H.R. 9945: Lowering Energy Costs through Grid Modernization Act

This bill would encourage utilities and project developers to upgrade parts of the electric transmission grid using newer “advanced conductors” instead of rebuilding entire lines in many cases. In plain terms, it aims to let existing power lines carry more electricity with less loss and less overheating by replacing old wire with higher-capacity wire, often within the same or nearby right-of-way.

What counts as an “advanced conductor”

The bill defines advanced conductors as transmission wires that, compared with a standard aluminum conductor steel-reinforced line, can:

• carry at least 1.5 times as much power,
• have at least 10% lower electrical resistance, and
• have at least 25% less thermal sag at maximum operating temperature.

Studies of grid upgrade options

The bill lets transmission providers that are already doing federally required transmission planning study whether two kinds of upgrades would help:

• Reconductoring projects — replacing existing wires with advanced conductors along mostly existing cleared or permitted rights-of-way.
• Right-of-way optimization projects — planning, designing, and building transmission upgrades using advanced conductors mostly within existing cleared or permitted rights-of-way.

If a provider chooses to do one of these studies, it must look at whether the project could reduce congestion, increase capacity, improve reliability, and strengthen resilience. It must also consider risks from natural hazards and extreme weather, such as wildfire, heat, storms, and icing.

The provider would have to send the study results to the Secretary of Energy and make them public, except for information that is protected as critical electric infrastructure information.

Federal data sharing

The Secretary of Energy could publish general, aggregated information about reconductoring results and related grid modernization projects, such as typical increases in transmission capacity, lower losses, and shorter project timelines. The Secretary could also maintain a public webpage listing general information like the state, approximate in-service year, and voltage class of these projects, without identifying specific facilities or operators.

Environmental review

The bill would make it easier for certain qualifying grid upgrade projects to get through federal environmental review. For a covered project, the issuance of a federal permit or approval would generally be treated as a categorical exclusion under NEPA, meaning it would not require a full environmental review unless the agency finds extraordinary circumstances.

A covered project would generally be a reconductoring or right-of-way optimization project that follows certain design and construction standards, uses appropriate controls and best management practices, and may widen an existing right-of-way a limited amount if needed to meet electrical standards and stay mostly within previously disturbed or developed land.

Tax credit changes

The bill would expand the federal clean electricity investment tax credit to include high-performance transmission property, which is basically transmission equipment used in these right-of-way optimization or reconductoring projects. It would also allow installation costs to count toward the credit.

In some cases, the credit rate would be:

• 6% by default, or
• 30% for smaller projects under 1 megawatt or for projects meeting certain labor-related requirements.

The bill also extends existing bonus treatment for projects located in energy communities and for domestic content requirements to include this type of transmission property.

It would further add this transmission property to several existing tax-code definitions and depreciation rules, and it would bar the credit for property whose construction begins after December 31, 2025, if it includes material assistance from a prohibited foreign entity.

Timing and rulemaking

The tax changes would apply to property placed in service in taxable years beginning after the bill becomes law. The Treasury Department would have to issue regulations or other guidance within 18 months to implement the changes.

Relevant Companies

• ETN — Eaton could see indirect demand from grid upgrade and transmission equipment projects.
• GEV — GE Vernova may benefit from higher spending on transmission and grid modernization equipment.
• PWR — Quanta Services could be affected through more transmission construction and reconductoring work.
• MYRG — MYR Group may see more utility transmission construction and upgrade projects.
• NRG — Large power market participants could be indirectly affected if transmission congestion and capacity change, though impacts would depend on market location.