Transmission bill BAAJA faces Senate cloture vote on Nov. 9

The Senate will vote Nov. 9 on BAAJA, legislation that would end incumbent utilities' right of first refusal on regional power lines and let FERC penalize slow grid upgrades. Utility Dive reported the cloture vote schedule, citing the Bipartisan Policy Center.

BAAJA would require FERC to issue a rule obliging each transmission planning region to file a consolidated interconnection and regional transmission planning process. The bill also directs FERC to set 'rate treatments for regional and interregional transmission planning and cost allocation' and require tariffs that put costs on the customers who benefit. It would let FERC require public utilities to make cost-effective grid upgrades and set penalties, including a potential return-on-equity reduction, for missing a FERC-decided timeline.

For allocators underwriting regulated transmission assets, the bill changes two variables: who pays for new regional lines and how much of a utility's return on equity can be cut for delay. Tariffs charged to beneficiaries decide which projects pass a cost-benefit test, and FERC's ability to reduce a utility's return for missing a FERC-set deadline puts part of that regulated earnings stream at risk. Ending the federal right of first refusal would likely widen the field of developers eligible to build regional lines beyond the incumbent utility, shifting sponsor and completion risk.

Rep. Josh Harder, D-Calif., told Utility Dive that 'the cost-sharing elements are by far probably the most important part of this bill.' He added: 'We have seen, at least at the FERC level, essentially no new interregional transmission built in a long, long time.' 'That's unacceptable,' he said, 'and it's just not doing the job to lower prices for folks.'

Cost allocation is already contested at the commission: MISO is preparing a cost-allocation framework filing, as Private Wealth Daily previously reported. Chirag Lala, vice president of research and chief economist at the Center for Public Enterprise, wrote in an October brief that BAAJA 'gets transmission right' but that the interregional planning mechanism lacks a 'forcing function' if regions fail to submit a planning process. The bill provides a six-month extension, after which, Lala wrote, the outcome is unclear.

Advait Arun, a senior associate for energy finance at the Center for Public Enterprise, told Utility Dive by email that BAAJA could add 'more firepower' to federal transmission finance programs, naming the Department of Energy's $2.5 billion revolving Transmission Facilitation Program fund.

The Nov. 9 cloture vote is the next gate: if it clears, FERC would write the planning and cost-allocation rules that determine where regional line costs land.