Lessons Learned for Transmission Cost Allocation in U.S. Regional Markets
Expanding electric transmission can facilitate generator interconnection and improve grid reliability. Assigning costs for new transmission infrastructure is highly contentious because these costs can have a direct impact on energy prices and ratepayer bills. In this report, we evaluate what factors influence successful transmission cost allocation agreements. Through a review of legal disputes, existing cost allocation practices, and regional case studies, we identify potential strategies to minimize cost allocation disputes for future projects. The report also highlights the processes by which regions can update their cost allocation methods. While we do not consider cost allocation methods currently under development for compliance with FERC Order 1920, the trends and lessons learned identified in this report can inform discussions on effective cost allocation methods to reduce barriers for transmission development.