R Street Institute
Presentations

Transmission Cost Drivers and Policy Remedies

by Devin Hartman, Kent Chandler, Olivia Manzagol
Nov 3, 2025
Print
issues: Energy and Environment, Energy Regulatory Reform

Briefing for the Department of Energy

  1. Status quo
    • Perverse incentives of cost-of-service regulation (RSI-consumer paper)
      • Policy favors diseconomies of scale & >90% projects exclusive domain of monopolies with no economic criteria/serious oversightOverbuilding inefficient Tx, underbuilding efficient Tx
      • RSI-consumer groups Tx cost management joint comment
    • Tx need drivers: aging infrastructure, load growth, generation change
    • Strategy: “quick” relief + long-term fixes leave consumer-friendly legacy
  2. Short-term fixes (brownfield upgrades)
    • FERC dynamic line ratings (DLR) rulemaking (RSI comments)
      • Order 881 precedent: tech-specific rule on “good utility practice”
    • Routinize system-enhancement dialogue & information
      • DOE funds labs for RTO-specific GETs/reconductoring evaluation
      • Consumers pushing independent Tx monitor
      • FERC conference on best practices, DOE covers tech status
      • Result 1: bottom-up regional stakeholder progress (carrot)
      • Result 2: record built for complaints, FPA 206 complaint (stick)
    • Expeditious permitting of GETs and reconductoring
    • Shift DOE support from mature techs to pilot/demonstration
      • e.g., LPO for third-party suppliers or customer reconductoring and GETs
    • Improve seams management
    • Shift capital from inefficient to efficient planning mechanisms
      • FERC consumer+RSI complaint on local-regional fixes (define threshold of 100kV, have indep. regional planning across all regions)
      • Remove competitive bidding carveouts for RTO projects
      • Routine FERC review of Tx formula rates (e.g., RSI event, PSC op-ed)
  3. Long-term fixes (greenfield ~7-10 years)
    • Order 1920 implementation
      • Set “high bar” for economic & reliability cost-benefit analysis
      • Beneficiary pays cost allocation
      • Minimize creep of anti-competitive “right of first refusal”
      • Better Tx cost reporting (accuracy and data accessibility)
    • Interregional planning and cost allocation (RSI backgrounder)
      • Remove reg barriers to merchant Tx (voluntarily projects)
        • Pending stakeholder request at FERC
      • Pending FERC record on min transfer (RSI comments)
        • Reliability criteria focused based on NERC study
        • Needs economic criteria (e.g., CBA test)