Energy Dominance Hinges on Permitting and Power Grid Reforms

As conservatives reclaim political power, they inherit a reeling power grid. That is, an electric grid that cannot keep pace with new demand as the United States revitalizes manufacturing and jostles for international supremacy on artificial intelligence. Politics as usual—namely, debating which technologies to subsidize—will not solve this problem. The problem is that markets won’t build what governments don’t allow.

Capital markets are plenty motivated to usher in sufficient supply. The number of new power plants seeking to come online roughly doubles the size of the existing fleet. The culprit is lousy regulation.

Ever-restrictive permitting, a saturated transmission grid, and interconnection backlogs prevent new power plants from coming online to serve growing customer demand. And developers who survive the red tape gauntlet are routinely delayed by a decade. This drives up consumer costs and imperils grid reliability.

The status quo is unacceptable. Not only does it increase customers’ energy bills, but it also hinders economic growth and national security by ceding energy dominance and technological advancement to foreign adversaries.

Republicans have their work cut out for them to make good on promises to lower energy costs and bolster grid reliability. They should get a head start by backing the bipartisan Energy Permitting Reform Act (EPRA) of 2024, which would reduce permitting barriers and prioritize efficient transmission expansion.

Waiting until next Congress in hopes of a better deal would be a major gamble for Republicans. Permitting and grid reforms are unlikely to pass muster in the budget reconciliation process, and there will likely be no gas in the 2025 tank after tax reform. Thin Republican margins in both chambers will likely require bipartisan compromise in another permitting package—if one materializes—in 2026.

The smart play is to pass permitting reform this year. As House Natural Resources Chair Bruce Westerman (R-Ark.) correctly noted, it is wise to “take a bird in the hand over two in the bush.”  

Time is short, and distractions are many. Transmission reform, in particular, has become overly partisan and prompted specious arguments against beneficial reforms. Unfortunately, consumers are paying the price.

From the perspective of those paying for transmission, the problem is a regulatory paradigm that rewards overbuilding inefficient projects and underbuilding efficient ones. That is, customers’ transmission charges are skyrocketing because growing transmission needs are met predominately through the most expensive means: incremental upgrades. In fact, over 90 percent of transmission expansion is now done through incremental projects, in the absence of competition, and do not even need to pass a cost-benefit test. In other words, the status quo is death by a thousand cuts for energy consumers, who are livid.

Led by the Electricity Consumers Resource Council, American manufacturers are leading the charge for reforms to enable cost-effective, large-scale transmission development over inefficient incremental projects. Similarly, a convening of center-right think tanks recently examined reforms to make transmission sufficiently robust and more cost-effective.

Encouragingly, the Federal Energy Regulatory Commission (FERC) just issued a bipartisan rule, with states’ support, to make regional transmission more economical. Unfortunately, FERC never addressed interregional transmission. A new study by the North American Electric Reliability Corporation, the nation’s leading voice on grid reliability, punctuated the consequences of this failure. The study identified expected energy deficiencies during severe weather events and recommended 35 gigawatts of additional transfer capability between regions to boost reliability.

Despite obvious infrastructure needs, some conservative whisperers argued that we cannot let America build because it increases subsidy expenditures. Indeed, taxpayer interests are critical considerations, especially with a bleak fiscal outlook. But good infrastructure policy should not be hijacked by the indirect effects of other policies. It is not as though removing red tape for pipeline expansion—which is necessary—should be put on hold until all oil and gas extraction subsidies are removed.

Besides, Republicans control their own destiny on subsidy reform next year. Conservatives need to fix why America cannot build with or without subsidies. EPRA is not a silver bullet, but the United States would be better off passing it now to kickstart energy dominance. Without it, Republicans’ 2025 agenda must overcompensate to prioritize permitting and grid reforms.