New FERC Mandate Requires Long-Term Planning Amid Rising Energy Demands

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Last month, the Federal Energy Regulatory Commission issued a rule that experts called one of its most significant this century.

FERC Order No. 1920 requires long-term planning by utilities and grid managers like Southwest Power Pool of Little Rock and the Midcontinent Independent System Operator, which has its Southern headquarters here.

Commission Chairman Willie Phillips, a Democrat, said the order will ease pressures including a “spiking” demand for power and frequent extreme weather that has revealed grid vulnerabilities over the past few years. With the American power system pushed to the brink by vehicle electrification, artificial intelligence, bitcoin mining and energy-hungry data centers, it was high time to act, he said.

The commission’s vote was 2-1, with Democratic Commissioner Allison Clements voting with Phillips and Republican Commissioner Mark C. Christie calling the rule “a pretext to enact, through administrative action, a sweeping legislative and policy agenda that Congress never passed.”

Advanced energy advocates praised the potential for easier interconnection of wind and solar projects, part of the Biden team’s goal of eliminating carbon emissions. But conservative states were beyond skeptical.

SPP’s reaction was generally negative. The not-for-profit regional transmission organization warned that while wind power is the No. 1 source of energy in its 14-state region, it must have unwavering “dispatchable” energy from sources like coal and natural gas. SPP also questioned the feasibility of installing carbon capture and sequestration processes by the rule’s deadline, among other concerns.

“Our mission, and our charge from the [FERC], is to strive to continuously keep the lights on today and tomorrow throughout our region,” said Lanny Nickell, SPP’s chief operating officer.

“We take our duty to the 18 million people in our footprint very seriously, and we fear that the EPA rule will induce or impose actions that conflict with that duty. At the minimum, it presents serious complications for SPP and our members that may be insurmountable,” Nickell said.

Arkansas Advanced Energy Association Executive Director Lauren Waldrip called the order a landmark, and “a significant step forward for the power industry, fostering innovation and enhancing grid reliability.”

By encouraging long-term transmission planning, she said, “this momentous rule not only paves the way for a more resilient and efficient energy future but also unlocks substantial economic opportunities for states and communities, ensuring that the benefits of modernized infrastructure are fully realized.”

The order is expected to face appeals and perhaps a rehearing process at FERC.

If it survives, Order 1920 could remake the power industry, affecting developers, clean-energy investors and the world of energy storage. It also has the potential to clear a huge backlog of interconnection projects. Long interconnection queues have run up costs and compromised grid reliability, most experts agree.

Douglas Hutchings, president of Delta Solar of Little Rock, said Order 1920 could have a significant impact on Arkansas, considering SPP’s and MISO’s planning operations here.

“One common concern with distributed resources, such as wind and solar, is their variability,” he said. “However, by diversifying geographically, the intermittency of the overall energy portfolio can be minimized. Robust transmission infrastructure is crucial for this, which is precisely what FERC Order 1920 aims to address proactively.”

Transmission-related costs also factor into rising electric bills, Hutchings said, “often because past investments have been reactive rather than proactive.” The order seeks to change that “by ensuring more strategic planning and investment in transmission infrastructure.”

The hope is to capture economies of scope and scale, he said.

“Many experts believe that the savings from zero-fuel-cost sources like wind and solar will eventually offset the investments in transmission. However, thoughtful and forward-looking planning today is essential to realizing these benefits.”