FERC Order 1920 Explained: A New Era for Grid Planning
FERC Order 1920 explained in the simplest way we can put it: You are about to plan transmission like you actually expect the next two decades to look different from the last two. That sounds obvious, but for years the grid has often been upgraded in small, reactive steps, one reliability fix or interconnection request at a time. Order 1920 changes the expectations for how regions look ahead, how they prove value, and how they decide who pays.
From where we sit at the Alliance for Competitive Power (ACP), this is not just a paperwork exercise. It is a fork in the road. Done well, long-range planning can unlock competition, reduce congestion costs, and make it easier for new resources to connect. Done poorly, it can turn into a comfortable lane for utility-preferred projects with fuzzy benefits and a bill that lands on captive customers.
What Actually Changed Under Order 1920
On May 13, 2024, the Federal Energy Regulatory Commission issued Order 1920, officially titled Building for the Future Through Electric Regional Transmission Planning and Cost Allocation. The Commission’s own plain-language overview is worth bookmarking because it lays out the major pieces without the procedural clutter. You can read it at FERC’s explainer on the transmission planning and cost allocation final rule.
Here is the practical shift you will feel in stakeholder meetings and planning documents:
A 20-year view becomes mandatory: Regions have to run a structured long-term planning process instead of relying mostly on near-term reliability triggers.
Scenario planning becomes the baseline: You get at least three long-term scenarios, not a single “main forecast.”
Benefits have to be assessed more broadly: Planners are pushed to look beyond classic reliability screens and capture system value that customers actually notice.
Cost allocation moves earlier: Regions must propose default ex ante cost allocation methods for long-term projects, so you are not fighting about the bill at the eleventh hour.
Why This New Transmission Planning Rule Showed Up Now
If you have been in IRP workshops, queue reform discussions, or large-load siting conversations lately, you already know the issue: The grid’s old planning rhythm does not match the pace of change.
Loads are shifting and, in some places, surging. Data centers and advanced manufacturing do not tiptoe onto the system. They show up with big numbers and tight timelines. Meanwhile, the resource mix keeps moving: Retirements, new gas, storage, and renewables, plus changing fuel economics and weather patterns that do not respect historical averages.
When planning is mostly reactive, you end up with a familiar outcome: A patchwork of upgrades that solves the problem in front of you, but not necessarily the one coming next. Customers can pay more over time because the cheapest regional solution never gets a real shot.
The 20-Year Scenario Process Explained
Order 1920 requires long-term regional transmission planning over a 20-year horizon, using at least three distinct Long-Term Scenarios. Think of it as stress-testing the grid plan against different, believable futures. Not science fiction, not wishful thinking, just credible “what if” paths that planners have to take seriously.
If you want a quick outside perspective on how the scenario and benefit pieces are expected to work, RMI has a useful walkthrough at Understanding FERC’s Order 1920.
To keep the scenarios grounded, FERC expects regions to draw from real drivers you already work with, including:
State and federal laws and regulations that influence the resource mix.
Expected retirements and additions across generation and storage.
Technology, fuel, and capital cost trends that change dispatch and investment logic.
Interconnection requests as a signal of where markets are trying to go.
State-approved plans and other planning documents you can actually point to.
Load growth and load shape changes, including electrification and large new customers.
Reliability and extreme weather risks that affect resilience needs.
One more detail you should not overlook: This is not a “plan once and forget it” mandate. Regions have to repeat the long-term cycle at least every five years and update in between, so assumptions get challenged before they become stale lore.
Shifting Planning Mindsets
Near-Term Upgrades
Old approach: Fix the next reliability issue; address the next queue-driven need.
Order 1920 direction: Add a 20-year, scenario-based process that surfaces regional solutions.
One Main Forecast
Old approach: A single expected future drives most decisions.
Order 1920 direction: At least three Long-Term Scenarios that test uncertainty head-on.
Limited Benefit Screens
Old approach: Reliability first, with narrow economic treatment.
Order 1920 direction: Multiple benefit categories to better reflect total customer value.
Late-Stage Cost Battles
Old approach: Cost allocation negotiated when the project is already politically “real.”
Order 1920 direction: Default ex ante cost allocation methods established up front.
What you should watch for in your region is not the label on the benefit category. It is the math and the transparency. If benefit methods are too cramped, genuinely valuable projects can get filtered out. If benefit methods are too stretchy, you can end up with “benefits for everyone” logic that weakens accountability.
Ex Ante Cost Allocation: Fewer Surprises, More Scrutiny
Planning is only half the fight. The other half is the question every stakeholder asks sooner or later: Who is paying for this?
Order 1920 requires regions to adopt one or more default ex ante cost allocation methods for long-term regional transmission facilities. In other words, the cost-sharing rules are set before steel goes in the ground. That is meant to reduce the endless cycle of project-by-project negotiations that can delay or shrink projects, even when they have broad value.
The key legal principle is familiar but still contested in application: Costs should be assigned in a way that is “roughly commensurate” with benefits, and entities that do not benefit should not be forced to pay. For a solid legal and policy read on the implications, you can review Crowell & Moring’s client alert at Order No. 1920 reshapes the transmission planning landscape.
From ACP’s standpoint, the ex ante approach can be a real win for customers, but only if your region’s benefit metrics are clear enough that people can understand why the bill lands where it does. Transparency is not a nice-to-have here. It is the guardrail.
Order 1920-A: States Get a Bigger Seat at the Table
Transmission is a team sport with complicated rules. FERC governs transmission rates and regional planning for jurisdictional facilities. States shape the resource mix, siting, and many of the policy and consumer priorities that end up driving grid needs.
Order 1920 included a structured state engagement process, and FERC’s rehearing order, Order 1920-A, expanded and clarified those state provisions. FERC’s own announcement explains what changed and why it matters at FERC strengthens Order No. 1920 with expanded state provisions.
For you, this likely means more active state participation in shaping scenario inputs, assumptions tied to state plans, and the guardrails around cost allocation. That can be constructive. It can also get messy if it turns into carve-outs that insulate incumbents from competition. The implementation details will decide which direction it goes.
Advancing Competition, Minimizing Monopoly Risk
You do not need us to tell you that transmission is capital-intensive and returns are earned through regulated rates. That structure is not inherently bad, but it does create a constant temptation: Build more, own more, rate-base more. Without tight benefit-cost discipline and open processes, long-term planning can drift into a utility-first blueprint.
As regions implement Order 1920, you will see us at ACP pressing for three things that keep markets open and customers protected:
Scenarios you can interrogate: If inputs are biased, outdated, or conveniently narrow, the plan will miss the least-cost path.
Benefit methods that reflect customer outcomes: Congestion relief, access to lower-cost supply, and resilience value should be measured consistently, not selectively.
Cost allocation that people can follow: Ex ante only works if “who pays” tracks “who benefits” in a way that holds up in daylight.
If you want a consumer-centered primer on why competitive structures matter, our own overview is a good starting point at What is a utility monopoly and why it matters for consumers.
Active Compliance Deadlines and Stakeholder Timelines
Order 1920 is now in the implementation phase. Transmission providers will submit compliance filings, and regions will update planning manuals, define scenarios, and propose the default cost allocation methods that will frame future projects.
If you are trying to keep up with the moving pieces, Harvard’s Environmental and Energy Law Program maintains a living tracker at Regional transmission planning rule tracker. It is a practical way to see where things stand and what deadlines are coming.
Our advice is simple: Engage early, especially on scenario inputs and benefit metrics. Once those are baked in, you are mostly arguing about outputs. If you want a sense of how ACP approaches these issues across markets and policy debates, you can also explore our work at Alliance for Competitive Power.
FAQ: Deciphering Order 1920
Does Order 1920 force specific transmission projects to be built? No. It sets the planning and cost allocation requirements. Regions still select projects through their processes, but the planning “rules of the road” are now more structured and forward-looking.
How often will long-term regional transmission planning happen? At least every five years, with updates in between. The goal is to keep plans current as load forecasts, technology costs, and policy drivers evolve.
What is the biggest change in the transmission cost allocation rule? Regions must have default ex ante cost allocation methods for long-term regional transmission facilities, and costs must be roughly commensurate with benefits. If an entity receives no benefit, it should not be assigned costs.
How could Order 1920 affect competitive power markets? Better long-term planning can reduce congestion, improve access to lower-cost generation, and support more efficient regional power flows. The risk is that, without transparent benefit metrics and fair cost allocation, planning can tilt toward incumbent utility ownership rather than open competition.
Where can you follow ACP’s updates on these implementation fights? You can track our commentary and resources at ACP news and updates.
Conclusion: Balancing Long-Range Commitments with Oversight
FERC Order 1920 explained in one line: You are moving from short-horizon, reactive transmission decisions to long-term regional planning with clearer benefit analysis and up-front cost allocation. That is a big opportunity to build smarter and keep customer costs in check, but only if the assumptions are transparent and the incentives do not drift toward monopoly comfort.
We will be watching how each region turns the rule into practice, and we encourage you to stay in the process. The next 20 years of grid investment will be shaped by decisions you make now in scenario design, benefit metrics, and cost allocation rules. If you want a grid built for competition and value, this is the window.
