FERC approves new approach to managing SPP grid congestion

Data centers, manufacturing projects and other large electricity users are driving a projected 224-gigawatt increase in North American summer peak demand over the next decade. In addition to building more transmission lines, utilities and regional grid operators are pursuing strategies to move more electricity through the existing system.

The Federal Energy Regulatory Commission approved revisions to Southwest Power Pool’s wholesale-market rules last month, establishing a formal process for economic transmission reconfigurations beginning Oct. 1. Economic transmission reconfigurations refer to changes in how existing transmission equipment is operated to lower the cost of delivering electricity without compromising reliability.

Historically, grid operators have generally treated the transmission network as fixed when managing congestion, meaning they operate it in its existing configuration rather than changing which lines and other equipment are in service. When a transmission line becomes overloaded, the grid operator may direct a lower-cost generator to reduce output and a more expensive generator elsewhere to increase production, raising production and congestion costs.

Topology optimization, the approach proposed by SPP and approved by FERC, takes a different path. Analytical software identifies changes to existing transmission connections that can redirect electricity around a congested portion of the grid. Moving power to lines with available capacity can reduce reliance on higher-cost generation and lower wholesale costs ultimately borne by electricity customers.

SPP will be the second regional grid operator to establish a formal process allowing registered participants in its wholesale electricity market to propose economic transmission reconfigurations. The Midcontinent Independent System Operator, or MISO, began implementing a similar program in 2023. The Electric Reliability Council of Texas, or ERCOT, plans to introduce its own process in early 2027.

MISO’s experience illustrates how the process works. A registered market participant, sometimes working through a technology vendor, submits a specific switching configuration intended to relieve a costly transmission constraint. MISO and the affected transmission owner analyze the proposal for reliability before MISO conducts a separate market review to determine whether it would reduce overall costs rather than shift congestion elsewhere.

Approved proposals become operating guides that tell grid operators which connections to open, when to use the configuration and when to restore the system to its normal arrangement. Of 21 requests submitted in 2024, five were implemented, mostly to address congestion associated with equipment outages. MISO estimated those actions produced $21 million in marketwide benefits.

The results grew substantially the following year. MISO approved eight reconfigurations in 2025 and estimated that the implemented actions produced $113 million in marketwide benefits. The relatively small number of approved changes demonstrates how targeted switching actions can produce significant savings when they address particularly costly constraints.

Transmission switching itself is a longstanding grid-management practice, but researchers began developing modern optimization algorithms for the electric grid in the late 2000s and early 2010s. Beginning in 2012, the U.S. Department of Energy supported a Boston University-led project involving seven institutions to make the software practical for large transmission systems.

The technology subsequently moved into utility and grid-operator pilots, including SPP’s 2018 study. That pilot identified possible reconfigurations for more than half of the transmission constraints studied and estimated potential annual congestion savings of between $18 million and $44 million.

Topology optimization is one of several strategies for increasing the capacity or efficiency of existing transmission infrastructure. Other options include using real-time weather and operating conditions to determine how much electricity a line can safely carry, installing devices that direct power toward lines with available capacity and replacing existing wires with higher-capacity conductors.

FERC Commissioners David Rosner and Judy Chang encouraged other grid operators to follow SPP and MISO. Rosner said topology optimization can move more electricity through existing infrastructure, although it will not eliminate the need for new transmission construction. Chang called it a practical tool for reducing costs and improving reliability and urged grid operators that have not adopted it to incorporate it into routine operations.

SPP operates the bulk electric grid and wholesale electricity market across all or portions of 17 states, extending from North Dakota to northern Texas. The region has averaged more than $1.6 billion in annual congestion costs, according to comments filed in the FERC proceeding.

Under SPP’s new process, SPP or an entity registered in its wholesale electricity market may submit a proposed switching action. Each request must identify the affected transmission constraint, the proposed action, its expected duration and the conditions under which it would be used. SPP may limit the number of requests submitted or studied each month to keep the workload manageable.

SPP will analyze each proposal’s effects on reliability, regional production costs and the market for transmission congestion rights. A proposed reconfiguration must produce savings, such as reduced congestion costs or the displacement of higher-cost generation, that outweigh any negative market effects.

The affected local transmission operator also must assess the proposal and may approve or reject it based on reliability concerns. An approved reconfiguration can be reversed or adjusted if operating conditions change.

The FERC decision does not authorize a particular software purchase or announce an immediate solicitation. It establishes the regulatory process SPP will use to evaluate and implement proposed reconfigurations.

Broader adoption, however, could increase demand for grid-analysis software, power-flow modeling, engineering studies, systems integration, cybersecurity and operator training. Technology and professional-services firms can monitor SPP stakeholder proceedings and utility procurement notices as the regional operator and its participating transmission companies put the new process into practice.

Story by Kimberly Reeves; photo by Photo Collections from Pexels