Electric transmission systems connect electricity producers with users.
Expanding electric transmission infrastructure can improve electrical grid reliability and resilience, reduce congestion, and increase access to new energy sources.
Competitive bidding can lower transmission project costs.
The U.S. electric transmission system connects electricity generating sources (e.g., coal, solar, wind) with users of electricity.
Hundreds of thousands of miles of high voltage (230,000-765,000 V) transmission lines carry electricity over large distances with minimal losses in power (Lawson 2022). This is aided by thousands of transformers that change the voltage and provide stability to the grid (e.g., during extreme weather events or times of high electricity demand).
The Federal Energy Regulatory Commission (FERC) regulates the interstate transmission of electricity. State entities (e.g., MO Public Service Commission) may regulate in-state transmission.
Most transmission lines are owned by private utility companies (Lawson 2022). The electric grid is managed by independent electric utilities and FERC-approved regional transmission organizations (RTOs)-independent, membership-based, non-profit organizations comprising utilities (FERC 2021, 2022).
Since 2000, U.S. utilities have increased electric transmission system spending to improve electrical grid reliability and resilience, reduce congestion, and increase access to new energy sources (Figure 1; EIA 2021, DOE 2023).
Increasing transmission investments can improve reliability by expanding access to a variety of electricity generating sources and replacing aging infrastructure (DOE 2023).
Increasing access to geographically diverse power sources can improve resilience during extreme weather events (DOE 2023).
Physical limitations on the electric grid can cause large price spikes over several years (e.g., SW MO; DOE 2023, FERC 2017). In addition to community-level solutions, expanded transmission infrastructure could allow these regions to reduce local electricity costs by drawing from more power sources (DOE 2023).
Renewable energy generators (e.g., solar panels, windmills) must be placed by renewable energy sources, which may not be located near existing transmission systems and sources of electricity (DOE 2023). More transmission lines can integrate new energy sources into the grid for customers that aren’t located close to these sources.
Several states (e.g., IA, IN, MI, MN, MT, SD) provide existing transmission providers with the right of first refusal (ROFR) to develop and own new transmission facilities.
In 2011, FERC Order 1000 removed federal ROFR requirements for new transmission projects, allowing for a competitive bidding process.
Competitive transmission projects represented 3% of all U.S. transmission investments from 2013—2017 (Pfeifenberger 2019).
Studies on how ROFR impacts energy reliability from transmission projects are not widely available.
General costs for hosting a competitive bidding process are not publicly available.
Estimates of how ROFR affects cost savings primarily come from one report, which estimates that if 33% of U.S. transmission investments used a competitive bidding process, about $8 billion would be saved over 5 years (Pfeifenberger 2019).
Additional studies are still needed to validate the cost impact of a competitive bidding process.
Federal Energy Regulatory Commission. (2017). (rep.). 2017 Transmission Metrics. Retrieved March 15, 2023, from https://www.ferc.gov/sites/default/files/2020-04/transmission-investment-metrics_0.pdf.
Federal Energy Regulatory Commission (FERC). (2021, July 20). Electric Power Markets. FERC. Retrieved March 15, 2023, from https://www.ferc.gov/electric-power-markets
Federal Energy Regulatory Commission (FERC). (2022, May 3). RTOs and ISOs. FERC. Retrieved March 15, 2023, from https://www.ferc.gov/power-sales-and-markets/rtos-and-isos
Lawson, A. J. (2022). (rep.). Introduction to Electricity Transmission. Congressional Research Service (CRS). Retrieved March 15, 2023, from https://crsreports.congress.gov/product/pdf/IF/IF12253.
Pfeifenberger, J. P., Change, J., Sheilendranath, A., Hagerty, J. M., Levin, S., & Jiang, W. (2019). (rep.). Cost Savings Offered by Competition in Electric Transmission - Experience to Date and the Potential for Additional Customer Value. The Brattle Group. Retrieved March 15, 2023, from https://www.brattle.com/wp-content/uploads/2021/05/16726_cost_savings_offered_by_competition_in_electric_transmission.pdf.
U.S. Department of Energy (DOE). (2023). (rep.). National Transmission Needs Study. Retrieved March 15, 2023, from https://www.energy.gov/gdo/national-transmission-needs-study.
U.S. Energy Information Administration (EIA). (2021, March 16). Utilities continue to increase spending on the electric transmission system. eia. Retrieved March 15, 2023, from https://www.eia.gov/todayinenergy/detail.php?id=47316
U.S. Energy Information Administration (EIA). (2022, August 11). Electricity explained - How electricity is delivered to consumers. eia. Retrieved March 15, 2023, from https://www.eia.gov/energyexplained/electricity/delivery-to-consumers.php
U.S. Environmental Protection Agency (EPA). (2022, May 5). U.S. Electricity Grid & Markets. EPA. Retrieved March 15, 2023, from https://www.epa.gov/green-power-markets/us-electricity-grid-markets