At its May 13, 2024 open meeting, the Federal Energy Regulatory Commission (FERC) approved a groundbreaking final rule—Order No. 1920[1] —requiring public utilities to undertake new long-term regional transmission planning over a 20-year horizon and allocate the cost of selected transmission projects in a manner that corresponds to the benefits they provide. 

Order No. 1920 has been in development since 2021 and adopts many of the proposals put forth by FERC in the underlying Advanced Notice of Proposed Rulemaking (ANOPR)[2] and Notice of Proposed Rulemaking (NOPR)[3] proceedings.  FERC also held technical conferences and participated in a State-Federal Task Force to solicit additional ideas and factual support for the proposals leading to the final rule.  The final rule was narrowly issued on a two-to-one vote of the Commissioners. This article presents an overview of Order No. 1920 and next steps in the FERC proceeding.

Executive Summary

Order No. 1920 adopts a number of new requirements, including:

• Provides new Long-Term Regional Transmission Planning (LTRTP) requirements;
• Addresses local transmission planning inputs in the regional transmission planning process;
• Addresses coordination of regional transmission planning and generator interconnection processes,
• Requires transmission providers to consider dynamic line ratings and advanced power flow control devices within LTRTP and existing Order No. 1000 regional transmission planning processes; and
• Adopts various proposals addressing regional transmission cost allocation and interregional transmission coordination. 

FERC declined to adopt the NOPR proposal to limit the availability of Construction Work In Progress (CWIP) Incentive for Long-Term Regional Transmission Facilities (LTRTFs).  FERC also declined to act on the NOPR proposal to permit the exercise of a federal Right of First Refusal (ROFR) for selected transmission facilities.  However, FERC adopted a limited federal ROFR for right-sized replacement transmission facilities.

Key Requirements

Long Term Regional Transmission Planning Requirements

Order No. 1920 requires transmission providers to participate in a regional transmission planning process and develop and use “Long-Term Scenarios” as part of LTRTP to identify and evaluate LTRTFs to meet “Long-Term Transmission Needs.”  Within these scenarios, transmission providers are required to use at least a 20-year transmission planning horizon and reassess and revise the Long-Term Scenarios at least once every five years.  A minimum of seven specific categories must be incorporated into the development of Long-Term Scenarios, and transmission providers must develop at least three distinct Long-Term Scenarios as part of LTRTP.  Transmission providers must develop at least one sensitivity for high-impact, low-frequency events applied to each Long-Term Scenario, and Order No. 1920 requires use of “best available data inputs” when developing the Long-Term Scenarios.  The final rule requires transmission providers to incorporate a set of seven “baseline” benefits to evaluate LTRTFs under each Long-Term Scenario as part of LTRTP.

Transmission providers are required to revise their Open Access Transmission Tariffs (OATTs) to include processes for evaluating LTRTFs that include descriptions of how LTRTFs will measure the required benefits and selection criteria for new facilities.  These processes must be transparent, not unduly discriminatory, and use the best available data.  Transmission providers are required to consult with and seek support from relevant state entities regarding the evaluation process and selection criteria.  Order No. 1920 also requires transmission providers to include in their OATTs a process to provide states and interconnection customers with the option to voluntarily fund all or part of the costs of an LTRTF that otherwise would not meet the selection criteria.  It does not require transmission providers to select an LTRTF, even when it meets the selection criteria.  Transmission providers must reevaluate selected LTRTFs in certain circumstances, such as when a selected project misses milestones or has significant cost overruns, but the final rule does not allow transmission providers to review selected LTRTFs on a routine basis because that would introduce too much uncertainty into the evaluation and selection process. 

Local Transmission Planning Inputs in the Regional Transmission Planning Process

Order No. 1920 requires transmission providers to enhance the transparency of the local transmission planning process by evaluating whether replacement transmission facilities identified in the local planning process can be “right sized” to more efficiently or cost-effectively address Long-Term Transmission Needs identified in LTRTP.

Coordination of Regional Transmission Planning and Generator Interconnection Processes

Order No. 1920 requires transmission providers to revise the regional transmission planning processes in their OATTs to evaluate for selection regional transmission facilities that address certain identified interconnection-related transmission needs associated with certain interconnection-related network upgrades originally identified through the generator interconnection process.  Specifically, transmission providers must evaluate certain identified interconnection-related transmission needs in their existing Order No. 1000 regional transmission planning and cost allocation processes, rather than in LTRTP.  Prior to Order No. 1920, many transmission providers only considered interconnection-related transmission facilities if they were part of an executed interconnection agreement.  The final rule expands the scope of interconnection-related transmission facilities that must be considered with certain limitations, such as facilities must have a voltage of at least 200 kV and an estimated cost of at least $30 million. 

Consideration of Dynamic Line Ratings and Advanced Power Flow Control Devices

Order No. 1920 requires transmission providers to consider, in LTRTP and existing Order No. 1000 regional transmission planning processes, dynamic line ratings, advanced power flow control devices, advanced conductors and transmission switching for each identified transmission need.  Transmission providers are required to consider these technologies for both new regional transmission facilities and upgrades to existing facilities and evaluate the extent to which the proposed facilities would be more efficient or cost-effective than transmission facilities that do not incorporate such technology.

Regional Transmission Cost Allocation

Order No. 1920 requires transmission providers in each transmission planning region to revise their OATTs to include one or more “Long-Term Regional Transmission Cost Allocation Methods,” which serve a backstop cost allocation method.  Transmission providers must meet with “Relevant State Entities” to develop the backstop cost allocation method, but agreement of the Relevant State Entities is not required.  The final rule also permits but does not require transmission providers to include in their OATTs a “State Agreement Process” by which one or more states can agree on a separate cost allocation for particular projects.

Commissioner Statements

In a lengthy dissent, Commissioner Christie argues that Order No. 1920 exceeds FERC’s legal authority, does not preserve the existing role of states in transmission planning, and fails to protect consumers.  In discussing his dissent at the May 13, 2024 open meeting, Commissioner Christie expressed concern that the final rule requires rate payers to fund transmission expansion projects for commercial customers, such as data centers. Chairman Phillips and Commissioner Clements authored a brief joint concurrence in support of the final rule, primarily addressing arguments raised by the dissent.  At the May 13, 2024 open meeting, they emphasized that the final rule does not contain a requirement to build transmission and that it provides states with a historic expanded role in FERC-jurisdictional transmission planning.

Compliance

Order No. 1920 becomes effective August 12, 2024.  Order No. 1920 requires that each Transmission Provider submit a compliance filing within ten months of the effective date of the final rule revising its OATT and other document(s) subject to the Commission’s jurisdiction to demonstrate that it meets all of the requirements adopted in the Final Rule (except for the reforms addressing interregional transmission coordination, which are due within 12 months).  Transmission Providers may file a motion for extension of time to comply with the Final Rule, which FERC has discretion to grant or deny.  Interested parties have 30 days to file a request for rehearing and or clarification of the final rule with FERC and may subsequently file a Petition for Review with the U.S. Courts of Appeals. 

For more information about Order No. 1920, including how it may affect your company, please contact Linda Walsh, Sylvia Bartell, Michael Blackwell, Corban Coffman or a member of Husch Blackwell’s Energy Regulation team.

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[1] Building for the Future Through Electric Regional Transmission Planning and Cost Allocation, 187 FERC 61,068 (2024).

[2] 176 FERC ¶61,024 (2021).

[3] 179 FERC ¶61,028 (2022).