Mind the Regulatory Gap

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The report identifies a significant regulatory gap in local transmission oversight, which has led to a shift in spending from regional to local projects, resulting in inefficiencies and increased costs for consumers [9][13][36]. - It emphasizes the need for substantial investment in the electric transmission grid to accommodate load growth and ensure reliability, particularly in the context of the clean energy transition [9][29]. - The report outlines 11 recommended reforms at regional, federal, and state levels to address the regulatory gap and improve transmission planning [18][25]. Summary by Sections Executive Summary - The U.S. electric transmission grid requires expansion to replace aging infrastructure and accommodate new loads, necessitating efficient planning to ensure cost-effective solutions [9][29]. - A regulatory gap exists where local projects receive insufficient oversight, leading to increased costs and inefficiencies [9][13]. Introduction: The Regulatory Gap - Transmission spending has increased significantly, with a need for a 60% increase in capacity by 2030 and a tripling by 2050 to support the clean energy transition [29]. Transmission Planning and Ratemaking in the United States - The report provides an overview of the complex transmission planning landscape, highlighting the roles of federal, state, and regional entities in overseeing transmission projects [41][43]. Consequences of the Regulatory Gap - The shift in spending from regional to local projects has been documented, with local projects receiving less scrutiny and oversight, leading to higher costs and inefficiencies [13][15][36]. Addressing the Regulatory Gap - The report recommends implementing regional-first planning, standardizing local project definitions, and strengthening state influence in regional planning processes [18][19][20][21]. - Federal reforms include reforming the formula rate process and establishing an independent transmission monitor [20][21]. Conclusion - The report concludes that addressing the regulatory gap through coordinated planning and oversight reforms is essential for achieving a cost-effective and reliable electric transmission system [25].