On January 13, 2022, the US Department of Energy (DOE) issued a notice of intent regarding its Building a Better Grid Initiative (Initiative), an effort to encourage the modernization of the nation’s existing electric transmission grid. The Initiative is the beginning of a rulemaking process required by the Infrastructure Investment and Jobs Act (Act), which President Biden signed into law late last year. The Act funds various investments in energy infrastructure, but its energy-related provisions are generally not self-implementing.1 Instead, executive agencies such as DOE are directed to commence implementation rulemaking proceedings to further clarify how the authority and funding provided by the Act will be used and allocated. The DOE notice issued as part of the Initiative is both preliminary and general in nature, and, unlike a formal notice of proposed rulemaking, it does not set forth proposed regulatory text.
These rulemaking proceedings may well occupy a great deal of time, and, in some circumstances, may be subject to appellate review. The Initiative should therefore be viewed as the beginning of a series of significant processes under the Act and not as a business or policy result. DOE must still fill in several important details concerning programs authorized by the Act and discussed in its Initiative. The key programs are summarized here.
Enhancing Grid Resilience
In the Initiative, DOE announced that it plans to issue solicitations for grant applications aimed at improving grid resilience. Grants will be awarded through the “Preventing Outages and Enhancing the Resilience of the Electric Grid” program and the “Program Upgrading Our Electric Grid and Ensuring Reliability and Resiliency,” each established under the Act.
Preventing Outages and Enhancing Resilience of the Electric Grid
This $5 billion program will fund projects to reduce the risks of power lines causing wildfires and to harden the grid against the consequences of disruptive events, including wildfires and natural disasters. The secretary of DOE must establish, within 180 days of the Act’s enactment, a mechanism to expend these funds through grants to eligible entities. Developing the mechanism will require a rulemaking proceeding, which will be subject to formal, public notice-and-comment procedures, and will result in both procedural regulations and substantive grant eligibility criteria. Eligible entities are electric grid and storage operators, electric generators, transmission owners and operators, distribution providers and fuel suppliers. Grants may also be made to states and Indian tribes that, in turn, make grants to eligible entities pursuant to a plan submitted by the state or tribe to DOE.
The secretary of DOE will determine the timeline and criteria for grant applications, which, under the Act, must detail efforts “to reduce the likelihood and consequence of disruptive events.” The DOE secretary is directed to prioritize projects that will generate the greatest benefit in reducing the risk and severity of disruptive events. A minimum of 30 percent of the available funds must go to small utilities with no more than 4 million megawatt hours of electricity sales per year (the same standard that is used in the Federal Power Act to define small electric cooperatives that are exempt from some Federal Energy Regulatory Commission (FERC) regulation). Eligible entities other than small utilities will be required to match 100 percent of the grant funding they receive. Small utilities will only be required to match one third of grant funding received.
The Initiative follows a number of grid improvement efforts that have involved progressively increased regulatory scrutiny of grid reliability. Since the enactment of the Energy Policy Act of 2005, FERC (through its designated electric reliability organization and regional reliability entities) has adopted operational reliability standards, cybersecurity…