Amid the combined challenges of load growth and a changing generation mix, the US transmission grid is in urgent need of expansion and upgrading.

However, while spending by US utilities on transmission has quadrupled over the past two decades, spending has moved in the opposite direction of what we need — from high-voltage regional lines to lower-voltage local projects. This is an inefficient way to expand the grid. In addition, the lack of robust review of local projects means they may be costlier and have greater land use and environmental impacts than larger, well-planned regional projects.

In this report, we show how a regulatory gap is enabling billions of dollars in local transmission spending annually to escape scrutiny by federal and state regulators. This gap is a crucial contributor to the recent shift in spending by utilities to lower-voltage local projects. The exhibits below illustrate some of the causes of the regulatory gap and how the lack of a robust review process for local projects compares to the robust process for regional projects.

Correcting the regulatory gap will be critical to ensure that ratepayer money is well-spent on efficient high-voltage grid expansion projects to meet the future needs of the US grid. The regulatory gap as it exists today runs the risk of causing upgrades to the US grid to be made in a more costly and inefficient manner. Absent state and federal action, we miss a key opportunity to proactively design the grid of the future rather than simply rebuild the grid of the past.

Relying heavily on local projects rather than coordinating their development with regional planning needs is an inefficient way to meet overall grid needs.

The report lays out 11 recommended reforms at the state, regional, and federal levels to help to close the regulatory gap. Because the reforms are synergistic, parallel reforms at all three levels will be most effective.