ISO-NE has filed a proposal at FERC to create a formal review process for “asset condition” transmission projects – utility-driven replacements of aging infrastructure that have long bypassed competitive planning and state scrutiny, a structural gap that has funneled billions in ratepayer funds into projects chosen solely by transmission owners with minimal oversight.
How Asset Condition Projects Bypass Regional Planning
Under ISO-NE’s current tariff, transmission owners – primarily Eversource, National Grid, and Avangrid subsidiaries – can classify projects as “asset condition” when the primary driver is replacing equipment at or near the end of its useful life. These projects skip the regional needs assessment and competitive solicitation requirements established under FERC Order 1000. The transmission owner identifies the need, selects the solution, and builds it, with costs typically allocated regionally across New England ratepayers through the Regional Network Service (RNS) rate.
New England states and consumer advocates have argued for years that this category functions as a loophole. Massachusetts, Connecticut, Rhode Island, and Maine have repeatedly objected at FERC that asset condition projects are frequently oversized, gold-plated, or misaligned with state decarbonization mandates. The core complaint: a project framed as replacing a 1960s-era 115 kV line with a like-for-like rebuild may actually install 345 kV-capable structures, extra circuit positions, or substation upgrades that anticipate future load growth – effectively pre-building capacity that would otherwise face competitive scrutiny.
The scale is material. While ISO-NE does not publish a single aggregate figure for asset condition spending, the region’s transmission owners collectively invest roughly $1.5-2 billion annually in capital projects, and stakeholders estimate that 30-40 percent of that flow historically falls under asset condition or similar non-competitive classifications. For context, ISO-NE’s 2024 Regional System Plan identified over $10 billion in proposed transmission investments through 2033; a significant share originates from asset condition justifications rather than regional reliability or economic studies.
The Decarbonization Collision Course
This filing does not exist in a vacuum. It collides directly with New England’s accelerating decarbonization trajectory. The six states collectively target over 30 GW of offshore wind by 2035, aggressive building and transportation electrification, and economy-wide net-zero mandates by 2050. ISO-NE’s own “Future Grid Reliability” study, released in late 2023, concluded that the region needs “significant transmission expansion” – not merely replacement – to integrate renewables and maintain reliability as thermal generation retires.
That points to a fundamental mismatch. Asset condition projects, by design, look backward: they replace what exists. The grid New England needs for 2035 looks radically different – higher voltage corridors to offshore wind landing points, enhanced transfer capability between load centers and renewable zones, and dynamic line ratings or storage-as-transmission assets that didn’t exist when the current fleet was built. If asset condition spending continues on a “replace in kind” basis, the region risks locking in a topology optimized for a fossil-heavy, centralized past.
FERC Order No. 2023, issued in July 2023, sharpens this tension. The order requires transmission providers to conduct long-term, scenario-based planning that accounts for state policy-driven resource changes – exactly the forward-looking analysis asset condition projects have avoided. ISO-NE’s compliance filing for Order 2023 is due in 2025. The asset condition review proposal filed now could either complement that process by forcing asset condition projects to demonstrate compatibility with long-term scenarios, or it could become a parallel track that lets transmission owners continue business-as-usual under a veneer of oversight.
If this trend holds, the financial stakes are substantial. Assuming New England’s transmission owners maintain recent capital expenditure rates, roughly $500-800 million per year in asset condition spending could face new scrutiny. For a transmission owner like Eversource, which earns a regulated ROE of roughly 10.5-11 percent on its New England transmission rate base, even a 10-15 percent reduction in approved asset condition capital would represent tens of millions in annual revenue requirement changes – enough to shift investment priorities toward projects that survive competitive or state-coordinated review.
Who This Affects
- Utility planner: Must now justify asset condition projects against explicit review criteria – likely including alignment with long-term scenarios, cost-effectiveness versus alternatives, and coordination with state policy goals – rather than internal engineering judgment alone.
- Storage or generation developer: Gains a clearer signal on which transmission upgrades will actually materialize and when, reducing queue uncertainty; but asset condition projects that still proceed “replace in kind” may perpetuate congestion at key interfaces like the Connecticut Valley or Southeast Massachusetts.
- Policy analyst or state official: Receives a new procedural lever to challenge projects that undermine statutory climate targets; should prepare to intervene in the stakeholder process defining review metrics and in individual project dockets.
- Investor in regulated transmission: Faces heightened regulatory risk on the ~$15-20 billion New England transmission rate base; watch for FERC signals on whether review outcomes could trigger disallowances or ROE pressure for projects deemed misaligned with regional needs.
What to Watch Next
- FERC action on the filing: The Commission could accept the proposal, reject it as insufficient, or set it for technical conference – the latter would signal skepticism about ISO-NE’s proposed review depth and invite states to push for stronger criteria.
- Stakeholder comment alignment: Watch whether Massachusetts DOER, Connecticut PURA, Rhode Island OER, and Maine PUC file coordinated comments demanding that review criteria explicitly incorporate state decarbonization laws and Order 2023 scenario planning.
- ISO-NE stakeholder process design: The specific metrics – e.g., whether “asset condition” reviews must evaluate non-wires alternatives, dynamic line ratings, or right-sizing for forecast electrification loads – will determine if the reform is structural or symbolic.
- Interaction with Order 2023 compliance: ISO-NE’s 2025 compliance filing must integrate long-term, multi-scenario planning; if the asset condition review operates on a separate track with weaker standards, the gap will become a flashpoint in 2025-2026 stakeholder proceedings.
- First projects subjected to review: The initial docketed projects will set precedent; focus on whether any pending asset condition projects are modified, deferred, or denied based on new criteria.
Bottom Line
The filing marks the first structural challenge to utility autonomy over replacement spending in New England, but its impact hinges entirely on whether the review criteria force “replace in kind” projects to accommodate the region’s decarbonization trajectory – or merely add paperwork to the status quo.
Read the full report at Utility Dive
Note: facts and figures attributed above to Utility Dive reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
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