80,000 miles of new intertie capacity across the three interconnections. The cost of building this new transmission, as we have argued before, is well within the average U.S. expenditures for transmission over the last 13 years. The difference is how the lines are planned and placed. In this 80 percent scenario, transmission use would increase by 8 percent (from 32 to 40 percent) to maintain reliability across the national grid, and carbon emissions would decline 80 percent.

The climate threat is very real, and with electricity generation composing a whopping 40 percent of total U.S. emissions, every step this country takes towards a clean energy future makes a difference. FERC Order 1000 is one way to help us get there.

Adam James is a Special Assistant for Energy Policy at the Center for American Progress. Whitney Allen is an intern on the energy policy team at the Center for American Progress.