Niskanen Center supports BIG WIRES Act

Minimum transfer requirements are a foundational step towards a stronger grid - Niskanen Center

By KENNETH SERCY, OCTOBER 24, 2023

The BIG WIRES Act, a bold transmission bill filed in late September, offers a critical opportunity to expand grid infrastructure and deliver much-needed customer benefits. Previous Niskanen Center analysis uncovered a startling lack of interregional transfer capability across the United States, which in turn hampers reliability and drives up costs. Passing the BIG WIRES Act will be a critical step towards averting more devastating power outages and saving consumers money on their electric bills by building more high-capacity power lines connecting different regions of the country.

Expanding our transmission infrastructure to achieve a robust grid is a long-term and multifaceted endeavor. Siting and permitting reforms proposed in other legislation (like the SITE Act) are necessary to enable a scalable buildout of high-capacity transmission lines. Transmission planning and cost-sharing improvements are also important for sustained grid infrastructure expansion.

Setting minimum requirements for the regional interconnectedness of our transmission system steps towards that future grid. A minimum transfer requirement would facilitate the expansion of grid infrastructure, strengthen regional and interregional coordination activities, and further identify strategies and best practices for bolstering power exchange between regions.

The BIG WIRES Act was introduced by Representative Scott Peters (D-CA) and Senator John Hickenlooper (D-CO). BIG WIRES would create minimum transfer requirements and establish an implementation process at the Federal Energy Regulatory Commission (FERC). The legislation takes a thoughtful, practical approach by maintaining existing market structures, allowing wide flexibility in meeting the standards, and adopting achievable and impactful transfer targets.

First, the bill maintains the existing market structure and reliability planning processes in all regions of the country. For example, states in the Interior West, Southeast, and Southwest–where utilities are vertically integrated and state commissions authorize generation expansion and retirement decisions–retain these same planning and decision-making functions under the BIG WIRES Act. In other parts of the country, regional transmission organizations remain intact as they currently exist. Thus, the minimum transfer standard does not change the power sector’s basic makeup or decision-making authorities. Rather, it merely defines minimum amounts of power that must be able to flow between regions.

Second, regions may take various actions–and combine some–to reach the transfer requirements. These include measures at the generation, transmission, and distribution levels. For example, besides building new high-capacity transmission lines, regions can upgrade existing transmission components, strategically locate new generation in a way that increases power flows on existing interregional lines, and implement demand-side measures such as end-use energy efficiency that increase the amount of transfer capability as a fraction of regional load. This wide flexibility allows states and regions to tailor their grid investments to their particular circumstances and objectives. An added benefit of a flexible approach is unlocking regional creativity in designing portfolios of actions to meet the requirements, which can inform future phases of transfer capability expansion.

Third, the targets are an achievable minimum threshold, while significantly increasing regional transfer capabilities from where they stand today. The general requirement is 30% of the region’s peak load, but areas with less than 15% transfer capability today must only add 15%. For instance, an area with a 10% transfer capability would only have to reach 25%. The legislation sets 2035 as the target year to meet the transfer requirements, providing a suitable timetable for agency rulemaking, regional plan development, and execution of project construction.

The BIG WIRES Act would boost interregional transfer capabilities and improve access to power outage protection and customer bill savings that today’s grid cannot offer. The infrastructure expansion achievements under the bill would also represent a foundational step towards the future grid that we can build on for years to come.