Pre-Workshop Comments of the R Street Institute Before The Federal Energy Regulatory Commission on Innovations and Efficiencies in Generation Interconnection

UNITED STATES OF AMERICA BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

Pre-Workshop Comments of the R Street Institute

I. Issue Summary

The Federal Energy Regulatory Commission (FERC or Commission) will convene a staff-led workshop on Sept. 10, 2024 on improving innovations and efficiencies in generation  interconnection processes. One of the specific topics of the workshop is to consider the extent to which transmission planning and generator interconnection processes may be further integrated beyond the reforms adopted in Order No. 1920. This panel will explore ideas to more efficiently and proactively plan for and interconnect new generation with lower cost and increased cost certainty. These comments respond to specific questions posed in advance of the workshop.

II. Summary of R Street’s Position

The R Street Institute (R Street) has provided multiple comments and input on the topic of generation interconnection and the need for more efficient transmission expansion processes. Most recently, R Street, in conjunction with multiple consumer groups, submitted a letter to FERC seeking methods to reduce network upgrade costs via transmission planning, which consumers mostly pay for indirectly. Our position may be summarized as needed transmission network expansion should be identified and implemented as timely and cost-effectively as possible. With more efficient processes the costs to consumers will decrease, and cost allocation can better align with the beneficiary pays principle.

Better integration of generator interconnection processes with transmission planning, especially using regional transmission planning to drive network upgrades, has the potential to improve the transmission expansion process. This improved efficiency translates into major cost reductions for network upgrades, which consumers ultimately pay for, either directly or indirectly. Because transmission costs are so heavily incurred by consumers, large savings from more efficient network upgrades reduces costs to consumers irrespective of cost allocation method. Consumer groups, having recognized the costs they are bearing from expensive network upgrades, were motivated to sign a letter prior to Order No. 2023 that sought reexamination of pathways to lower network upgrade costs via transmission planning. Most of the same consumer groups then backed Senate legislation to advance this issue post-Order No. 2023. We are pleased the Commission elected to respond to such consumer requests, including its framing of this panel.

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