After decades of relatively stagnant growth in electricity consumption, demand is now surging on the U.S. power grid.
According to a recent forecast, U.S. electricity demand will surge 16% over the next five years, which is about three times the rate of growth originally expected. There are several drivers of this trend, including the growth of data centers used for cloud computing and artificial intelligence and the reshoring of manufacturing plants — and jobs — from overseas.
Reports suggest this new era of rapidly increased electricity demand could be similar to the period of growth seen in America after World War II. This calls for major new investments in the nation’s electricity grid, especially long-distance power lines that move electricity from the rural areas where it is mostly produced to the urban areas where it is mostly consumed.
And make no mistake: This simply will not happen without major reforms to the approval process for major transmission line projects. In the past, it has taken as long as 15 years for such projects to navigate the complex federal approvals process. To keep the grid stable while demand continues to surge, we don’t have that kind of time to waste.
Thankfully, there are signs of hope coming from the nation’s capital. In late November, an agency known as the Federal Energy Regulatory Commission (FERC), which oversees transmission line projects that cross state lines, approved a bipartisan order to streamline the approval process and ensure greater involvement from the states.
The new directive, known as Order 1920-A, gives states a much bigger voice in the long-term federal planning process for upgrading the nation’s power grid. This is critically important because states have a much better idea about the future energy needs of communities and industries, and most decisions impacting the availability and price of electricity are made at the state level.
The new FERC approval process also allows for a wider range of forecasts on electricity demand to be considered, ensuring a more detailed analysis of future energy needs. And the process of dividing the cost of new transmission lines between the states and customers they serve should be clearer after FERC’s recent action.
By fostering closer collaboration between states, grid operators, transmission line developers and the federal government, FERC will reduce the potential for conflict and confusion that has fueled delays in the past.
The November FERC order also delivered a victory to residential electricity customers and small businesses. In an earlier version, the green energy targets of major corporations would have played an outsized role in determining where new long-distance transmission lines are needed.
But critics, led by Republican FERC Commissioner Mark Christie, pointed out that this would effectively see homeowners and small businesses paying for transmission line projects that didn’t directly benefit them.
In fact, the earlier version of the order could have produced a massive subsidy for corporate green energy goals while “shifting the costs to residential and small-business consumers already struggling to pay their monthly power bills,” Christie said.
Overall, the November order from FERC recognizes that “state utility regulators are the first line of defense for their consumers and must have the authority to protect their consumers from unwarranted or excessive transmission costs,” Christie noted.
These sentiments were echoed by the National Association of Regulatory Utility Commissioners, a professional body that represents the state-level officials who oversee the electricity sector. “We view these as positive changes and … we will continue to support the ability of states to have an appropriate and needed role in transmission planning and cost allocation,” NARUC said in a statement following the new FERC order.
Too often officials in Washington, D.C., forget that the states created the federal government, not the other way around. That needs to change, especially when it comes to building out the energy infrastructure that our country needs to stay ahead of China and other global competitors.
There is plenty of work to be done, but FERC’s decision to involve states earlier, and more meaningfully, in the construction of major power transmission lines is a positive example that other federal agencies would do well to follow.