Who Pays for the Grid

Every serious energy plan, of every ideological description, requires more transmission capacity. Generation is comparatively easy to site and build. Moving the power to where it is used is not.

The obstacle is rarely technical. It is cost allocation. A line that crosses three states delivers benefits unevenly, and the state that hosts the towers without gaining much load has no reason to volunteer.

Regulators have spent decades trying to write allocation formulas that survive challenge. The formulas get litigated, the litigation takes years, and the queue of projects waiting to connect grows through all of it.

The unglamorous truth is that this is a bargaining problem, not an engineering one, and it will be resolved when someone assembles a package where every state gets enough to say yes. That work is slow, and it is the actual job.

The reason this is a bargaining problem rather than a technical one is worth setting out carefully, because the technical framing keeps producing proposals that cannot pass.

A transmission line has a peculiar economics. Almost all the cost is fixed and incurred up front, the benefits accrue over decades, and the benefits land on people who are not the people the towers are near.

The federal power statute splits authority in a way that reflects a much older grid. Interstate transmission is federally regulated, siting is overwhelmingly a state matter, and the two do not have to agree.

So a project can be approved as necessary and still be unbuildable, because necessity is decided in one venue and permission in another. Nothing in the law reconciles them, and nothing requires anyone to try.

The allocation formulas are the attempt to reconcile them by arithmetic. The regulations under it set out how costs are assigned between beneficiaries, and the assignment is contestable at every step because the benefits are genuinely hard to measure.

That contestability is not a drafting failure. A benefit that arrives as slightly lower prices across a wide area, over thirty years, in scenarios that depend on what else gets built, is a real thing that resists being turned into a number a state can be billed for.

Meanwhile the queue grows, and the queue is now the binding constraint rather than the capital. Projects wait for study, studies depend on what else is in the queue, and a withdrawal upstream reopens the analysis downstream.

The underlying data on generation and consumption is public and unambiguous about the direction of travel. Where power is produced and where it is used have been diverging for years, and the wires between them are the part that has not moved.

There is a version of this argument that blames obstruction, and it is too easy. A state asked to host towers for a line that lowers prices somewhere else is not being unreasonable in wanting something for it. It is behaving exactly as the incentives instruct.

The fix that has worked, where anything has, is not a better formula. It is a package: a line plus a substation plus a local benefit that the hosting state can point at, negotiated case by case at enormous cost in time.

That does not scale, which is the uncomfortable part. Every serious plan requires many such lines, and the negotiation cost is roughly constant per line rather than falling with practice.

The published analysis keeps arriving at the same place from different directions. The engineering is solved, the money exists, and the thing standing in the way is that nobody has the authority to make the trade that would settle it.

There is a tempting shortcut, which is to federalise siting and be done with it. It would work, in the narrow sense that lines would get built, and it would spend a constitutional settlement that exists for reasons unrelated to electricity.

The reason to be wary is not sentiment about states. It is that the same authority, once created, is available to whoever holds it next, for whatever they consider urgent, and the argument for it will always be made about a project everyone agrees is necessary.