The US transmission grid is facing substantial challenges due to load growth and a shifting generation mix, necessitating urgent expansion and modifications. Although utility investment in transmission infrastructure has quadrupled during the last 20 years, the emphasis has changed from critical high voltage regional lines to lower-voltage local projects, which is inefficient. Local projects frequently receive less scrutiny, which can result in higher costs and greater environmental and land-use implications than bigger, more strategically planned regional initiatives.

A recent report titled ‘Mind the Regulatory Gap: How to Enhance Local Transmission Oversight’ published by the Rocky Mountain Institute (RMI), an independent, nonpartisan, non-profit group dedicated to transforming global energy systems, . highlights the challenges in expanding the US electric grid to meet increasing energy demands and transition to clean energy while ensuring grid reliability in the face of severe weather events. RMI’s analysis identifies significant inefficiencies in the planning and oversight of local transmission projects, urging reforms to address these gaps and improve outcomes for both ratepayers and the environment.

A critical issue identified is a regulatory gap that allows billions of dollars in local transmission spending to escape thorough oversight by state and federal regulators. This gap has contributed to the current trend of shifting utility spending toward lower-voltage local projects. The report emphasises the importance of closing this gap to ensure that ratepayer money is used efficiently on high voltage grid expansions, which are better suited to meet the grid’s future needs.

The report has pointed out that local transmission projects do not have the same level of rigorous scrutiny as regional projects because they are constructed by individual utilities to satisfy particular demands. This oversight gap results from local projects being excluded from the jurisdiction of Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs), which are in charge of regional planning. Furthermore, state Public Utility Commissions (PUCs) have little power to examine these projects, and the Federal Energy Regulatory Commission (FERC) presumes project expenses are fair unless demonstrated differently. This leads to inefficiencies, increased expenses, and lost chances to expand local initiatives to meet more extensive regional demands.

The report stresses that relying too heavily on local projects without coordinating them with broader regional planning needs leads to inefficiencies. To address these issues, the report proposes 11 reforms at the state, regional, and federal levels to close the regulatory gap. These reforms should be implemented in parallel to be most effective in designing a more efficient and future-ready grid. The regional recommendations include:

  • Implementing ‘regional-first planning’ to consider scaling local projects for regional needs
  • Standardising definitions and tracking for local projects
  • Strengthening state input in regional planning processes

At the federal level, RMI suggests:

  • Reforming FERC’s formula rate process to ensure projects undergo adequate review before qualifying for cost recovery
  • Establishing Independent Transmission Monitors (ITMs)
  • Exploring performance-based regulation for transmission

State-level reforms include:

  • Expanding PUC authority through certificates of public convenience and necessity (CPCNs)
  • Integrating transmission into resource planning
  • Increasing regulatory staff capacity to improve oversight

In conclusion, the report emphasises the need for a shift from reactive to proactive transmission planning, urging regional collaboration and comprehensive planning to create a future-ready grid that meets energy demands efficiently while reducing environmental impacts.

The full report can be accessed here