INSIGHTi
Electricity Transmission Provisions in the
Inflation Reduction Act of 2022
August 5, 2022
On July 27, 2022, Senate Majority Leader Chuck Schumer and Senator Joe Manchin released legislative
text for the budget reconciliation legislation, also known as the Inflation Reduction Act of 2022 (IRA).
The IRA contains several provisions aimed at incentivizing increased development of electricity
transmission infrastructure in the United States. Many stakeholders view an enhanced U.S. transmission
system as key to enabling increased use of wind and solar energy for electricity generation and improving
resilience to extreme weather events such as Winter Storm Uri. This analysis summarizes the three
transmission provisions in Part 5 of Subtitle A of Title V of the bill. In total, this part would appropriate
almost $2.9 billion for transmission provisions. Other provisions in the IRA, such as those related to loan
programs administered by the U.S. Department of Agriculture, could potentially incentivize transmission
development, but this analysis does not include them.
Section 50151 Transmission Facility Financing would appropriate $2 billion to remain available until
September 30, 2030, for a direct loan program for certain transmission project development. To be
eligible for a direct loan, a transmission project would need to be located in a National Interest Electric
Transmission Corridor (NIETC). The U.S. Department of Energy (DOE) may designate an area as an
NIETC if it meets certain criteria, such as promoting energy security or enabling the use of intermittent
energy sources such as wind and solar. No NIETCs currently exist. Absent an NIETC designation, the
appropriations this section would provide may not be accessible to industry participants. The
Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) amended the NIETC designation process, but it
remains unclear to what extent DOE will use its authority to designate NIETCs.
Section 50152 (“Grants to Facilitate the Siting of Interstate Electricity Transmission Lines”) would
appropriate $760 million to remain available through September 30, 2029, for making grants aimed at
facilitating the siting of certain onshore and offshore transmission lines. In general, state and local
governments have authority for siting electricity transmission infrastructure in the United States. This
Section would allow relevant siting authorities to receive grants to be used for purposes including
transmission project studies, examination of alternative siting corridors, hosting negotiations with project
backers and opponents, participating in federal and state regulatory proceedings, and promoting economic
development in affected communities. Grants under this section would be contingent on the siting
authority agreeing to make a final decision (approval or denial) on the transmission project within two
years. The bill does not specify consequences should the siting authority fail to make a final decision.
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Section 50153 (“Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and
Analysis”) would appropriate $100 million to remain available until September 30, 2031, for expenses for
convening stakeholders and conducting analysis related to interregional transmission development and
development of transmission for offshore wind energy. The continental U.S. transmission system is
comprised of three interconnections (i.e., grids) with limited connection among them: the Eastern
Interconnection, the Western Interconnection, and the Electric Reliability Council of Texas. The Eastern
Interconnection is the largest and is itself comprised of different regions, including five separate power
markets overseen by independent system operators or regional transmission organizations. Currently,
transmission development involving two or more regions is relatively rare. Some analysis indicates that a
greater amount of interregional electricity connection would promote greater use of renewable energy and
potentially lower costs for consumers. The Federal Energy Regulatory Commission (FERC), which
regulates rates for interstate electricity transmission, began a rulemaking in July 2021 aimed at potentially
modifying multiple aspects of transmission development. An April 2022 FERC Notice of Proposed
Rulemaking focuses primarily on regional transmission planning and cost allocation. FERC continues to
examine interregional transmission planning, for example, as part of the Joint Federal-State Task Force on
Electric Transmission.
If Congress enacted the Inflation Reduction Act of 2022, it would be the third significant energy-related
law of the past two years (following the Energy Act of 2020, enacted as part of P.L. 116-260, and IIJA).
Such successive lawmaking is relatively rare for the electricity sector. Arguably, the last time a similar set
of events took place was when Congress enacted the Energy Policy Act of 2005 (P.L. 109-58) followed by
the Energy Independence and Security Act of 2007 (P.L. 110-140) and the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5). The electricity sector changed significantly in the years following
enactment of those laws, with a marked increase in the use of natural gas, wind, and solar for electricity
generation accompanied by increased efficiency, which kept electricity demand growth low. The change
was in part driven by federal energy laws (especially tax credits), though market forces, state policies, and
other factors influenced the electricity sector as well. As in the mid-2000s, recently enacted energy laws
may drive significant changes in the electricity sector, though market forces and other factors are likely to
be important too.
Evaluating the potential impact of the transmission provisions in the IRA is complicated by three factors.
First, the two recently enacted energy laws are still being implemented, and their eventual impact on the
electricity sector remains unknown. Second, FERC’s rulemakings on transmission are not finalized and
may affect future transmission development. Lastly, electricity sector participants and regulators are
responding to numerous issues—including reliability challenges, nominal cost increases, and weather-
related risks—all of which may influence transmission infrastructure development in the years to come. If
Congress enacted the IRA, the transmission provisions within would be an additional change to which the
electricity sector would need to respond.
Author Information
Ashley J. Lawson
Analyst in Energy Policy
Congressional Research Service
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Disclaimer
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