A Brief History of Transmission Legislation in the United States

The electricity industry in the United States has undergone significant changes over the past few decades, largely driven by a series of legislative and regulatory initiatives aimed at promoting competition, efficiency, and the integration of renewable energy resources. 

In this excerpt from the new Introduction to Transmission course, HeatSpring instructor Tim Taylor delves into the key pieces of legislation and regulatory orders that have transformed the electricity industry since the late 1970s, effectively paving the way for the gradual deregulation of the industry, enabling non-utility generators to access the grid, creating wholesale electricity markets, and fostering innovation in technologies such as distributed energy resources (DERs). 

While deregulation has brought about numerous benefits, including increased competition, customer choice, and the growth of renewable energy, it has also introduced new challenges – but that’s a topic for another time.

Let’s jump in!

Let’s take a look at some of the prominent legislation and regulations that have taken place over the last 30 years or so. This actually doesn’t show an act that was legislated back in 1978.

That one was called PURPA – Public Utility Regulatory Policies Act. And that came out of the Jimmy Carter administration.  PURPA enabled non utility generators (or NUGs) to produce power for use by customers attached to the grid. It was really PURPA in ’78 that started the industry on the road to deregulation. 

As we’re seeing on the slide here, in 1992 the Energy Policy Act took it one step further and created the designation of exempt wholesale generators (EWGs). What that really meant was that the revenues that were derived by EWGs are not considered to be public utility company revenues. They’re not considered to be money that would be made by a public utility. So these EWGs were not public utilities. 

Looking then 1996, very important orders 888 and 889 provided non discriminatory access to the transmission system so that any generator that met the suitable requirements was to be provided non discriminatory access to the transmission system.

It also suggested the formation of ISOs [independent system operators], which was followed up in 2000 by FERC Order 2000.  In which, it established the concept of RTOs [regional transmission organizations]. Now, for our purposes, ISOs and RTOs, they’re basically the same. There is a legal nuance between the two, but by and large, they are considered functionally to be the same here in the 2020s.

Jumping ahead to 2020, we see FERC order 2222. This enabled DERs [distributed energy resources] to participate through aggregators – or companies/organizations that aggregate all the little DERs. DERs can be storage. It can be generation. It could be even demand response,  but the aggregators could participate alongside traditional generation and storage resources in the regional organized wholesale markets for capacity, energy and ancillary services.   

So these real small DERs, even  rooftop solar, if they are part of an aggregation, they can participate in the wholesale markets.

 Now, this was passed back in 2020, and it has been a little bit slow to get it enacted because the ISOs and the RTOs, they have to amend all of their different tariffs and all the legal language to enable this. So it has been a little bit slow to get it implemented. Hopefully we’ll see it within the next couple of years, more ISOs/RTOs offering it. 

Then we look at FERC order 2023, which was done very recently. Its aim was really to expedite the study and the interconnection of more renewables and generation to the transmission system. So it meant that, all of the RTOs and ISOs,  they’ve got to transition all of their study processes,  from a first come, first served process to a first ready, first serve type of process.

We’ll talk about that a little bit more as we get into the course. This was significant once again for helping to reduce  future bottlenecks and future interconnection queues for generators looking to connect to the transmission system. 

Interested in learning more about more? Enroll in Introduction to Transmission or the two-course Electric Transmission and Solar PV Interconnection Bundle today!