Interstate Power Bill Shifts Cost of State Energy Policies Directly to Local Consumers

The newly proposed “Fair Allocation of Interstate Rates Act” (FAIRA) is shaking up how we pay for the massive power lines that cross state borders. The gist? If a state decides to implement a specific energy policy—say, a big push for solar or wind power that requires new transmission lines—the cost of those new lines can no longer be automatically spread across consumers in neighboring states.

Under this bill, if an interstate transmission facility is built “even in part” to carry out a specific state policy (a “covered policy”), the utility provider is prohibited from charging consumers in other states for that construction. The only way out is if the consumer’s home state government explicitly agrees to pay up. Essentially, the bill establishes a clear rule: only the consumers in the state whose policy drove the construction are considered the “cost causers” and are presumed to be the only ones who benefit from it. The Federal Energy Regulatory Commission (FERC) has 180 days to figure out the rules for implementation.

Who Pays for the Power Lines Now?

This is where things get real for your wallet. Currently, the cost of building large regional transmission lines is often shared across all consumers in the region, based on the idea that everyone benefits from a more reliable, interconnected grid. FAIRA changes that calculation dramatically.

Imagine State A passes a law requiring 80% renewable energy by 2030, which means building a huge new transmission line to import wind power from State B. Under FAIRA, the cost of that new line must be borne almost entirely by the consumers in State A. Consumers in State B, who might have previously shared a portion of the cost, are now off the hook—unless State B’s governor or utility regulator agrees to the charge. For the average person, this means that if your state is pushing aggressive energy policies that require new infrastructure, prepare for potentially higher utility bills as the cost burden is concentrated locally.

The Policy vs. Your Power Bill

The central tension here lies in the bill’s broad definition of a “covered policy.” It includes any policy of a state or its local political entities. This is vague and leaves a lot of room for interpretation by FERC. What counts as a policy that triggers this cost shift? Is it just a specific renewable energy mandate, or could it be a local zoning decision that forces a utility to reroute a line?

This vagueness matters because it determines whether your state’s consumers get stuck with the entire bill. On one hand, the bill aims for fairness: why should a consumer in State C pay for infrastructure built only to serve State A’s policy goals? On the other hand, it fundamentally dismantles the regional cost-sharing model that has traditionally funded the backbone of the interstate grid. For consumers in states with ambitious energy goals, this could mean a significant economic burden, potentially making large-scale projects much more expensive or even impossible to finance.

The Interstate Negotiation Table

The exception provision—where an out-of-state consumer can still be charged if their state government “expressly agrees” to the cost allocation—introduces a massive political hurdle. Instead of utilities and regulators making cost decisions based on technical benefits, states will now have to negotiate politically over who pays for infrastructure.

For example, if State A needs State B’s transmission corridor, State B’s public officials might use their veto power over cost allocation as leverage in other policy areas. This could lead to long, drawn-out negotiations, potentially delaying necessary grid upgrades that benefit everyone regionally. While the intent is to protect consumers from paying for other states’ mandates, the practical effect could be slower, more expensive, and more complex infrastructure development across the entire electric grid.