Lowering Energy Costs through Grid Modernization Act

This Act may be cited as the “Lowering Energy Costs through Grid Modernization Act”.

In this Act:

(1) Advanced conductor.— The term advanced conductor means a transmission conductor that—

(A) provides at least 1.5 times the potential energy carrying capacity of an aluminum conductor, steel-reinforced (in this section referred to as “ACSR”) transmission conductor;

(B) has a direct current electrical resistance at least 10 percent lower than a traditional ACSR conductor of a similar diameter and weight; and

(C) has at least 25 percent lower thermal sag than an ACSR transmission conductor of similar diameter and weight at maximum operating temperature.

(2) Categorical exclusion.— The term categorical exclusion has the meaning given such term in section 111 of the National Environmental Policy Act of 1969 (42 U.S.C. 4336e).

(3) Reconductoring project.— The term reconductoring project means a project involving the replacement of existing conductors with advanced conductors predominantly within an existing cleared or permitted right-of-way.

(4) Right-of-way.— The term right-of-way means an easement, lease, permit, or license to occupy, use, or traverse public or private lands.

(5) Right-of-way optimization project.— The term right-of-way optimization project means a project that plans, designs, and constructs electric transmission upgrades using advanced conductors predominantly within an existing cleared or permitted right-of-way.

(6) Secretary.— The term Secretary means the Secretary of Energy.

(a) In general.— A transmission provider subject to transmission planning required by the Federal Energy Regulatory Commission issuances including Order No. 1920, as modified or clarified by Order Nos. 1920-A and 1920-B, may, during each transmission planning process as required under such orders, conduct a transmission modernization study that evaluates the extent to which a right-of-way optimization project or reconductoring project may result in economic and grid reliability benefits.

(b) Requirements.— In the event a transmission provider conducts a study under subsection (a), the transmission provider shall, in conducting such study—

(1) describe in such study—

(A) the extent to which right-of-way optimization or reconductoring projects have been evaluated to address congestion, capacity constraints, reliability risks, or resilience needs;

(B) how implementing such projects compares to other transmission projects that address congestion, capacity constraints, reliability risks, or resilience needs; and

(C) the potential economic and grid reliability benefits from implementing such projects; and

(2) consider risks relating to natural hazards and extreme weather events relevant to the applicable right-of-way, including wildfire, heat, storm, or icing risk information consistent with existing resilience planning practices.

(c) Submission and publication.— A transmission provider that conducts a study under subsection (a) shall submit to the Secretary the results of such study, and make such results publicly available, except for information designated as critical electric infrastructure information, pursuant to section 215A of the Federal Power Act (16 U.S.C. 824o–1).

(a) Aggregated insights.— The Secretary may publish aggregated performance data on reconductoring outcomes and related grid modernization activities, using publicly available sources or voluntary submissions, without identifying specific facilities or operators. Such aggregated information may include typical ranges of increased transfer capability, reductions in transmission losses, changes in congestion or curtailment, and indicative project timelines, provided that no specific facility or operator is identified.

(b) Public listing.— The Secretary may maintain a public web page listing States, approximate in-service years, and general voltage classes for right-of-way optimization and reconductoring projects, using only existing tax credit documentation, publicly available information, or voluntary submissions, and without identifying specific facilities or operators.

(a) In general.— The issuance of a Federal permit or other Federal approval authorizing a covered project is deemed to be a categorical exclusion under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), unless the Secretary or other relevant agency head determines that extraordinary circumstances (as defined by regulations issued by such Secretary or other relevant agency head, respectively) apply to the covered project.

(b) Covered project defined.— In this section, the term “covered project” means a right-of-way optimization project, or reconductoring project, that—

(1) is in accordance with the integral elements listed at the start of appendix B to part 1021 of title 10, Code of Federal Regulations;

(2) incorporates the design and construction standards, control technologies, and best management practices that the Secretary or other relevant agency head determines to be appropriate; and

(3) may involve widening an existing right-of-way to meet current electrical standards if the widening remains within previously disturbed or developed lands and only extends into a small area beyond such lands as needed to comply with applicable electrical standards.

(a) In general.— Section 48E(a)(1) of the Internal Revenue Code of 1986 is amended—

(1) in subparagraph (A), by striking “and” at the end,

(2) in subparagraph (B), by striking the period at the end and inserting “, and”, and

(3) by adding at the end the following new subparagraph:

“(C) any high-performance transmission property.”.

(b) Applicable percentage.— Section 48E(a)(2) of such Code is amended by adding at the end the following new subparagraph:

“(C) High-performance transmission property.— Subject to paragraph (3)—

(i) Base rate.— In the case of any high-performance transmission property which is not described in clause (ii)(I) and does not satisfy the requirements described in clause (ii)(II), the applicable percentage shall be 6 percent.

(ii) Alternative rate.— In the case of any high-performance transmission property—

(I) with a capacity of less than 1 megawatt, or

(II) which— the applicable percentage shall be 30 percent.

(aa) satisfies the requirements of subsection (e)(3), and

(bb) with respect to the construction of such property, satisfies the requirements of subsection (e)(4),”.

(c) Increase in credit rate in certain cases.—

(1) Energy communities.— Section 48E(a)(3)(A) of such Code is amended—

(A) in clause (i), by striking “or with respect to energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(B) in clause (ii)—

(i) in subclause (I), by striking “or with respect to energy storage technology described in paragraph (2)(B)(i)” and inserting “, energy storage technology described in paragraph (2)(B)(i), or high-performance transmission property described in paragraph (2)(C)(i)”, and

(ii) in subclause (II), by striking “or with respect to energy storage technology described in paragraph (2)(B)(ii)” and inserting “, energy storage technology described in paragraph (2)(B)(ii), or high-performance transmission property described in paragraph (2)(C)(ii)”.

(2) Domestic content.— Section 48E(a)(3)(B) of such Code is amended by striking “or energy storage technology” each place it appears and inserting “, energy storage technology, or high-performance transmission property” in each such place.

(d) Qualified investment with respect to high-Performance transmission property defined.— Section 48E of such Code is amended—

(1) by redesignating subsections (d) through (k) as subsections (e) through (l), respectively, and

(2) by inserting after subsection (c) the following new subsection:

“(d) Qualified investment with respect to high-Performance transmission property.—

(1) Qualified investment.— For purposes of subsection (a), the qualified investment with respect to high-performance transmission property for any taxable year is the basis of any high-performance transmission property placed in service by the taxpayer during such taxable year.

(2) High-performance transmission property.—

(A) In general.— For purposes of this section, the term high-performance transmission property means property used in a right-of-way optimization project or a reconductoring project.

(B) Installation expenses included.— For purposes of determining the credit under subsection (a), the term high-performance transmission property shall include amounts paid or incurred by the taxpayer for installation of such property.

(C) Right-of-way optimization project and reconductoring project defined.— For purposes of subparagraph (A), the terms right-of-way optimization project and reconductoring project have the meaning given such terms, respectively, in section 2 of the Lowering Energy Costs through Grid Modernization Act.

(3) Material assistance from prohibited foreign entities.— The term high-performance transmission property shall not include any property the construction of which begins after December 31, 2025, if the construction of such property includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”.

(e) Restrictions relating to prohibited foreign entities.— Section 48E(e)(6)(B) of such Code, as redesignated by subsection (d), is amended by striking “or energy storage technology described in subsection (c)(2)” and inserting “, energy storage technology described in subsection (c)(2), or high-performance transmission property described in subsection (d)(2)”.

(f) Credit phase-Out.— Section 48E(f) of such Code, as redesignated by subsection (d), is amended—

(1) by striking “or energy storage technology” each place it appears and inserting “, energy storage technology, or high-performance transmission property” in each such place, and

(2) by inserting “or any high-performance transmission property” after “any energy storage technology”.

(g) Conforming amendments.—

(1) Section 48E(a)(2) of such Code, as amended by the preceding provisions of this section, is amended—

(A) by striking “subsection (d)” both places it appears and inserting “subsection (e)” in each such place,

(B) by striking “subsection (d)(3)” both places it appears and inserting “subsection (e)(3)” in each such place, and

(C) by striking “subsection (d)(4)” both places it appears and inserting “subsection (e)(4)” in each such place.

(2) Section 48E(k) of such Code, as redesignated by subsection (d), is amended by striking “subsection (g)” and inserting “subsection (h)”.

(3) Section 48(e)(4)(D) of such Code is amended by striking “section 48E(h)(4)(D)(ii)” and inserting “section 48E(i)(4)(D)(ii)”.

(4) Section 49(a)(1)(C) of such Code is amended—

(A) in clause (vii), by striking “and” at the end,

(B) in clause (viii), by striking the period at the end and inserting “, and”, and

(C) by adding at the end the following new clause:

“(ix) the basis of any high-performance transmission property under section 48E.”.

(5) Section 168(e)(3)(B)(viii) of such Code is amended by striking “or any energy storage technology (as defined in subsection (c)(2) of such section)” and inserting “, any energy storage technology (as defined in subsection (c)(2) of such section), or any high-performance transmission property (as defined in subsection (d)(2) of such section)”.

(6) Section 7701(a)(51) of such Code is amended—

(A) in subparagraph (D)—

(i) in clause (i)(II)(aa), by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(ii) in clause (ii)—

(I) in subclause (I)(aa), by striking “or energy storage” and inserting “energy storage technology, or high-performance transmission property”,

(II) in subclause (II)—

(aa) in item (aa), by inserting “or any high-performance transmission property produced by the taxpayer” before the comma at the end, and

(bb) in item (ee), by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(III) in subclause (III)—

(aa) by striking “, energy storage technology,” each place it appears and inserting “, energy storage technology, high-performance transmission property,” in each such place,

(bb) by striking “any energy storage technology,” and inserting “any energy storage technology, any high-performance transmission property,”, and

(cc) by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(B) in subparagraph (I), by adding at the end the following new clause:

“(vii) High-performance transmission property.— The term high-performance transmission property has the same meaning given such term under section 48E(d)(2).”.

(7) Section 7701(a)(52) of such Code is amended—

(A) in subparagraph (A), by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”,

(B) in subparagraph (B)—

(i) in clause (ii), by inserting “or high-performance transmission property” after “energy storage technology”, and

(ii) in the subparagraph heading, by striking “and energy storage technology” and inserting “, energy storage technology, and high-performance transmission property”,

(C) in subparagraph (D)—

(i) in clause (i)—

(I) by striking “or energy storage technology” each place it appears and inserting “, energy storage technology, or high-performance transmission property” in each such place, and

(II) in the clause heading, by striking “and energy storage technology” and inserting “, energy storage technology, and high-performance transmission property”,

(ii) in clause (iii)(II), by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(iii) in clause (v)(II), by striking “or energy storage technology” and inserting “, energy storage technology, or high-performance transmission property”, and

(D) in subparagraph (E), by adding at the end the following new clause:

“(v) High-performance transmission property.— The term high-performance transmission property has the same meaning given such term under section 48E(d)(2).”.

(h) Effective date.— The amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.

(i) Regulations.— Not later than 18 months after the date of the enactment of this Act, the Secretary of the Treasury shall issue such regulations or other guidance, or amend existing guidance, as may be necessary or appropriate to carry out this section and the amendments made by this section.