Maybe a better question to start with is, what is a state transmission authority?
State transmission authorities are public entities focused on helping states develop transmission, particularly around public financing and planning. For more context about transmission financing, I suggest reading through my previous blog post on status quo transmission financing in California.
In the current California legislative session, there are three bills (SB 330, AB 825, SB 254) that propose mechanisms for public financing of transmission.
Many states have state transmission authorities or agencies with the authority to issue public debt for transmission development. There are currently two states with transmission authorities: New Mexico with the Renewable Energy Transmission Authority (RETA) and Colorado with the Colorado Electric Transmission Authority (CETA). Both entities have the explicit intent of accelerating transmission development to facilitate clean energy and long-duration storage. Other states including Idaho, Kansas, North Dakota, South Dakota, Utah, and Wyoming, have or have had agencies with the ability to issue public debt for transmission.
Developing a comprehensive transmission system is important because it unlocks access to low-cost clean energy. With a diversity of clean resources and storage systems reliably supporting the grid, California’s gas-fueled power plants, which have significant environmental and public health harms, can be retired faster.
State transmission authorities, or mechanisms for publicly financed transmission, can support the development of these much-needed transmission system upgrades. Additionally, these mechanisms can have significant cost-savings. A recent report shows that a public-private partnership approach for certain new transmission lines could save California’s ratepayers up to $3 billion annually. Amidst rising electricity rates, which the current financing system is contributing to, publicly financed transmission would provide tenable relief to ratepayers in the long-term, particularly California’s most energy-burdened households.
The aforementioned bills could bring these benefits to life. While California wouldn’t necessarily enact the same structures as New Mexico, Colorado, or any of these other states, it’s worth exploring how these entities have played out.
New Mexico, RETA:
New Mexico is a regulated electricity market with the investor-owned utility, Public Service Company of New Mexico (PNM), serving most of the state. It is regulated by the New Mexico Public Regulation Commission (NMPRC). RETA was established in 2007.
RETA has the authority to issue revenue bonds, collaborate with private developers, exercise eminent domain, and can contract for the lease and operation of its facilities with any revenue being directed into a renewable energy transmission bonding fund. While at least 30 percent of power transmitted on RETA transmission projects must come from renewable resources, most of RETA’s current projects are planned to carry 100 percent of their power from renewable resources. After its almost 20-year tenure, RETA has one project in operation, one under construction, four under development, and two under Memorandums of Understandings (MOUs). The entity has additionally been involved in several stakeholder initiatives around federal transmission, long-duration storage, and regional collaboration.
Last year, RETA and the Federal Permitting Improvement Steering Council announced an MOU to provide federal permitting support to RETA-supported projects that also qualify under the Permitting Council’s FAST-41 program. This state-federal partnership would support processes such as environmental reviews and infrastructure authorization, which would speed up project development timelines.
Case Study: the Western Spirit Transmission Project is a 155-mile transmission line that was jointly developed by RETA and a private developer, and is now owned and operated by PNM. The project allowed an additional 800 MW of renewable energy to be brought online (Western Spirit Wind Project), which would not have been possible prior to the line. It is the largest expansion of PNM’s grid since the 1980s. The costs of the $400 million-line were not passed onto ratepayers, and instead, the wind projects enabled by the transmission line have borne the costs.
Colorado, CETA:
Colorado has a regulated electricity market with two investor-owned utilities, Black Hills Energy and Public Service Company of Colorado (Xcel Energy), that are regulated by the Colorado Public Utilities Commission. CETA was established in 2021.
CETA’s role and authority is similar to RETA’s. The entity is able to issue revenue bonds, enter into leases and contracts, exercise eminent domain, and participate in state and interstate transmission planning. CETA is a “transmission builder of last resort,” meaning it only steps in to develop transmission lines when the IOUs and third-party private developers are unwilling.
Given the relatively recent establishment of CETA, there are not clear case studies of the entity leading a project through development. However, there are other ways state transmission authorities can lead in the transmission space. For example, CETA has been integral to more comprehensive state-wide transmission planning efforts. Additionally, the CETA Board of Directors approved a set of community engagement principles, which were co-developed with a broad set of stakeholders in 2024. These community engagement principles elevate a more equitable process for transmission development and ensure more direct benefits for host communities that can help developers move through processes such as land rights and permitting more smoothly.
What can California learn from these models?
There’s proof-of-concept that public financing mechanisms have enhanced transmission development. RETA’s Western Spirit Transmission Line showcases how state transmission authorities can be effective in driving the transmission development process. With many transmission projects coming down California’s pipeline, public financing mechanisms are an important tool to support transmission projects, which ultimately improve access to low-cost, clean energy for customers.
State transmission authorities can facilitate other benefits such as interregional coordination, partnerships, and best practices. While the ability to publicly finance transmission is a core aspect of state transmission authorities, RETA and CETA have both leveraged their role to improve many other aspects of transmission development. CETA is tasked with improving transmission planning coordination with neighboring states and RETA’s MOU with the federal government can assist with transmission permitting. Additionally, CETA’s work around community engagement practices is important for setting expectations of how transmission can be built more equitably.
Public financing is not necessarily at odds with the investor-owned utility model. You would expect IOUs to be against public financing models, and you would be right. But the two models aren’t necessarily at odds. For example, CETA is a developer of last resort, meaning the state entity only takes over if IOUs and private developers do not want the project. Even without this mechanism, California’s IOUs have a significant backlog of transmission projects. State agencies can provide additional needed support and resources, such as access to low-cost debt for financing, to get these projects moving forward.
Transmission is a long game and we need to act now. Transmission projects take a long time to build. Even if all planning, financing, permitting, land acquisition, construction, etc. processes go smoothly, these are large infrastructure projects that require significant time. To that end, the benefits of a state transmission authority may not be immediately obvious. It’s a long game with the understanding that building a comprehensive network of large physical infrastructure also requires non-physical infrastructure, such as staff capacity, expertise, and governance structures. Passing legislation as quickly as possible is the first step to building these foundational systems that will reap important benefits in the future.
Existing California agencies perform many of the functions of state transmission authorities. For example, New Mexico and Colorado both benefited from having their new agencies contribute to more coordinated state-wide transmission planning. In California, CAISO has already been doing that and doing it reasonably well. California’s needs are about coordinating, delegating, and supplementing these existing resources, to ensure that public financing of transmission is a smooth process. The process of implementing public financing mechanisms needs to be thoughtful and coordinated with other agencies to be effective.
What should California do?
That’s easy, California’s legislature should pass SB 330, AB 825, and SB 254. Transmission development is critical to facilitating the clean energy transition, and public financing mechanisms for transmission offer the state more pathways to firm up the grid and access low-cost clean energy for Californians.
Whatever form the public financing of transmission takes, setting up the systems as soon as possible is important. This is an investment, and though it will take time and money, the returns are a faster and more affordable transition to a clean and reliable grid that California absolutely needs.