Federal energy regulators are pushing forward with reforming rules around planning and siting new transmission lines needed to bring planned renewable resources online. Still, as with previous efforts, there are questions about how effective the initiative will be.

The Federal Energy Regulatory Commission’s (FERC) draft notice of proposed rulemaking on transmission planning and cost allocation (NOPR), issued on April 21, is garnering much attention across the industry. Stakeholders, including electric utilities, regional transmission organizations, state public utility commissions, and environmental groups realize that new transmission facilities are needed to maintain system reliability and deliver large amounts of new renewable generation to load centers. But scrutiny around the proposed rules is intense, with questions as to whether or not they will lead to new transmission build-out and how the initiative will meet the needs of states, transmission developers, and ultimately, electricity consumers.

Average authorized returns for electric and gas utilities have been below 10% in recent years. By comparison, the average authorized ROEs for electric and gas utilities from 1980–1982 were 15.12% and 15.03%, respectively. As inflation approaches levels seen in the early 1980s, pressures will mount to increase allowed equity returns to attract capital for both ongoing investment needs and the accelerated transition to lower carbon networks.