America will probably be using a lot more electricity in the very near future. Demand will increase due to data centers for artificial intelligence, as well as electrification that is a central part of decarbonizing the American economy such as continued adoption of electric vehicles and electrification of home heating and cooking. But increased demand for electricity creates a problem. It will require an expansion of our electricity transmission network, a system that was designed for much lower levels of electricity usage. Moreover, the restructuring of electricity markets in much of the US starting in the 1990s is requiring more transmission capacity because of the integration of electricity generation and demand on a much larger scale than in the day when most electricity was generated and used within the service area of a single public utility. Greater extreme weather events because of climate change will increase the demand for electricity and also increase the risk of failures in the transmission system – larger transmission systems can provide resilience for these situations.
But the process for constructing new US transmission systems is broken. The US has built a fraction of the miles of high-voltage transmission lines that are required to meet our future needs. Building on prior work that has helped identify the problem, Joshua Macey and Elias van Emmerick’s article provides two key contributions. First, they show how the current system incentivizes the construction of transmission projects that do not benefit the grid as a whole. Second, through a thorough analysis of the existing powers of the Federal Energy Regulatory Commission (FERC) and the Department of Energy, they identify a range of legal authorities that those agencies could use to address the problems already identified through administrative action – providing a potential roadmap for at least starting to work on our need for more transmission.
It’s not as if we aren’t spending money on transmission, as Macey and van Emmerick note. The problem instead is that the money we do spend is not spent on projects that would actually benefit the grid overall. Nor do we spend that money to facilitate bringing a range of new generation resources online, including renewables. The authors document how the current system by which we decide which lines get built, and then get paid for by electricity consumers, is broken. In theory that system should facilitate the independent identification of where transmission would most benefit the electric grid, and consumers, as a whole, get it built through a competitive bidding process, and then allocate the costs of construction among those who would benefit.
In practice, utilities use loopholes to avoid competitive bidding, so that they construct the lines themselves, and then recoup the costs of that construction through charges to consumers. Utilities also use loopholes – especially for local or small projects – to avoid state approval requirements or regional transmission planning processes and construct lines that provide limited or no benefits to the stability of the overall grid, or to the facilitation of new generation (including renewable energy), but instead benefit the incumbent utility’s own generation resources and exclude competition. Finally utilities use their influence over regional transmission organizations to control what kinds of projects are approved, and to develop the rules that allow utilities to avoid planning and competition.
Just describing these phenomena would be a helpful contribution. But Macey and van Emmerick comb through the provisions of the Federal Power Act, plus other authorities for the Department of Energy, to identify powers that FERC and DoE could use to close loopholes, force better governance at regional transmission organizations, and reduce state and local obstacles to siting. Most of the changes they propose do not necessarily require legislative action – though Congressional action might reduce the risk that what they propose would be overturned in court.
As with any proposal for administrative or regulatory action as a substitute for Congressional inaction, there are challenges. Some of their proposals call for relatively aggressive interpretation of statutory authorities by FERC and DoE – such an effort might run afoul of a Supreme Court that has been more aggressive in patrolling agency statutory interpretation after the Court overturned Chevron and has developed the major questions doctrine. And all of their proposals presume an administration that is interested in thoughtful and effective engagement in expanding transmission. The evidence that this administration has such a position is . . . pretty thin. Thus, their proposals may have to wait for a future administration. But even so, their analysis is important – while delays in expanding our transmission system will be costly, delayed action is better than inaction. Moreover, it is unlikely that Congress will be substantially changing these authorities in the near future.
While these reforms may seem deep in the weeds of energy law, they have real implications for environmental law. Decarbonizing the American economy will require significant increases in electrification, and that in turn requires tremendous expansion of our transmission system in a way that will produce greater reliability and greater access for a wide range of zero-carbon energy sources (solar, wind, nuclear, geothermal, and more). Transmission reform is a necessary condition for decarbonizing. Macey and van Emmerick have given us a roadmap for starting that process.
