Socialized Is Not a Dirty Word: The Only Just and Reasonable Method for Assigning the Costs of High-Voltage Interstate Transmission Lines Is to Socialize Them

Abstract

Following the federal government’s requirement that electric utilities must allow other power generators to use their transmission lines, investment in the United States electric grid has faltered. The effects of underinvestment in the grid have limited the proper function of competitive energy markets and stifled investment in renewable energy sources. The Federal Energy Regulatory Commission (“FERC”) has allowed states belonging to planning regions that coordinate transmission development to create multiple methods for allocating the costs of new facilities crossing state lines. Many of these methods use models to forecast which customers in each state benefit from the facility, and then assign costs based on those determinations. This Note argues that the fluid nature of the modern grid defies attempts to assign costs so specifically. Instead, FERC should require the costs of high-voltage interstate transmission facilities to be spread equally among all customers in a planning region. Only then, with this socialized cost allocation method, can cost allocations comply with the requirement that rate determinations be “just and reasonable.”