FERC 881: TOP 5 Concerns
FERC Order 881, is the most sweeping change since NERC FAC-008. Announced in December 2021, it requires ambient-adjusted ratings (AARs) instead of static seasonal ratings to improve grid accuracy, transparency, and efficiency.
This change addresses aging infrastructure, rising electricity demand, and the need for better transmission capacity management. Utilities were required to submit compliance strategies back in 2024 and must fully implement AARs by July 12, 2025. Financial penalties have not been confirmed.
The transition poses challenges, including technology upgrades, data integration, and compliance documentation, but AARs can increase grid reliability, optimize power flow, and support energy transition efforts.
FERC 881 Recap
Various concerns and issues surround implementing FERC Order 881, which is expected in any significant upgrade to a system. Many factors, stakeholders, and documentation requirements are causing legitimate concerns, especially for companies starting late or running into unexpected delays. Next, we will take a look at the top five concerns regarding the implementation of FERC Order 881 as it relates to the AAR requirements:
1. System Readiness and Software
Significant concerns about system readiness and delays in vendor software delivery impact the ability of Transmission Operators and others to meet the requirements on time. AAR calculations adjust ratings based on varying temperatures and weather conditions. These ratings provide additional accuracy of the transmission line capacity over traditionally used fixed ratings. Software is required for this level of calculations, and implementations take time, money, preparation, and organizational skills. Software delivery, calculation accuracy, and data quality delays can significantly slow down this process.
2. Operational Testing Time frame
The compressed timeline for testing is a significant concern, with project shifts testing periods raising doubts about the adequacy of operational testing. Many stakeholders advocate for a minimum of six months of testing before the implementation date to ensure thorough validation. Being well inside that six-month recommended testing period, utilities not firmly in the testing stage for their project are feeling the stress of meeting the July 2025 deadline for FERC 881 compliance. Utilities must communicate their AAR data effectively to the Regional Transmission Organizations (RTOs) and independent system operators (ISOs) for compliance. So, not only must their selected software solution be able to calculate the AAR data, but it must also be able to communicate that data with other software.
3. The Impact of Seasonal Loads
FERC Order 881 includes the need for at least four distinct seasonal ratings. These ratings are used to evaluate longer-term point-to-point transmission service. Specifically, these calculations are for more than 10 days in the future based on predicted ambient temperature. With the July 2025 season being the peak load for many utilities in the USA, with summer demands increasing, especially in southern regions for residential and retail air conditioning, the deadline being at this time may pose a risk to reliable operations if the implementation and testing periods are not complete. In other words, implementing changes during peak load periods, particularly in summer months, poses a risk to reliable operations. There is a strong preference for a transition that avoids these high-demand times to prevent operational issues, with some stakeholders requesting six-month extensions.
4. The Readiness Moment
We’ve discussed how RTOs, ISOs, and utilities must communicate to meet FERC 881 compliance. Concerns exist regarding the definition and achievement of readiness among joint facility owners. This is especially true if more than one utility utilizes a particular facility. If members are unprepared, this could jeopardize operations’ overall implementation and reliability. One utility software implementation could delay the entire system or section of that system’s ability to reach the FERC Order 881’s mandate standards.
5. Lack of Clarity and Communication
In this article, we’ve discussed the concept of communication in several ways. It is emphasized here because the absence of detailed information about upgrades and enhancements to others, such as stakeholders in the RTO, ISO, or individual utility companies, creates concern. A lack of clarity in the timeline or lapses in communication among members of this expanded team can jeopardize meeting the FERC mandate. It is essential to have a clear and firm timeline from transmission operators and owners, ensuring that all stakeholders can adequately prepare for the upcoming changes.
Our solution Advanced Facility Ratings Module is designed to assist with compliance with FERC 881. Schedule a demo today to see how IPS can help you meet this upcoming mandate.