With unprecedented load growth from data centers and other large customers, a pressing question for policymakers, utilities, and consumers is whether existing federal transmission pricing policies are equipped to meet the moment — and whether the grid can stay reliable and affordable while expanding to serve new demand. Adding new electricity demand to the system need not raise rates for existing customers, and can even put downward pressure on them, but that outcome depends on the policy choices federal and state regulators make now.

Federal Transmission Pricing Volume 2: Options for Ensuring Affordability and Reliability in an Era of High Load Growth is the second installment in a two-part series prepared by Grid Strategies and co-published with the Electricity Customer Alliance. Building on Volume 1’s history of how the current framework developed, Volume 2 draws out guiding principles from that history and applies them to a set of concrete policy options that FERC and the industry could adopt to ensure all transmission customers — including new data centers and other large electric system users — pay their fair share of transmission costs.

The report is organized around three observations: adding load need not raise rates for existing customers, but the outcome depends on system conditions, planning, tariff design, and cost allocation; large load growth can support economic development and broader system benefits, but only if the grid expands in a timely, cost-effective way; and proactive, well-planned transmission with transparent cost assignment is essential to capturing those benefits while avoiding unjustified cost shifts.

Volume 2 evaluates twelve transmission pricing policy options across four categories:

• Timing-of-funding options addressing when costs are paid and who bears the risk if large loads delay, downsize, or never materialize
• Local transmission cost recovery options addressing costs from local transmission, including upgrades triggered by new large loads interconnecting
• Regional transmission cost allocation options addressing how regional costs are allocated across load-serving entities and zones
• Innovative approaches that proactively plan for and allocate transmission capacity and give large load customers more options to directly initiate and fund the grid expansions needed to serve them

Read Volume 1: The Evolution of Current Policies and Practices is a primer on how federal transmission pricing got to where it is today and why the current framework looks the way it does.

Co-published by Americans for a Clean Energy Grid and the Electricity Customer Alliance. Prepared by Grid Strategies.