Electricity rates are rising faster than inflation and are felt by households across America. After decades of flat electricity demand, the country is experiencing significant load growth, driven by hyperscale AI data centers, resurgent domestic manufacturing, and the steady electrification of buildings and vehicles. The need for new energy generation is growing as utilities aim to bring new natural gas, clean firm, and renewable capacity online over the next few years to keep power affordable and reliable. Importantly, this also means upgrading and expanding the country’s transmission infrastructure. Recently, the Department of Energy released the draft of its National Transmission Needs Study, the triennial, congressionally commissioned report on the state of the nation’s high-voltage backbone.

The study’s topline findings indicate that the country needs a substantial buildout of new transmission infrastructure simply to keep pace with new demand. When a bottleneck in the transmission network prevents the cheapest power from flowing, grid operators are forced to rely on higher-cost resources, resulting in an uneconomic outcome felt by customers across the system. The study also finds that connecting regional grids delivers outsized reliability and cost benefits, and that many grid operators across the country are approving their largest transmission expansions on record. As the DOE report notes, incumbent utilities built 98 percent of new transmission from 2016-2024, and laws incentivize utilities to build small-ball lines that may not be the most cost-effective and that are shielded from competition. 

The need for additional transmission is not in dispute, though disagreements exist on how much is needed. However, how the transmission is planned and built, and who pays for it, are critical to ensuring that Americans receive power at the lowest possible cost. 

That’s the question a coalition of right-of-center policy groups took up earlier this year. In an April framework, C3 Solutions, Americans for Prosperity, the Pacific Legal Foundation, the Abundance Institute, the American Conservation Coalition, the R Street Institute, and the Conservative Energy Network set out five principles for transmission reform, all centered on a simple idea: transmission exists to serve consumers, not to prop up any particular power source or pad a utility’s bottom line. 

For decades, transmission has been among the most poorly regulated parts of American infrastructure. Utilities receive a guaranteed return on whatever they build, which rewards new construction over cheaper upgrades to existing lines. Mandatory regional planning processes often crowd out voluntary, merchant-built transmission that could be delivered more efficiently and at a lower cost. States and localities can slow-walk permitting for reasons that have little to do with actual harm to residents. And in far too many parts of the country, there’s remarkably little transparency about how transmission decisions are made or who ultimately pays for them. Under today’s rules, the projects that get built are often the ones that are easiest to justify under a regulator’s cost-of-service formula, not the ones that deliver the most capacity per dollar. 

>>>READ: Closing the Local Project Loophole: The Case for Competitive Transmission

This group’s principles are relatively straightforward and should guide how the Trump administration and federal and state policymakers think about transmission policy reform: 

1. Prioritize expanding and upgrading the existing transmission system. The quickest and least-cost ways to expand the transmission system are often upgrades to existing infrastructure. However, the cost-of-service regulatory model discourages transmission owners from pursuing upgrades voluntarily or from adopting solutions beyond in-kind replacements. Cost-of-service regulation should better align incentives so they do not favor any energy source over another and ensure “good utility practices” in adopting advanced transmission technologies and in the more efficient management of seams between regional transmission systems.  
2. Remove barriers to greenfield transmission under the merchant transmission model. This model is economically advantageous because it relies on voluntary planning and cost allocation. However, it faces high regulatory barriers, under which it is routinely usurped by mandatory planning processes or deemed ineligible for compensation for providing key grid services. 
3. Refine mandatory transmission planning and cost allocation practices, where necessary, to follow economic principles. Most of the greenfield transmission expansion will inevitably occur under mandatory planning and cost allocation processes run by utilities or regional transmission organizations (RTOs). The most economical manner to plan such projects is through robust cost-benefit and scenario analyses, planning horizons appropriate for long-lived infrastructure, allocating costs based on the beneficiary pays principle, and putting transmission needs or solutions out for competitive bid. Developers should have a reasonable expectation that beneficial transmission lines can be deployed.  This should include ensuring that developers have a credible means of proposing lines, that regulators evaluate them based on neutral criteria, and that, if selected, costs will be borne only by those who benefit, and only to the degree they benefit. 
4. Streamline transmission permitting and siting. Priority improvements should be made at the state and local levels while protecting private property rights. These include tying permitting decisions to evidence of demonstrable harm (not speculation), improving information on project costs and benefits (including out-of-state), maintaining fairness across business models, and instituting appeals processes to vindicate the liberty of parties seeking redress on restrictive permitting and siting decisions. Any national changes to interstate transmission siting should only use federal backstop authority as a last resort. 
5. Improve transmission governance. Greater transmission system transparency and accountability are needed across the country, but especially outside RTOs. Expanding the role of independent institutions, such as an Independent Transmission Monitor, to coordinate, audit, and assess transmission system operations and planning is warranted. Closing gaps in governance frameworks, such as the federal-state divide regarding local transmission projects, is imperative for cost containment. 

Interregional and cross-interconnection transmission can reduce costs for customers when lines are planned efficiently, and costs are allocated correctly. Greenfield transmission, combined with grid-enhancing and advanced transmission technologies, can enable the most economically efficient delivery of electricity to consumers. Simply adding new generation without evaluating how our high-voltage network can improve reliability at the lowest cost increases the risk of overbuild and stranded assets, costs that will fall directly on ratepayers. 

>>>READ: Blocking Data Centers Won’t Make Electricity Cheaper

As DOE opens its 60-day public comment period on the draft study, the real test for Congress and state regulators alike is whether the coming wave of transmission spending gets disciplined by transparency, competition, and robust cost-benefit analysis to protect taxpayers and ratepayers. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.