Transmission Customer Convening Summary

Introduction

While utilities spend tens of billions of dollars on transmission capital expenditures each year, they do not necessarily allocate funds toward efficient, cost-effective, or policy-compliant resources and infrastructure. Consumer transmission costs have increased dramatically over the past decade, even as reliability issues persist and terawatts of efficient, new generation languish in interconnection queues. While well-planned transmission projects leveraging advanced transmission technologies (ATTs) could reduce costs and integrate new generation, many barriers prevent these projects from coming online. Under the status quo, transmission forecasting, planning and optimization deficiencies, regulatory incentives, and transparency and regulatory gaps ensure the most beneficial lines remain underbuilt.

Given these challenges, the R Street Institute and the World Resources Institute (WRI) organized an expert workshop for customers and consumer advocates to discuss and propose solutions to today’s most salient transmission issues. Held at the WRI offices in Washington, D.C. on Dec. 20, 2024, the workshop drew 18 participants who engaged in four hours of lively discussion. A subsequent webinar on the subject took place in 2025.

The following is a summary of key takeaways, including high-level observations from event organizers and associated next steps for consumer advocates and policymakers. We applied the Chatham House Rule to facilitate open and honest discussions at the event, and this document will honor that rule by summarizing what was said without direct quotation or attribution.

Definitions

The event organized discussion around four pillars:

• Bettering future investment through improved planning
• Optimizing use of the existing system
• Leveraging competition to improve efficiency
• Improving governance and transparency

A paper based on a 2022 convening provides context on these pillars. The terms “customer” and “consumer advocate” are used interchangeably throughout this summary when referring to participants. The acronym “ATT” encompasses grid-enhancing technologies like dynamic line rating, advanced power flow, and topology optimization, as well as advanced conductors.

Observations and Next Steps

Bettering future investment through improved planning

Similar to the 2022 convening, customers expressed support for holistic and proactive planning to ensure energy infrastructure buildouts are efficient, ensuring reliability at least cost. They agreed that implementing Federal Energy Regulatory Commission (FERC) Order 1920 will be critical to meeting those expectations. The order favors least-regret solutions and helps avoid stranded costs and unreasonable allocations—two key consumer priorities. Consumer advocates also thought Order 1920-A was successful in defining an appropriate role for states and clarifying that costs shall be allocated based on causation. For example, if one state’s renewable portfolio standard (RPS) triggers a line build between two states, a region can propose a cost allocation method that shields consumers without an RPS from rate hikes caused by the other state’s RPS. This eased some consumer advocates’ concerns.

Customers also identified opportunities for generation interconnection reform. In particular, they noted a need to advance and refine differentiated interconnection services with distinctions based on grid-connection speed and generation curtailment risk. The current energy resource interconnection service/network resource interconnection service distinction and implementation help with price discovery and the appropriate allocation of cost and risk in interconnection. Additionally, customers noted the need to improve load forecast accuracy and other information related to load interconnections that affect forward-looking transmission planning.

Some customers expressed concern that interregional planning might turn into national integrated planning, thereby driving infrastructure build that does not address consumer needs. The group indicated they were more comfortable focusing on regional needs for interregional transfer capability planning. A recent interregional transfer capability study by the North American Electric Reliability Corporation (NERC) found that because transfer needs vary by region, a minimum interregional transfer capability “one-size-fits-all” approach would likely be inefficient and ineffective. The study identified certain reliability-based deficits between pairs of regions, taking into account the availability and adequacy of resources in neighboring regions but without considering cost-benefit assessments. Instead, it revealed that transfer need varies amongst and between regions. In customers’ eyes, a uniform requirement across regions is not preferred, leaving room for alternative options such as a methodology-based determination of region-specific transfer levels.

Some participants expressed interest in including merchant transmission as a possibility in regional planning, which would help ensure those projects are considered holistically with the regional plan while reducing unnecessary transmission and generation build.

• Load forecast improvements could also boost regional planning effectiveness—if they distinguish between transmission and generation needs. Moreover, forecasts with temporal specificity are needed to resist the flawed assumption that all demand will coincide with system peak.

• An interregional planning regime focused on assessments of regional needs and benefits of enhanced transfer capability is preferable to a uniform requirement across regions.  

Optimizing Use of the Existing System

Participants discussed current attempts to optimize the use of the existing grid through ATTs like dynamic line rating (DLR) and advanced conductors. FERC Order 2023’s provision to consider ATTs was mentioned, as well as the advance notice of proposed rulemaking (ANOPR) that would require utilities to deploy DLR on congested lines. Consumer advocates agreed that requirements to merely “study” or “consider” ATTs are insufficient to overcome utility incentives, as they would not convince transmission owners (TOs) to forgo the higher profits of building new, more expensive lines. Furthermore, ATT vendors are reluctant to contest utility findings—even when enough public information is available to do so—because they rely on utilities as clients. Other ideas, such as “shared savings,” which would let utilities partially recoup consumer savings from ATT projects through higher rates, were also discussed but ultimately dismissed. Consumer advocates have serious concerns about utilities earning incentives in the form of essentially unlimited returns for doing what they are already obligated to do under their duty to serve and through good utility practice. There was also concern about how performance baselines would be set.  

Participants stated their preference for ATT mandates like the DLR ANOPR over “requirements to consider,” à la Order 2023, or incentive reforms like “shared savings.” However, consumer advocates raised concerns about the technical burdens of defining and implementing such mandates. Some wondered if utilities had the personnel to implement ATT solutions operationally, while others noted that a mandate approach means FERC would have to initiate a separate technical proceeding for each type of ATT.    

• Regulators should continue to require good utility practice parameters like FERC Order 881 and FERC’s DLR ANOPR while ensuring rules are well defined.

• Some participants suggested that local, TO-initiated projects should not be used to short-circuit competitive options unless grid-enhancing or advanced technologies are part of the solution. Sponsorship planning models for competition have yielded creative non-wires solutions; these options could expand upon that.

• Regulators could require a set of performance metrics in transmission planning and interconnection processes to ensure that cost-effective solutions (e.g., ATTs) are the focus rather than the exception.

Leveraging Competition to Improve Efficiency

Consumer advocates generally supported competitive bidding and wanted to see an updated, methodologically rigorous study on the cost savings of competition to bolster the empirical case for the benefits of competition. Courts have generally struck down right of first refusal (ROFR) laws, but customers expressed they cannot rely on that trend. Order 1920 introduced a ROFR for “right-sizing” projects, which participants worry will be implemented in a way that harms consumers.  

• Participants welcome regulatory changes that inhibit utilities’ ability to sidestep competitive processes.
• Some participants agreed that pure merchant transmission models with voluntary planning and cost allocation should be empowered to build more regional and interregional transmission. Similarly, FERC should require its inclusion in regional planning and reform markets so that the agency can monetize some of the ancillary services it provides (e.g., frequency response).

• Hybrid merchant/regulated competitive models (e.g., “cap-and-floor”) employed in other countries could prove useful. Some participants suggested exploring these models to incentivize beneficial transmission without compromising consumer protections.

Improving Governance and Transparency

Unilateral utility actions trigger most transmission costs without any oversight from regulators other than cost-of-service ratemaking, which varies in effectiveness by jurisdiction. Not only does this harm consumers, it also discourages regional planning because TOs can avoid addressing needs regionally and efficiently by addressing local needs instead. Transparency reforms help, but they are insufficient because utilities have not generally disclosed requested information in a timely or helpful way. For instance, PJM has not disclosed that its transmission costs are regularly materially over budget. Putting the burden on customers to litigate projects on a case-by-case basis (e.g., through prudence review) is time- and resource-intensive with a low likelihood of success. Complaints are a similarly time-intensive way to change policy.

• Consumers need governance reforms to balance incumbent TO influence in regional planning. For one thing, all transmission should be subject to true economic review. Recent changes to the California model, in which investor-owned utilities must periodically report all TO projects with detailed costs and customers can obtain information through discovery, could be replicated elsewhere.

• Independent transmission monitors (ITMs) could facilitate transmission cost monitoring and supplement true economic regulation of TO-initiated projects. However, consumer advocates would need to agree on ITMs’ responsibilities and in what parts of the system they will operate.

• All consumer advocates agree that more oversight—such as by an independent entity with monitoring capabilities, perhaps some form of an ITM—are especially needed in non-RTO regions. This is largely due to the perceived lack of any independent transmission planning, even for regional processes. Consumer opinions within RTOs on the creation of new bodies versus the expansion of current market monitors vary. Many customers support increasing independent transmission planning and limiting the amount of transmission initiated by TOs.  

• A number of consumer advocates are also interested in addressing overlap between Order 890 and Order 1000 by reducing TO-initiated asset management and supplemental or local projects in planning.

Conclusion

Important insights emerged from the consumer perspective at the 2024 workshop, where participants discussed recent developments and emerging solutions.

On the topic of planning improvements, while participants supported Order 1920 as potentially more beneficial to transmission build for consumers, they remain concerned by the order’s ROFR provisions. Customers are calling for interconnection reform, and some participants expressed interest in more consideration of merchant lines in regional planning and new ways to engage with setting interregional transfer capabilities.

Regarding system optimization, participants called for an expansion of technology-specific implementation requirements, such as the pending DLR ANOPR. Many generally approved of using performance metrics and competitive exclusions to incentivize ATT deployment.

Concerning competition, consumer advocates affirmed their basic commitment to increasing competition by calling for an expansion of competitive or market-based transmission solutions. Some expressed interest in exploring how hybrid merchant/regulated models like “cap-and-floor” could be implemented with competitive tender in the United States.

Finally, various participants called for several governance and transparency reforms like minimizing TO-initiated projects; setting up some form of ITMs, at least in non-RTO markets; creating processes to monitor project costs; and removing hurdles for consumers challenging imprudent transmission.