In “We Need FERC Transmission Incentive Policies That Exist Today”, Nina Plaushin, a VP for ITC Holdings, talks about the critical role of financial incentives in transmission development.
“History repeats itself. To the extent FERC moves forward with reducing or eliminating transmission incentives, it would be impossible to maintain needed levels of transmission investment. While FERC has taken a positive step to promote beneficial investment with the Advance NOPR on transmission planning and other issues, policymakers must recognize that robust RTOs will underpin the success, or failure, of all of these policies.
FERC’s nearsighted view of transmission incentive policy is concerning. Risk-averse investors steer away from uncertain regulatory environments and utilities can internally allocate their capital elsewhere.
Without a strong regulatory framework for electric transmission, our nation’s ability to realize President Biden’s goal of a carbon-free power sector by 2035 will be eviscerated. The appearance of reducing customer costs comes at the expense of grid reliability, resiliency, deep decarbonization, and economy-wide benefits. FERC collectively, and individual commissioners, repeatedly speak to the need for transmission expansion and investment.
The ANOPR has regulatory changes that will improve key processes. But FERC must stop the rapid decline in transmission returns (base ROE plus incentives) if it wants to drive capital into the sector.”