FERC’s newly finalized Grid Expansion Rule offers a pragmatic and proactive approach to addressing our nation’s energy needs. At its core, the rule is rooted in common sense and a commitment to ensuring just and reasonable rates—a charge that FERC is bound by statute to uphold

Current approaches to regional transmission planning are ill-equipped to meet or identify immediate and long-term energy needs. Piecemeal transmission expansion historically resulted in inefficient, myopic infrastructure investments and unjust, unreasonable, and unduly discriminatory and preferential rates. Market inconsistencies and misaligned regulatory incentives have resulted in inefficient grid buildout and a failure to meet ever-growing transmission needs. These inefficiencies are exacerbated by regulatory bodies captured by the very same utilities they are designed to monitor

The final rule, informed by one of the most robust records in FERC’s history, including approximately 26,850 pages of initial comments and appendices, demonstrates a concerted effort to remedy these shortcomings. It’s a significant step toward modernizing our outdated and aging grid. 

Central to the final rule is the importance of long-term planning in meeting future transmission needs and anticipating growth in energy demand. By requiring transmission providers to produce comprehensive regional transmission plans spanning at least 20 years, the rule ensures that we are not simply reacting to current trends—such as the ongoing and inevitable closure of aging fossil fuel generators—but also preparing for future challenges and opportunities. 

Moreover, FERC’s mandate to conduct this planning exercise every five years using diverse scenarios and quality data speaks to its commitment to robust and informed decision-making in this context. By requiring the evaluation of seven specific economic and reliability benefits in selecting transmission facilities, the rule seeks to ensure that investments are efficient and cost-effective. Similarly, mandating that transmission operators consider a number of factors—including grid enhancing technologies (GETs) and advanced conductoring—in their long-term regional transmission planning will further the adoption of cost-effective, energy-efficient methods for adapting to expected changes in energy demand.  

Crucially, the rule introduces measures to enhance transparency and stakeholder engagement in the planning and cost allocation processes, including with states. It “[e]xpands states’ pivotal role throughout the process of planning, selecting, and determining how to pay for transmission facilities.” The rule’s cost allocation provisions strike a delicate balance between ensuring those who benefit from transmission projects bear the costs and providing a substantive mechanism to ensure necessary transmission is built. 

In a deviation from the proposed rulemaking, the Commission declined to provide incumbent transmission owners conditional federal rights of first refusal (ROFR) dependent on joint ownership of transmission facilities. As highlighted in a Niskanen-led, politically-diverse coalition letter submitted to FERC, such a ROFR would grant no-bid monopolies and exclude developers with valuable expertise from regional planning processes. However, FERC plans to continue to consider the proposed ROFR in future proceedings, and hopefully, after some additional contemplation and informed analysis, they will outright reject it. 

Far from being a radical or politically charged initiative as some allege, this rule is a balanced and logical approach to addressing the serious challenges facing our nation’s grid infrastructure. As Chairman Phillips and Commissioner Clements write in their concurrence, the rule will help FERC fulfill its statutory mandate to “provide a coherent regional and national regulatory regime and avoid the harms and costs that come from a balkanized electricity system in which every state is its own regulatory island.” By prioritizing efficiency, long-term planning, stakeholder engagement, and sensible cost allocation, the rule sets a strong foundation for ensuring a reliable and resilient grid capable of powering the American economy well into the 21st century.