FERC Order 1920, ushering into new era!

A new FERC ruling, Order 1920, is poised to bring significant changes to the electric transmission system in North America. The order aims to improve grid reliability, facilitate the integration of renewable energy, and potentially lower electricity costs for consumers in the long run. However, understanding the intricacies of this complex ruling requires a deeper dive into its key provisions and their potential impacts on the diverse stakeholders involved in the power sector.

Let's explore the details of FERC Order 1920, starting with its three core reforms: long-term planning horizons, expanded cost allocation, and enhanced stakeholder engagement.

Key Takeaways of FERC Order 1920 Reforms:

Transmission Planning

FERC Order 1920 places a significant emphasis on modernizing and improving transmission planning to ensure a robust and resilient grid for the future. Here's what it entails:

Long-Term Planning: The order mandates a minimum 20-year planning horizon, a substantial increase from the previous 10-year requirement. This extended timeframe aims to account for the long lead times of transmission projects and the evolving energy landscape. The goal is to anticipate future needs, such as the integration of renewable energy sources and increased electrification of transportation and buildings.

Scenario Planning: The order encourages transmission providers to use multiple scenarios to assess potential future conditions. These scenarios should consider factors like technology advancements, policy changes, economic growth, and climate impacts. This approach helps identify robust solutions that can withstand a range of future uncertainties.

Benefits Evaluation: The order outlines seven specific types of benefits that transmission providers should consider when evaluating transmission projects. These benefits include:

Reliability: Enhancing the grid's ability to withstand disturbances and prevent outages.

Resilience: Improving the grid's ability to recover quickly from disruptions.

Operational Efficiency: Reducing congestion and optimizing power flow.

Resource Diversity: Facilitating the integration of diverse energy sources, including renewables.

Economic Efficiency: Lowering costs for consumers through competitive markets.

Public Policy: Supporting state and federal energy goals.

Environmental Goals: Reducing emissions and mitigating environmental impacts

Selection Criteria: The order doesn't prescribe a rigid set of criteria for selecting transmission projects but emphasizes the need for a transparent and consistent evaluation process. Transmission providers are encouraged to consider a range of factors, including:

Benefits: The extent to which a project addresses the seven types of benefits outlined in the order.

Cost-Effectiveness: The project's cost relative to its expected benefits.

Technical Feasibility: The project's ability to be implemented within a reasonable timeframe.

Environmental Impacts: The project's potential environmental effects and mitigation measures.

Stakeholder Input: Feedback from affected communities and other stakeholders.

Cost Allocation

Order 1920 seeks to modernize the way transmission costs are allocated, aiming for a fairer and more efficient system. Key points include:

Beneficiaries Pay: The order emphasizes the principle that those who benefit from a transmission project should contribute to its costs. This includes not only the entities directly connected to the new lines but also those who benefit indirectly from improved reliability, reduced congestion, or access to new energy resources.

Regional Cost Allocation: The order encourages regional approaches to cost allocation, rather than solely relying on the traditional "postage stamp" method (where costs are allocated evenly across all customers). This allows for a more nuanced assessment of who benefits from a project and how much they should pay.

Flexibility: The order recognizes that different regions have unique circumstances and cost allocation approaches. It allows for flexibility in how costs are allocated, as long as the methods are just, reasonable, and not unduly discriminatory.

Summary

FERC Order 1920 is a landmark ruling with the potential to reshape the North American transmission landscape. It is aimed changing transmission planning by mandating a 20-year horizon, requiring scenario-based analysis, and emphasizing a broader assessment of project benefits. It encourages fairer cost allocation based on who benefits, promotes regional approaches, and allows for flexibility. The order emphasizes building appropriately sized transmission projects to avoid both under and overbuilding.By addressing the challenges of long-term planning, cost allocation, and stakeholder engagement, the order aims to modernize the grid and unlock the benefits of a clean energy future. While the implementation will be complex and challenging, the order represents a significant step forward in ensuring a reliable, resilient, and sustainable electricity system for generations to come.

Please feel free to let me know if I missed any important points or misunderstood the ruling. Thanks!