Major US Blackout Anniversary Renews Call for Power Grid Updates

Transmission developers are marking 20 years since the biggest blackout in North American history with calls for US energy regulators to finalize a rule to make it easier to invest in making the power grid more resilient.

In August 2003, a cascading blackout that knocked out power to more than 50 million people in the Northeast US and Canada highlighted fundamental shortfalls in managing a grid that spans multiple states and regions. The blackout prompted the Federal Energy Regulatory Commission to take steps to address those challenges.

Today, the goal of achieving net-zero emissions from the grid by 2035 while keeping the lights on has again highlighted the importance of investment, developers said.

“The blackout highlighted and demonstrated to us that we are all connected and how important having a strong, reliable, resilient backbone transmission grid is for our customers,” said Linda Apsey, president and CEO of ITC Holdings Corp., the largest US independent electricity transmission company.

Following a major power grid rule issued last month, FERC should expeditiously finalize a second rule that would change the way regional transmission lines are planned and paid for, developers including ITC say.

The regional transmission planning rule, first proposed in April 2022, would require regional planning to consider at least 20-year impacts, including the changing power-and-demand mix and extreme weather events, and for utilities and planners to seek agreement from states in each region for cost allocation.

The commission also proposed expanding benefits of transmission that planners would be encouraged to consider, including access to lower-cost generation, mitigation of weather-related outages, and reduced power grid congestion. Expanded benefits generally mean broader cost allocation, as the costs of projects are paid by those who benefit from them.

“We have to get to a point where we’re expanding the definition and criteria of the benefits of transmission so it’s more holistic, because that would allow us to move forward with more of the necessary transmission investment,” Apsey said in an interview.

“Many great transmission projects never make it across the threshold because they’re only measured in this bucket, or they’re measured in that bucket,” she said. “That will fundamentally change how we plan the transmission grid.”

Investment Needs

ITC, based near Detroit, was the first grid territory in the country to see power knocked out on Aug. 14, 2003, and the first to provide a detailed breakdown of what triggered the outage, which affected more than 50 million people in the Midwest, Northeast, and Ontario. A tree branch in Ohio triggered the cascading blackout across regions, made worse by a software glitch and human error.

In the 2000s, the government responded to the Northeast blackout by requiring mandatory reliability standards, penalties for vegetation management failures, and communication protocols, lowering the risk of seeing another large-scale outage.

The clean energy transition has spurred widespread agreement that more transmission lines are necessary to connect more renewable energy, meet rising demand from electrification, and keep the lights on during more frequent storms and extreme weather.

High-voltage transmission capacity could expand by about 60% by 2030 and triple through 2050 to connect wind and solar facilities to demand—and total capital could be as much as $2.4 trillion by 2050, a Princeton University study found.

Without reforms that improve planning across the country, as much as 380 gigawatts of new transmission capacity expected to come online by 2030 could be in jeopardy of “sitting in permitting limbo that could outlast the decade,” a BloombergNEF report published Wednesday found. Regional grid planning, rather than national, is a cause for concern.

Map of BloombergNEF Analyzed Transmission Projects

Colors denote different projects. Dashed lines represent the approximate location of the interconnections.

Source: BNEF

Challenging Reforms

The Biden administration has championed faster permitting of transmission lines using federal land, and the Energy Department is moving forward on declaring “national interest” transmission corridors that would enable FERC to permit a transmission line over states’ objections. FERC is also considering imposing minimum transfer capacity among different regions of the country.

But the road ahead for transmission rules may be a heavier lift for the commission, which is split 2-2 between the political parties and controlled by a Democratic chairman.

Disagreements about allocating the costs of regional transmission projects among states, which generally oversee permitting, have been particularly thorny.

Mark Christie, a Republican commissioner and former state regulator, has expressed concern over the costs of transmission to consumers and the importance of respecting state commissions. The other Republican commissioner, James Danly, voted against proposing the planning rule to begin with. States have pushed back on any attempt to erode their siting authority.

Finalizing the regional planning rule is a top priority, FERC Chairman Willie Phillips told Bloomberg last month. But Phillips warned that any rule expanding federal siting of transmission lines would have to be carefully considered. Phillips formerly chaired the DC Public Utility Commission and served as general counsel at North American Electric Reliability Corp., which oversees mandatory reliability standards rolled out following the 2003 blackout.

“When it comes to us implementing backstop siting authority, we’re actually asking the federal government to sort of step into the shoes of the states,” Phillips said. “We’re the most litigated agency and industry in the country. This will be tested in court.”

Competition Debate

The regional planning rule will face a debate over who should have the right to build projects. Proponents of competitive bidding argue consumers could save as much as 30% if regulated electric utilities were required to compete with other companies.

Last August, the Justice Department and Federal Trade Commission, in a rare move, publicly urged the commission to nix language that allows utilities a right of first refusal for regional projects.

The debate over competition “is a very big discussion on whether or not there should be a monopoly for the clean energy transition,” said Sharon Segner, senior vice president at LS Power, an energy company that supports competition.

“It’s going to be hard for FERC to put together a legally sustainable rule if they deviate from the words of the Department of Justice and Federal Trade Commission,” Segner said.

Apsey said she was hopeful FERC would keep the language in the final rule.

The competitive solicitation process “ultimately will stand in the way and slow down realizing the needed investment in our transmission infrastructure,” she said.