The direction FERC takes under President-elect Donald Trump’s second term is up in the air, but between his campaign promises and a major complaint filed just before the holidays, the commission may spend some of its time on cutting costs to consumers. 

During an election year in which the cost of living was a major theme, Trump promised to halve energy bills — including electricity, gas and transportation — within one year of his second term by expanding domestic resources and infrastructure.  

Then in late November, consumer groups filed a complaint seeking greater oversight of local transmission planning, which they claim has contributed to higher bills consumers have faced in recent years. (See Consumer Groups Seek Independent Oversight of Local Tx Planning.) The complaint and a recent RMI report claim that local transmission lines can fall into a gap, with RTOs more focused on regional plans and many states assuming the RTOs and FERC will oversee them. 

Transmission is the fastest-growing part of customers’ bills, with the Energy Information Administration reporting in November that spending on distribution and transmission has been responsible for overall higher industry spending in recent decades.

In an interview with RTO Insider, FERC Commissioner Mark Christie pointed to J.D. Power & Associates’ most recent survey of residential customers, which reported the highest average bills in the survey’s history at $182/month and a fourth straight year of declining customer satisfaction.  

FERC gives transmission developers a presumption of prudence when they file for cost recovery under its formula rate rules, meaning opponents have a higher burden of proving any overspending. “It’s another part of many things that FERC does that have contributed to this rapidly rising cost of transmission,” Christie said. 

Curtailing that presumption, as well as transmission incentives for lines that do not go through a “credible” certificate of public convenience and necessity process, would lead to states starting to review transmission more often, as it would align the utilities they oversee with that goal, he argued. 

“What’s happened over the last 20 years with the advent of RTOs is that the various states have either removed or taken away or restricted the ability of their state utility commissions to vet these local projects as well as regional projects,” Christie said. 

Some states like Virginia, where Christie was a regulator, kept their transmission oversight. PJM, meanwhile, does a good job on planning regional transmission lines, he said. 

“Where they do not do [a good] job is on the local projects, which in PJM are called supplementals, and … about 80% now of the transmission costs in PJM are coming from these local projects,” Christie said. (See Rising Transmission Costs in PJM Concern Consumer Advocates, Enviros.) 

The best place to review local projects, which are by definition only inside the territory of one utility and often involve more basic grid upkeep like replacing old infrastructure, is at the state level. 

“FERC cannot change state laws, obviously, but what FERC can do is stop giving a presumption of prudence for projects that are coming out of states where they’ve not been given a thorough vetting,” Christie said. 

WIRES Weighs in

WIRES Executive Director Larry Gasteiger pushed back against the consumer groups’ complaint and defended local transmission planning generally in an interview. 

“This complaint is a distraction from all the work that really needs to get done on getting transmission that we need today built more efficiently and faster,” Gasteiger said. “It’s going to be a distraction from compliance with Order 2023. It’s going to be a distraction for compliance with [Order] 1920 because it’s going to pull on resources from the commission; from the transmission developers; from all the stakeholders to deal with an issue that’s, frankly, unnecessary.” 

Local transmission planning already is adequately overseen, with stakeholders given a chance to review plans in detail, Gasteiger argued. While the issue has been brought up repeatedly over the years, Gasteiger said none of the critics can point to specific projects in which the industry overbuilt transmission because of a lack of oversight. 

“There’s been a longstanding openness towards reasonable transparency and reasonable access to information,” Gasteiger said. “I think my sense is that transmission owners are generally open to that. But that’s not what this is about. This is really about adding a lot more process, a lot more requirements now around local transmission, further burdening it. It’s only going to make it take longer. It’s only going to make it become more costly, and it’s only going to make projects riskier for transmission developers to get done.” 

Local transmission development is a necessary process, WIRES argued in a report in 2021. 

“What we don’t want to see is jeopardizing success stories where you have been able to get transmission developed like in local transmission,” Gasteiger said. “It’s not an either-or. The fact of the matter is, if you want to have more regional transmission development, it’s only going to create requirements for more local transmission development.” 

It’s not All Local

With FERC issuing Order 1920-A, which won more support from states as it gave their regulators a larger role in regional planning, opinions are split on whether it will save money if it survives legal review. 

Christie filed a dissent against the initial Order 1920 but supported the move to give state regulators a more formal role. However, he still feels that 1920-A has its shortcomings, including a failure to do anything about local transmission. 

“It’s not going to do anything to lower costs. It’s a bizarre argument,” Christie said. “It’s going to actually increase costs because the whole goal of 1920 was to increase transmission spending by $3 [trillion] or $4 trillion. … How can that lower costs?” 

Joshua Macey — associate professor at Yale Law School, where he teaches energy law — said the answer to Christie’s question is by increasing competition. 

“When you look at the history of electricity regulation in the last 30 years, there’s overwhelming evidence that competition has driven down costs,” Macey said. “There’s been countless studies showing that transmission constraints reduce competition, increase generator market power and lead to congestion that drives costs.” 

The political discussion around transmission expansion has focused on expanding access to renewable energy, which is tied to liberal states’ energy policies, he added. More transmission would help expand renewables, as well as make the grid more reliable and increase competition. 

“I think creating barriers to transmission would not be consistent with the Trump administration’s goal of reducing prices, though it might be consistent with the goal of protecting fossil resources,” Macey said. 

The Energy Markets

Increasing competition in the power markets also could help lower prices, with Macey suggesting an auction-based approach to radically reduce interconnection queues. 

“You would auction off positions in the queue to the highest bidder,” Macey said. “You would fix resource adequacy markets, which … includes raising offer caps in the energy market; having meaningful nonperformance penalties in capacity markets; and then essentially requiring that when conducting a regional transmission plan, you also assess the benefits of increasing regional transfer capability.” 

A major factor on electricity prices is the price of natural gas, which EIA reported has gone from an average of just over $2/MMBtu in November to well over $3/MMBtu by the end of year, with the agency expecting it to average that latter price the rest of the heating season. 

Impacts on natural gas prices were the main reason the Rhodium Group forecast price increases if the Trump administration rolls back the Inflation Reduction Act, which has been a goal of many in the Republican Party. Rhodium estimates full repeal would lead to higher energy bills of $489 annually for the average customer by 2035. 

The law is “transitioning a major source of natural gas demand, the power sector, away from natural gas,” Rhodium Associate Director Ben King said in an interview. “That has the impact of reducing the price of gas, so it just makes things a little bit cheaper.” 

Getting new supplies of generation onto the grid also can help the power industry hedge against the huge price spikes from abnormal events in the natural gas market, such as February 2021’s Winter Storm Uri, or Russia’s invasion of Ukraine and the subsequent scrambling of global natural gas supplies, he added. 

Increasing natural gas demand in the power sector has impacts that go much further afield than higher electricity prices. It also means higher prices for industries that use gas as fuel and end-use customers who rely on it for heating, King said. 

One can find the opposite argument from conservative groups, with a letter to Congress on the IRA’s two-year anniversary signed by Competitive Enterprise Institute, Americans for Prosperity and more than 50 conservative groups arguing its full repeal would save money. 

“The cost of these subsidies may reach $1 trillion or more, but the tax dollars squandered are only part of the burden,” the groups said. By favoring renewables over “conventional and reliable resources,” the “unavoidable result is costlier energy bills — the last thing the American people need.”